Commercial Property Financing

Who Else Wants To Do Commercial Property Financing The Smart Way?

Smart business owners always want to make the dollars they spend work for them—also known as capital utilization. This means putting as little capital down as possible to get the highest return. This holds true in everything to do with running a business, like investing in an employee, or purchasing equipment. You want to pay employees as little as possible to still get them to work for you and be as productive as possible. You want to pay as little as you can for a productivity-enhancing piece of equipment and then maximize the efficiency side of things.

The same thing applies to commercial property financing. This is where the theories that birthed Mercantile Capital Corporation differentiate us in three ways and define smarter financing for business owners.

First, is the down payment amount. Ordinary bankers typically require anywhere from 20 to 30 percent of the purchase price of commercial property as a down payment, which is not the best capital utilization for a small business owner. It reduces the risk for the banker, but not for the business owner. We, on the other hand, require one-third to one-half that amount for a down payment. In other words, we finance up to a 90 percent loan-to-cost for most of our borrowers—and that’s a big distinction. I call it “equity savings,” which can now be reinvested in the business. And by doing so, you’ll probably get much higher cash-on-cash returns on that capital than what you could even in owning your commercial real estate.

The second differentiation between our kind of commercial property financing and regular bank financing is the length of the terms we offer. An ordinary bank gives much shorter terms because they want this risk—that’s how they view it—to get paid off more quickly, which means a fifteen- or twenty-year term instead of the twenty-five-year term that we offer. Yet those extra five or ten years make a dramatic impact on monthly cash flow for the business owner.

Third, we specialize in a very little-known commercial loan program that I believe is the best one out there. For years the banking community has done a disservice by not educating the small business community about this particular program. It is the least expensive capital that a business owner can find, and it happens to be the program that we specialize in. In fact, I am one of the nation’s leading experts on this particular program.

Ultimately, this is our definition of smarter commercial property financing: 1) put as little down as you can, 2) get the longest term you can, and 3) get a below-market fixed interest rate for as long as you can.