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Because investors are increasingly considering business opportunities and commercial property, it is important to their success that they receive a comprehensive introduction to the distinctions between residential real estate financing and commercial real estate - business opportunity investing. This business loan discussion will inform new business real estate investors about critical business financing factors. SBA Loan Refinance and Business Finance Issues Business refinancing will normally be more complex than the business finance process for initially buying a business or commercial real estate. SBA loan refinancing is particularly problematic. It is vital to anticipate these potential refinancing obstacles prior to initiating business opportunity financing or a commercial mortgage. Commercial Mortgage and Business Finance Obstacles Compared to residential real estate property loans, a business loan has more potential obstacles. This impacts the complexity and time required to finalize most commercial real estate financing and commercial financing situations. Problematic commercial loan factors that recur frequently should be a matter of particular concern. Enhanced Value of Business Loan Experience The obvious oversupply of inexperienced business opportunity financing and commercial real estate financing advisors and lenders must be a practical factor to anticipate, and a lack of meaningful experience can seriously complicate the loan process. This is due primarily to the negative residential real estate finance environment. Most residential mortgage brokers are trying to replace residential loan revenues with business loan transactions, but in most cases they are acting as business finance advisors without necessary commercial loan qualifications. Length of Business Loan Application and Approval Process Most local and regional banks have an excessive business opportunity financing process that routinely requires about nine months. In comparison a non-traditional commercial mortgage can be finished in a shorter period of time but will usually take longer than a residential real estate mortgage for completion. The need for specialized business financing and SBA financing programs can add to the complexity and timing required to close a business loan. Commercial Real Estate Mortgage and Business Finance Fees The typical commercial mortgage process is more complicated and time-consuming than for a residential real estate mortgage, and a more costly fee structure should be anticipated. Business finance retainer fees are more prevalent than with residential real estate financing. The commercial real estate loan process typically includes several third-party costs that can result in extensive costs beyond the fees assessed by a lender. Commercial Real Estate Loan for Special Purpose Property Situations Special purpose commercial real estate finance situations involving funeral homes, golf courses, churches, gas stations and similar specialized properties result in complexities not seen with residential mortgage financing. Such specialized commercial properties are increasingly excluded from the business loan portfolios of many commercial lenders. Because of limited lending options combined with unique commercial mortgage issues, golf course financing, church financing and funeral home financing are among the most difficult scenarios for business financing. More Differences - Business Opportunity Loan and Commercial Mortgage The business finance and commercial real estate loan process throughout the U.S. has many factors differentiating it from residential mortgage finance. A number of additional relevant aspects are included in separate business loan reports. A few of the subjects included in other reports are business opportunity loans, SBA loan finance, personal guarantors and lender suitability criteria. Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.
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About Stephen Bush: Steve will provide candid SBA loan - buy a business - business loan advice. Free series of Business Financing to Buy a Business Opportunity reports
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