Commercial Building Loan Rates

Commercial building loan rates are affected by several different things. Finding the best rates will take a bit of effort but it is important to make the effort because the money that is saved on getting a lower rate can literally turn into thousands if not tens of thousands of dollars.

There are many different financial institutions that offer commercial building loans, each with a different rate. Banks usually will have the lowest rates, compared to other finance companies; however they will also have the most stringent requirements to meet.

Programs

One of the easiest ways to get a great rate on commercial building loan rates is to see if your company or business can fit into one of the many programs that are in place to help business owners and to increase commerce in a given area.

There are programs that are backed by the federal government and municipalities that are offered up for a host of reasons. Many rural areas are covered by these programs. The idea is that building commercial properties in rural areas will not only expand commerce in the area but will increase tax revenues for the area and bring jobs to the area.

Rural areas are not the only areas that offer these programs. Urban areas that may not be in the best of conditions are also usually covered by some type of program to revitalize the area. How does this help you? Well these programs basically are in place so that you will have to pay a lower interest rate on the commercial building loan rates that you get from the bank. The loan is guaranteed so the banks offer a more favorable rate.

Getting into one of these programs can really pay off. The requirements are usually a bit narrow but you never know your company or business may fit nicely into the mold.

Shopping the Rates

You should shop the rates. Banks are hurting a bit for business right now, so the probability of them being a bit more open to competition is likely very high. Of course if the credit is there, than shopping around for better rates is going to be a bit easier, there will be many more options for a business with good credit. If the credit is not so grand than you will have a harder time of shopping the rates and you may be stuck with what you are offered.

What Kind of Rates to Expect

You can expect to pay anywhere between 3.45% and 4.45% over prime for a commercial building loan at a hard money financial institution and you can expect to pay around 2.0% to 4.0% over prime at a traditional bank. Comparatively speaking this is quite the difference than what you would expect to pay for a residential building loan.

Finding the lowest rates will largely depend on credit worthiness and whether the business or company qualifies for one of the special programs that are available.