Business mortgages are a type of commercial loan in which the bank or commercial lender gets legal rights to a specific property until the full loan amount has been repaid by the business. Most small business mortgages have a maximum term of 20 years, and may have several options for repayment.
When determining whether or not to approve a business mortgage, banks and commercial lenders will consider your current and future ability to repay the debt as well as your credit history. The amount of your down payment will also effect your ability to secure financing with favorable terms. Put simply, the bigger the down payment, the shorter your repayment schedule and the smaller your interest payment.
To see if a business mortgage will be appropriate for your small business, here are some of its pros and cons:
You have the option to sublet parts of your property
Monthly mortgage payments can be cheaper then your rental payments
In many cases, the monthly payments are fixed and comfortably spread out over time
The interest portion of your mortgage payments is tax deductible
You need to come up with a down payment
It is harder to move to a new location
The monthly payments can put a strain on your business budget