Understanding Loan Terms

What Kinds Of Assets Can Be Considered When Applying For A Commercial Real Estate Loan?

21 July 2018

Stanley Simmons

Whether you are planning to expand your business or you want to do a complete overhaul of your office building, chances are that you're going to need a commercial real estate loan to make your upcoming construction project a reality. Luckily, you can use your assets to secure a loan that will meet your expectations both now and in the future. Following are a few different kinds of assets that may be considered as collateral when securing the commercial real estate loan you need.

Your Inventory Assets

Anything of value that your business owns might be considered as collateral when applying for a commercial real estate loan. If you own a warehouse full of electronics that you sell to customers, those electronics might be all the assets you need to secure the loan you want. If you own several high-end copying machines that are used to produce communications for customers, they might be worth a portion of the loan amount you're looking for.

The company providing your loan will consider all of the inventory assets you want to offer as collateral and then determine which items are acceptable and how much each item is worth to them. From there, you can decide which assets are worth putting up for collateral and determine whether you need to tap into other kinds of assets in order to secure the funds you need.

Your Accounts Receivable

If you are like most companies, you probably have an impressive accounts receivable record that could help get you the commercial real estate financing that you are looking for. If you are able and willing to give up future income from customers, you can submit your accounts receivable for consideration when applying for your loan. You don't have to offer all of your accounts as collateral, which can come in handy if you need to make sure that you have some kind of income in the future if for some reason you default on your loan and you lose the accounts you put up for collateral.

Your Anticipated Income Due to Growth

Even if you don't have accounts receivable that can be considered as collateral for the loan you want, your loan provider might be willing to consider your anticipated income growth for the near future and use that growth as collateral for your loan. Your past sales record, your current profits and losses, and other loans you may already be paying will probably also be considered when your loan provider determines your anticipated income growth and decides how much collateral it's worth.

Contact a local company for more information about commercial real estate financing.

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About Me

When was the last time you realized you were in the red financially? Although most people don't think about their finances on a day to day basis, it can be easy to find yourself living paycheck to paycheck if you aren't careful. I began thinking carefully about the financial implications of some life decisions I was making, and I knew I had to make a difference. I talked with a loan officer about getting things together, and he was instrumental in helping me to work things out. Read more about my financial successes and failures on this little website. You might be able to avoid some of my previous mistakes.