Commercial Refi Process from Start to Finish

The commercial refi process can be complex, but understanding the steps involved can help you navigate it more smoothly.

The first step is to determine your loan-to-value ratio, which is typically between 50-70% for commercial properties.

You'll need to gather financial documents, including your business's tax returns, balance sheet, and income statement.

A commercial lender will review these documents to assess your business's creditworthiness.

The lender will also assess the property's value and condition to determine its worth as collateral.

The loan application process can take anywhere from 30-60 days, depending on the lender and the complexity of the application.

Once your loan is approved, you can proceed with the refinance process, which typically takes 30-60 days to complete.

Keep in mind that the entire process, from application to closing, can take 60-90 days.

Commercial refinance is similar to refinancing a residential mortgage, where you use a new loan to pay off an existing one.

Typically, borrowers refinance their loans to qualify for more favorable terms, such as a lower interest rate or a different loan type.

Refinancing can also help property owners convert equity into cash to improve cash flow, giving them more financial flexibility.

Commercial property refinance loan types are straightforward, but understanding the differences can make a big impact on your business. There are three main options to choose from when looking to refinance a commercial loan.

Conventional commercial mortgages are the most common type, offered by traditional banks and mortgage lenders. They typically allow a loan-to-value (LTV) ratio of 60% to 80%.

Commercial loans from conventional lenders usually have stricter requirements, including higher credit score requirements, lower maximum LTV ratios, and shorter loan terms. This can make qualifying more difficult.

Conventional commercial loans are geared toward more established business owners who can meet these tougher borrowing requirements.

Refinancing a commercial property in California can be a complex process with both advantages and disadvantages to consider.

The upfront costs of refinancing can be significant, including application fees, appraisal fees, closing costs, and potential points. These costs can add up quickly and may take time to recoup through lower monthly payments.

Qualifying for a commercial property refinance can be challenging, especially if you have credit issues or declining property values. This is because lenders want to ensure that you can afford the new loan payments.

You may not always secure a lower interest rate when refinancing, and in some cases, you may end up with a higher rate than your current mortgage. This is a risk to consider when deciding whether to refinance.

Extending the loan term to reduce monthly payments can actually cost you more in interest over the life of the loan, even with a lower interest rate. This is because you're paying interest for a longer period of time.

Here are the key cons of refinancing a commercial property in California:

To refinance a commercial property, you'll need to meet certain requirements. A good business credit score is essential, with a minimum FICO Small Business Scoring Service (SBSS) score of 155 usually required for an SBA 7(a) loan.

Lenders also consider your net operating income (NOI), which is a measure of your property's gross income minus operating expenses. The higher your NOI, the better your chances of refinance approval.

Debt service coverage ratio (DSCR) is another important factor, with lenders typically looking for a minimum of 1.25 and preferring a ratio closer to 2.00. This indicates that your business is generating enough revenue to cover its debts.

A stable operating history is also crucial, with lenders preferring to see at least a few years of consistent financial performance.

Here's a breakdown of the key requirements:

To get started, you'll need to gather some essential documents, including your business name and address, tax returns, employer identification number, business plan, and proof of collateral.

Commercial refinancing is a process where you use a new loan to pay off an existing one, often to take advantage of better terms or access equity in your property. This can be a smart move if you can qualify for a lower interest rate or a different loan type.

Refinancing a commercial loan is similar to refinancing a residential mortgage. You can refinance when you can qualify for more favorable terms, such as a lower interest rate or a different loan type. This can help you free up cash flow for other investments or property improvements.

Typically, borrowers refinance their loans when they can qualify for more favorable terms, such as a lower business interest rate or a different loan type. This can be a good option if you want to lower your monthly payments or access equity in your property.

There are several types of commercial refinance loans available, including cash-out refinance loans, bridge loans, and SBA mortgage refinancing. A cash-out refinance loan allows you to tap into the equity of your property to take cash out, while a bridge loan provides short-term financing to help you secure a long-term loan.

Here are some common reasons why businesses refinance their commercial mortgages:

It's worth noting that prepayment fees can be a consideration when refinancing a commercial loan. However, with the right loan program, you can often close the existing loan quickly at a lower rate than the original.

The appraisal fee is a crucial cost to consider in commercial refinancing. This fee can range from $1,000 to $10,000.

You'll need to pay a commercial real estate appraiser to estimate the cost of the property you intend to refinance. This fee is much higher for a commercial loan than for a residential mortgage because the loan amounts are larger.

The charges for commercial mortgage appraisals vary based on location and other factors.

Commercial refinancing can be a complex process, but understanding the basics can help you navigate it more easily. Here are some key things to keep in mind.

You can choose from various loan programs, including commercial term lending, agency lending, and real estate banking. Each of these options offers different benefits and features.

Commercial term lending offers straightforward financing with competitive pricing and a certainty of execution. You can choose from initial fixed rates for 3, 5, 7, or 10 years, followed by an adjustable rate for the remaining term. Alternatively, you can opt for a 15-year fixed rate or a 6-month adjustable-rate loan program.

Agency lending provides Fannie Mae and Freddie Mac multifamily lending solutions. These solutions include Fannie Mae DUS fixed and variable rates for 5 to 30 years with up to a 30-year amortization, as well as Freddie Mac Optigo fixed rates for 5 or 10 years and variable rates for 5, 7, or 10 years with up to a 30-year amortization.

Real estate banking offers commercial loan refinancing solutions for top-tier real estate owners and investors. These solutions include initial fixed rates followed by adjustable rates, as well as fixed- and adjustable-rate programs.

Here are some common loan terms you might encounter:

Refinancing with JPMorgan Chase can also provide access to additional resources, such as treasury solutions and market experts.

Refinancing can be enormously helpful in increasing cashflow and making you better prepared to grow your portfolio.

Our experienced team is ready to assist with your financing needs. We can get deals done and deliver a superior customer experience with financing that fits your needs.

When choosing a lender, it's a good idea to look for one with a maximum cap on their additional fees. This can help you avoid unexpected costs.

Here are some common refinance loan terms to consider:

We design our commercial loan refinancing solutions for top-tier real estate owners, developers, investors, and operating companies.

If you're looking for a government-backed refinance loan, you can consider options backed by the SBA or USDA. The SBA offers loans up to $5.5 million, while USDA loans go up to $25 million.

To qualify for an SBA loan, you must have equity in your business and it must be a for-profit business operating in the United States. You'll also need to show that you've been in operation for at least two years and can't get funding elsewhere.

The USDA loan has its own set of requirements, including that your business must be located in a rural area and you must be a U.S. citizen or have permanent residency status.

Government-backed refinance loans are an attractive option for small business owners. These loans are backed by government agencies, providing a guarantee that makes them more accessible to a wider range of borrowers.

The SBA offers loans up to $5.5 million, while USDA loans go up to $25 million. This is a significant amount of funding that can help businesses cover various expenses.

To qualify for an SBA loan, your business must have equity and be a for-profit business of a suitable size operating in the United States. You'll also need to show that you've been in operation for at least two years and can't get funding elsewhere.

In contrast, USDA loans are available to businesses located in rural areas. The business owner must be a U.S. citizen or have permanent residency status to be eligible.

Government-backed options can be a great way to refinance your business, and one popular choice is Agency Lending. JPMorgan Chase offers Fannie Mae and Freddie Mac multifamily lending solutions to fit your unique refinancing needs.

One option is Fannie Mae DUS, which offers fixed and variable rate loans for 5 to 30 years with up to a 30-year amortization. This means you can choose a loan term that works for you and your business.

Another option is Freddie Mac Optigo, which offers fixed rate loans for 5 or 10 years and variable rate loans for 5, 7 or 10 years with up to a 30-year amortization. This gives you flexibility in your loan terms and can help you save money on interest.

If you're considering Agency Lending, it's worth noting that these options are only available for multifamily properties.

Conventional commercial mortgages are loans from traditional banks or mortgage lenders that aren't backed by the federal government.

These loans typically allow you to borrow a certain percentage of the property's value, with a loan-to-value (LTV) ratio of 60% to 80%. The maximum LTV ratio shouldn't exceed 85% according to guidelines set by the Office of the Comptroller of the Currency.

Conventional commercial loans usually have stricter requirements than government-backed loans, with higher credit score requirements, lower maximum LTV ratios, and shorter loan terms.

Business owners who can meet these tougher borrowing requirements are often more established and have a stronger credit history.

If you're considering a conventional commercial mortgage, be aware that you'll likely face more expensive monthly payments due to the shorter loan terms.

Here are some key differences between conventional commercial loans and government-backed loans:

Keep in mind that conventional commercial loans are geared toward more established business owners who can meet the stricter borrowing requirements.

Refinancing a commercial loan is a straightforward process that's similar to refinancing a mortgage on a residential property.

You refinance your loan when you can qualify for more favorable terms, such as a lower business interest rate or a different loan type.

The refinancing process involves using the money from a new loan to pay off an existing one, which can be a great way to improve cash flow.

Typically, refinancing can also help property owners convert equity into cash, allowing them to use that extra cash to improve their business or make other smart financial decisions.

We offer a range of commercial property loan refinancing options to suit different needs. Our commercial property loan refinancing is available for various property types, including industrial, mixed-use, multifamily, office, and retail properties.

Our fixed- and adjustable-rate loan programs can be tailored to fit your budget. You can access financing as low as $500,000.

Commercial Term Lending provides financing options for those who need it.

Refinancing your commercial property in California requires careful consideration of current market conditions. Assessing the state's real estate market, including interest rates, property values, and lending standards, is crucial to securing favorable refinancing terms. This will help you make an informed decision about whether to refinance.

To refinance, you'll need to provide extensive documentation, including financial statements, tax returns, rent rolls, and property insurance. Be prepared for the possibility that the property appraisal may come in lower than expected, affecting your refinancing terms.

Here are some key factors to consider:

Refinancing a commercial property in California can be a complex process, but understanding the essential facts can help you make informed decisions. It's crucial to assess California's current real estate market conditions before refinancing.

Interest rates, property values, and lending standards can fluctuate, impacting your refinancing terms. This is why it's essential to stay informed about the current market conditions.

To refinance a commercial loan, you'll need to provide extensive documentation, including financial statements, tax returns, rent rolls, and property insurance.

Here are some key things to consider before refinancing your commercial property in California:

Lower interest rates can lead to lower monthly payments and interest costs over the life of the loan, freeing up cash flow for other investments, property improvements, or debt reduction.

You'll pay hefty upfront costs, including closing costs, which can add to your expenses. Make sure the savings from your new loan will outweigh the cost of any fees you'll pay upfront.

Some lenders may charge a prepayment penalty for paying off your loan early, which can add to your costs. It's essential to review your loan program and understand any restrictions or penalties before refinancing.

Refinancing a property in California can come with some significant drawbacks. Upfront costs can be a major hurdle, including application fees, appraisal fees, closing costs, and potential points, which can total thousands of dollars.

Qualifying for a commercial property refinance can be a challenge, especially if you have credit issues, declining property values, or insufficient rental income to cover the new loan. This can make it difficult to get approved for a refinance.

You may not always secure a lower interest rate, and in some cases, you could end up with a higher rate than your current mortgage. This is especially true if market conditions aren't in your favor.

If you extend the loan term to reduce monthly payments, you may pay more in interest over the life of the loan, even with a lower interest rate. This is because you're essentially stretching out the amount of time you're paying interest.

Refinancing can be a complex and time-consuming process, requiring extensive documentation and negotiation. This can be frustrating and may delay the process.

Here are some of the specific costs you might incur:

You're looking to refinance your business mortgage, which can be a complex and overwhelming process. Commercial mortgage refinancing options are available to help you achieve your financial goals.

We offer commercial property loan refinancing for various property types, including industrial, mixed-use, multifamily, office, and retail properties. Financing is available through fixed- and adjustable-rate loan programs starting at $500,000.

Reducing debt strain is a common reason businesses refinance their mortgages. This can help alleviate financial pressure and allow you to focus on your operations.

You can also refinance to extend the term of your mortgage, which is especially helpful if you have a bridge loan or hard money loan that's soon up for renewal or payoff.

In a commercial refi, the loan details are crucial to understand. The loan amount can range from $500,000 to $100 million, depending on the property's value.

The loan term can vary from 5 to 25 years, depending on the lender and the borrower's creditworthiness. Some lenders may offer shorter or longer loan terms.

The interest rate can be fixed or variable, with some lenders offering as low as 4% or as high as 12% APR. The interest rate will impact the total amount paid over the life of the loan.

The loan-to-value (LTV) ratio is also an important consideration, typically ranging from 60% to 80% of the property's value. This means the borrower will need to provide 20% to 40% of the purchase price as a down payment.

The loan origination fee can range from 0.5% to 2% of the loan amount, which can add up quickly. This fee is usually paid upfront by the borrower.

Refinancing a commercial property can be a smart move, but it's essential to understand the fees and costs involved. Prepayment penalties can vary by lender, so it's crucial to shop around for the best deal.

A guaranty fee typically ranges from 0.25% to 3.75% of the loan amount. This fee is usually non-refundable, so it's essential to factor it into your refinancing costs.

Credit checks can cost anywhere from $100 to $1,000. This fee is usually borne by the borrower, so it's a good idea to factor it into your budget.

The application fee can vary by lender, but it's usually a one-time payment. Origination fees, on the other hand, can be a percentage of the loan amount, often ranging from 1% or more.

Appraisal fees can be significant, ranging from $1,000 to $10,000. This fee is usually necessary to determine the property's value, so it's essential to factor it into your refinancing costs.

Here's a summary of the common fees and costs associated with refinancing a commercial property:

In a commercial refi, lenders closely examine a company's financial health to determine its creditworthiness. A key metric they consider is the debt service coverage ratio (DSCR).

This ratio gauges a company's ability to pay down debt by analyzing its cash flow. Lenders typically choose the range of 1.2 to 1.5 as a benchmark.

To be considered sustainable, lenders often want to see a few years of consistent operation. This demonstrates the company's ability to maintain its cash flow over time.

A DSCR above one indicates the business is making enough money to pay its loans.

When considering commercial refi options, it's essential to know your lenders and the types of loans available. Banks are a straightforward way to refinance commercial real estate, offering similar loan terms. They're a good starting point for many commercial owners.

Commercial Term Lending, offered by some banks, provides straightforward real estate financing with competitive pricing and certainty of execution. This type of loan includes initial fixed rates for 3, 5, 7, or 10 years, followed by an adjustable rate for the remaining term.

Agency Lending, such as Fannie Mae and Freddie Mac multifamily lending solutions, offers unique refinancing options for commercial owners. Fannie Mae DUS loans have fixed and variable rates for 5 to 30 years, while Freddie Mac Optigo loans have fixed rates for 5 or 10 years and variable rates for 5, 7, or 10 years.

You may also consider non-traditional lenders, such as Hard Money Lenders, who offer private loans for borrowers who can't get financing through traditional banks. SBA Loans, provided by the U.S. Small Business Administration, offer low fixed rates and fully amortized terms.

Other options include Community Banks, which provide loans to commercial real estate within their geographic area, and CMBS Loans, which have little to no cash-out restriction and are popular among borrowers.