Commercial Loan Calculator

Before you make any big decision in life, you probably weigh all of your options first before committing. This includes calculating your monthly finances to make sure your goals are well within your means. Choosing the right loan for a commercial real estate property is no different. Before deciding on the best possible loan for your business, you’ll want to determine what your monthly payments will be by using an online commercial loan calculator. Here’s how they work and what you need to know about obtaining a commercial loan.

How Do Commercial Loan Mortgage Calculators Work?

Commercial real estate loans are unique because you use real estate as collateral to secure them. Because of this, commercial loan terms are usually in favor of the borrower. Currently, interest rates are between four and six percent with ten to 20 year terms.

A commercial loan mortgage calculator works by calculating your monthly payment on a commercial real estate loan with an interest rate reset. This means that the interest rate changes after a certain amount of time depending on your loan terms and it’s usually based on the average interest rates at the time when your rates reset. Rate reset loans are common. They are characterized by paying a fixed rate for a certain amount of time. Then, your rates may go up or down depending on the market conditions. In some cases, your rate may even stay the same. Your loan documents should tell you when your reset date is as well as how your new rate is determined.

Some commercial building loan calculators don’t always work on balloon payments. So if you have one, then you’ll want to make sure to find a commercial bank loan calculator that accommodates balloon payments. A balloon payment allows you to make low monthly payments throughout your loan term, but you’ll have to pay the remaining balance in one lump sum at the end. For example, if your monthly payments don’t cover the cost of your loan by the time your loan term ends, then your final payment will be due in the form of the total remaining balance.

To use the business mortgage calculator, you’ll insert your information based on your loan terms and the calculator will determine what your monthly payments will be before and after your rate reset. It will also calculate your monthly payments over the course of the loan.

Here is what information you’ll put into the calculator:

  • Loan amount: You’ll need to input the principal loan amount into the calculator.
  • Origination fee: Some lenders charge an origination fee up front just for processing a loan application. Keep in mind that this amount is subtracted from your loan before you receive your funds. Make sure you enter this information correctly so that the calculator can determine an accurate monthly payment for you. If there is no origination fee, then simply put zero.
  • Interest rate: Input your original interest rate that was selected at the time you took out the loan.
  • Loan term: You’ll want to identify how long your loan term is in years or months.
  • Interest rate reset date: It’s important to enter the number of years until your interest rate resets. You can find this information in your loan agreement documents or your letter of interest. If you can’t find the date in those places, then you can ask your lender. Make sure you enter the date accurately as the calculator will need to adjust your monthly payments based on this date.
  • Your interest rate at the time of your reset: You’ll need to know what your interest rate will be after it resets. This number is usually based on the prime market rate. You can usually find this information in your loan documents. If you want to make sure the number is accurate, then ask your lender.

Here is what information comes out of the calculator:

  • Your original monthly payment: Your commercial loan calculator will tell you what your original monthly payment will be before your rate reset date.
  • Post reset monthly payment: Inputting the interest rate reset terms will give you what your estimated monthly payments will be after the reset. Again, this number could be higher, lower or exactly the same as what you’re already paying. Interest rates are currently on the rise. Because of this, it might help to plan on paying more after your rate resets.
  • Your total loan payment: Your calculator should be able to tell you the total amount of money you owe for the entire duration of the loan. Commercial loans need to be paid until the interest rate and the principal are totally paid for. You can use the commercial loan calculator to tell you how much money you owe over the course of your loan.
commercial loan

Understanding Commercial Loans

Using a commercial loan calculator is a good way to determine what your monthly payments will be, but there’s more to a commercial loan than just your monthly payment. If you’re a brand new business owner or are looking to start your first business, then you’ll need to consider several factors to ensure that you’ll have a successful start. First, you’ll want to determine how you’re going to finance your business and get your services and product going. You have several options, such as investments, savings, or utilizing equity from your personal assets like your home. Most business owners will need to obtain a commercial mortgage to obtain the power they need to fund their receivables and pay for inventory. You’ll need to get approved by a lender to get your business off the ground. To do this, you’ll need good credit and a good credit history.

Next, you’ll need to figure out how much money you should borrow. Keep in mind that your primary goal as a borrower is to obtain a commercial loan that maximizes your business’s profitability by strengthening your competitive edge in the industry and enhancing your working capital. Before you seek financing, determine how much money you need before you contact a lender. You can use a commercial loan calculator to help come up with this number. You’ll also want to keep these factors in mind when determining your perfect loan amount:

  • How much money you plan to put down
  • How much money you made on average over the past two years
  • Whether or not you have outstanding debts
  • What your credit history is like

A loan officer will be able to tell you what interest rate you qualify for based on your past credit history and current credit score. Important factors to consider include the interest rate you are eligible for, the term of the loan, the loan amount, and any additional or hidden costs associated with the monthly payment. These will help you determine how much interest you’ll be paying on the loan over the course of its lifespan as well as what your monthly payments will be.

There are several advantages to financing an existing business. The first thing you’ll need to do is to prepare a business plan by taking a look at your financial history, such as graphs and financial statements from previous years. Then, you’ll want to write up a statement that highlights the assets of your business that you’re trying to use to secure the loan. You want to prove to the lender that your business is profitable and will continue to be in the future. This will increase your chances of getting approved for a loan. Your past profit may also dictate how much money a lender loans you.

Ask yourself the following questions when determining how much money you require from your loan. Do you require a loan for making improvements to an existing business or are you acquiring a new building? Will you need new inventory? Are you going to use the money from your loan to pay off debt? Remember that you don’t have to accept the entire amount of the loan if you qualify for more than you need. If you can justify taking on more debt while managing your future margin, then you should not have a problem getting approved as long as you have your other requirements straight. Some lenders might only lend to you on a short-term basis until you make a significant profit and then they will lend to you for more extended periods once you show that your business is successful.

How Long Does It Take To Get A Commercial Loan?

Many different lenders will extend a loan to you if you qualify. The question is who should you pick and where should you start? If there is a financial institution such as a bank that you have used in the past, then you should start when them. This is because they might be able to give you special pricing or offers since you’re already a current customer even if they don’t advertise that they do commercial interest loans. Once you initiate the application process, you should have a preliminary answer about your approval either the same day or the next business day. Keep in mind that this does not always guarantee that you’ll be offered a loan or a line of credit. Your lender will need to do a financial history check on you, a more in-depth credit check and even a reference check that could take up to 20 days. Once this is done, the loan is turned over into the hands of an underwriter who will meet with you to ultimately decide if they are going to do business with you. Some lenders may want you to meet with other investors who will be contributing to your financial goals. When an underwriter approves your loan, the next step involves setting up the loan terms and singing the final documents.

What Documentation Is Needed To Obtain A Commercial Loan?

Your loan officer may ask for a variety of paperwork before you are accepted as a qualified borrower. Here are some of the most common types of documentation papers you’ll need to provide to obtain a commercial loan:

  • Financial information: You’ll be asked to provide your financial history over the past two years. All of this information must match what’s listed on your credit history. This includes your W2’s or W9’s, self-employment documentation and forms, current pay stubs, your bank records if you’re self-employed and filed tax returns for your entire household over the past two years. Keep in mind that your loan officer may require more information than this.
  • Personal information: You’ll need to provide all of your personal information at the time of your loan application. This includes your driver’s license, social security card, and a proof of your residential address. All of these documents need to be in their original form. Bring them all to your loan application appointment to avoid delaying the process.
  • The results of your appraisal: You may not need to provide this information at the start of the application process, but it will be required by the time the loan is finalized. Because of this, it’s a good idea to have it on hand anyway. If you are refinancing the property and have an appraisal that is up to date or if the current owner of the building has an appraisal, you’ll want to submit this with your loan application.
  • Real estate documentation: You’ll need to provide the loan officer the original real estate listing if the building is a new sale. If you already own the building and are planning on having it refinanced, then you may not need this information. If you plan to make changes to the building after you obtain the loan, then you may need to provide a blueprint of the property dimensions and your intended changes.
  • Survey: A property survey is one of the main documents that you need to have before the loan process can be completed. The survey will need to be signed and presented to the loan officer before the loan is completed before closing.
  • Business plan: Business plans are not always required, but some underwriting groups may want to see one from you. This helps them see your vision for the business, which can benefit you if they feel that your plan is going to bring in a profit.

Related post