At the “Silicone Slopes” annual technology event held in Salt Lake City in 2019, the then Governor Herbert announced that this is the fastest Utah has ever grown — all the way to the point that the state can hardly manage to keep up with the demands. Residential and commercial real estate both have seen huge increases in value. The real estate market in Utah is booming like never before seen.
It’s important for both banks and real-estate companies to have the best tools that are available when it comes to financing, because the right loan can make all the difference. Commercial real estate is a cash flow driven asset and an inferior loan with a high interest rate, short maturity or shortened amortization can negatively impact your asset. If a buyer selects the wrong lender, they may end up without financing and an expiring purchase contract. In a market competing against cash offers, buyers do not have the leverage to continually extend their contract. This can force a borrower to either pay high fees on a short term bridge loan or even worse, lose out on the property to an impatient seller. Borrowers are often required to submit substantial paperwork documenting their abilities before even being considered for a loan. Also, commercial real estate loans require a substantial amount of paperwork before even being considered for a loan. Delay too long and you could have a hard time meeting your financing deadlines.
But with this high Utah demand, it may come time to ask how to navigate all the choices when it comes to commercial real estate financing. Not just for you, but also the people who are planning to work with you. Make sure that they’re making educated decisions, because if they aren’t familiar with what is available, then they may not be able to get it right for their clients or buyers.
There are a few different paths for commercial real estate financing. Financing options are available depending on the intended use of the property. Below are a few of the typical usage types and the loans available for each:
1. Owner Occupied: Properties are considered owner occupied if the property is occupied by 51% or more by the owner’s business. Financing for these properties are eligible for SBA 504, SBA 7(a) and conventional financing.
2. Leased Property: Properties leased out to third party tenants as an investment are not eligible for SBA loans. They are typically financed with conventional financing through a traditional lender like a bank or credit union.
3. Large Investment properties: For much larger investment properties some investors consider CMBS financing. CMBS stands for “commercial mortgage-backed securities”. These loans are used to buy commercial real estate buildings such as a multifamily living complex, office buildings, or warehouses. Learn more about CMBS loans.
Commercial Real Estate Financing, Business Acquisition, Franchise Start-Ups, Debt Restructuring , and Working Capital Loans through the SBA. We work with Utah businesses and businesses nationwide.
Monarch Commercial Capital
2160 E 4500 S
Unit 4
Holladay, UT 84117
