SBA Loans offer Commercial Building Owners a 90% Loan to Value (LTV)
In financing a commercial building or refinancing a business property, the phrase loan-to-value (LTV) is often used.
Loan to value is a ratio that expresses the amount of a mortgage as a percentage of the total appraised value for a property. For instance, if a business owner borrows $130,000 to purchase a commercial building worth $150,000, the LTV ratio is $130,000/$150,000 or 87%.
LTV is an important part of how much leverage you are using to control real estate. The higher the LTV, the less cash your business has to invest in the commercial property.
ABOUT COMMERCIAL PROPERTY REFINANCING WITH HIGHER LTV
Loan to value is one of the key risk factors that commercial building lenders assess when qualifying for a mortgage. The risk of default is foremost of lending decisions, and the likelihood of a lender absorbing a loss in the foreclosure increases as the amount of equity decreases. Therefore, as the LTV ratio of a loan increases, the qualification guidelines for certain mortgage programs become much more strict. Lenders can require borrowers of high LTV loans to buy mortgage insurance to protect the lender from the buyer default, which increases the costs of the mortgage.
NEWS ABOUT COMMERCIAL BUILDING FINANCE AND LOAN-TO-VALUE
What’s new is that for a limited time, your company can obtain commercial property refinancing with a loan to value of 90% by using anew US government program from the Small Business Administration. It’s called the SBA504 program.
The SBA 504 program let’s you refinance a commercial building loan with a lower monthly payment, at lower interest and with less personal risk with a 90% LTV.
So if you own a commercial building for your business, this 90% LTVprogram from the SBA will help you find financing even with lower credit scores.
Ask The Sterling Group about commercial building finance and the SBA 504 program. Call 1-800-578-4884 for consultation and advice.
Sterling is a FULL service business advisory company. Their team of advisor will answer all of your questions and they specialize in commercial properties for business owners. Through hundreds of available commercial loan programs they will get you the financing you need.
