Purchasing commercial property is a major transaction. Several common mistakes can make financing more difficult.
Signing a contract with insufficient time
Commercial financing may require an appraisal, environmental review, underwriting, title work, and legal documentation. The purchase contract should include a realistic financing and due-diligence period.
Underestimating total costs
Borrowers sometimes budget for the down payment but overlook renovations, equipment, professional fees, moving expenses, and working capital.
Submitting inaccurate financials
Outdated statements, incorrect debt balances, and unexplained differences between tax returns and internal financials can delay underwriting.
Focusing only on interest rate
Borrowers should also compare:
- Amortization
- Loan maturity
- Balloon risk
- Fees
- Prepayment terms
- Collateral requirements
- Personal guarantees
- Financial covenants
Choosing the wrong loan program
A conventional loan, SBA 7(a) loan, and SBA 504 loan can produce very different structures. The best option depends on the complete transaction and the borrower’s long-term goals.
JD Capital Solutions helps business owners evaluate financing options, prepare lender-ready packages, approach appropriate lending institutions, review proposed terms, and coordinate the loan process through closing.
Considering the purchase or refinancing of an owner-occupied commercial property? Contact JD Capital Solutions to discuss your financing options.
This series is provided for general educational purposes and does not constitute a loan commitment, legal advice, tax advice, or a guarantee of approval.
