Commercial Mortgage Loan

Why It’s Smarter to Make a Smaller Down Payment On Your Commercial Mortgage Loan

You want your lender to help you secure a loan that provides the greatest flexibility to use more of your capital as you see fit for your business. The lower your down payment, the more flexibility you have to invest in your company and get a higher cash-on-cash return on your commercial real estate investment.

In weighing your financing choices, remember that some debt is good. Don’t assume you should take the commercial mortgage loan with the highest down payment requirement so you can “pay off your debt faster.” Putting down capital for your investment property means you have less to invest in your business. This makes it harder to grow your business and could make you more vulnerable to situations that require quick access to capital.

The degree of growth and development of your business often hinges on the amount of capital or “cash-on-hand” available to your company. Available capital is a vital component for growth and expansion. Therefore, it makes the most sense to conserve as much of your capital as possible when investing in a non-income-producing asset such as real estate.