A business loan to buy a business involving either golf courses or funeral homes is among the most difficult commercial mortgage scenarios. Golf course financing and funeral home financing involve special complexities not found in typical business financing situations. In both cases refinancing is usually even more difficult than the commercial loan to purchase.
Reduction in Commercial Lenders - Golf Course and Funeral Home Financing
To further compound the already difficult business financing for either a funeral home or golf course, fewer commercial lenders are providing competitive commercial mortgage business loan terms. There has especially been a significant reduction in the number of local and regional banks providing commercial loan programs for both funeral home loans and golf course loans.
Business Opportunity Financing to Buy a Business
Business financing to buy a business opportunity is a special business loan variation in which commercial property is not purchased. The land and buildings in such a situation are typically leased for ten years or more. Similar to a conventional mortgage to buy a golf course or funeral home, competitive business opportunity financing is not easy to find.
Avoiding Problematic Commercial Mortgage Terms
When buying or refinancing a golf course or funeral home business, it is important to avoid undesirable business financing terms. These terms include the length of the business loan and the percentage of value for the commercial loan. Some local and regional banks are particularly likely to offer short-term commercial financing instead of a long-term commercial mortgage.
Stated Income Business Financing Difficulties
Although a stated income commercial loan has a certain number of benefits in specific circumstances, the use of stated income business financing is not recommended for a funeral home loan or golf course loan. A major limitation of a stated income commercial mortgage is the maximum business loan possible. A further limitation is the low percentage of value for stated income commercial financing involving either golf course financing or funeral home financing.
When Commercial Real Estate Loan Value is Less Than Business Value
Another complicating factor for funeral home financing and golf course financing is that the business value frequently exceeds the commercial real estate value by a significant amount. This is especially true when appraising a funeral home. Some commercial lenders will provide a commercial mortgage that includes only the commercial property value, and this will result in a much smaller commercial loan.
Excessive Commercial Mortgage Fees for Golf Course and Funeral Home Financing
Commercial borrowers should expect some legitimate and reasonable commercial mortgage fees during the initial commercial loan process. There are several commercial lenders that continue to take advantage of the severe lack of business loan choices for purchasing, building and refinancing a golf course or funeral home. One of the particularly unacceptable tactics is to charge exorbitant fees ($25,000 is not unusual) whether or not the business financing is successfully completed.
Lender Choices - Golf Course Financing and Funeral Home Financing
As already noted, the availability of suitable lenders for this specialized type of business loan is shrinking. A viable commercial mortgage for funeral home financing or golf course financing will depend upon a prudent choice involving the lender.
The practical reality is that a commercial borrower should be prepared for the limited choices of truly qualified lenders for a business loan to buy a business involving funeral homes or golf courses. It becomes essential to choose a lender with the capability to successfully complete the required commercial loan process and simultaneously avoid the business financing problems described above.
Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.
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