An industrial property loan, also known as a commercial real estate loan, is a loan that is used to finance the purchase of the industrial property. This type of loan is typically used by businesses that are in the process of expanding their operations or by investors who are looking to purchase the income-producing property. Industrial property loans can finance the purchase of office buildings, warehouses, manufacturing plants, and other types of commercial real estate.
What are industrial property loans?
Industrial property loan can finance the purchase of office buildings, warehouses, manufacturing plants, and other types of commercial real estate. They are typically structured as long-term loans with fixed interest rates. The repayment schedule will depend on the type of loan that is being used. Many industrial property loans are structured as 30-year amortizing loans. However, a lender may offer a shorter-term loan if the borrower needs short-term financing or has trouble obtaining long-term financing.
How do industrial property loans work?
Industrial property loans finance commercial real estate, such as office buildings, warehouses and manufacturing plants. The borrower is responsible for making monthly payments on the loan. Once the loan is fully repaid, the borrower owns the property free and clear. To apply for a loan for industrial property, you must be able to provide the lender with financial documents and information about your business. With this information, the lender will determine your creditworthiness and decide whether to lend you money.
The risks of industrial property loans
are similar to the risks of other types of commercial real estate loans. These include the risk that you may be unable to repay the loan, have difficulty leasing or selling your property and that real estate prices may decline. The lender will consider these risks, along with your financial strength and business plan, when determining whether to make the loan.
If you cannot repay the loan, the lender may be able to get money from your other assets. If there are not enough of these assets for the lender to collect, it may claim your assets. These are similar to the risks of other types of commercial real estate loans. These include the risk that you may be unable to repay the loan, have difficulty leasing or selling your property and that real estate prices may decline.
How to get an industrial property loan
If you plan to build a property, you should apply for a loan before starting construction. Otherwise, you may have difficulty obtaining financing because your lender cannot assess how much you will need. To obtain a loan, lenders typically require the following:
- A business plan showing your financial strength and how you will use the money.
- An appraisal of the property to determine its fair market value.
- The latest financial statements for your company and other information about your assets and liabilities.