Sorry to be so blunt, but I’m just saying, what you’re feeling.
If you have bought a commercial premises, through your business, such as an office or a warehouse, there is a good chance that this will ring true with you.
You have a dedicated business banker right? But do they promptly return your calls or emails?
Then the 12 month anniversary of your purchase comes around, and its, where are your tax returns and profit and loss. Every single year!
Most of us don’t realise the complexities involved with a commercial transaction.
Whilst your business is operating at a comfortable profit level, this minor inconvenience is hardly one at all.
However, for those of you who have experienced a rough year, or a down turn in profits, only then does reality hit home!
If the bank conducts its annual review, and determines that you are no longer operating with a large enough profit for them to foresee your future commercial loan repayments to be made with ease, they will ask you to leave and to go to another lender.
No problem, you say, will do.
But wait. Unlike when you took out the loan and your tax returns demonstrated that you could repay it, even if interest rates were to rise, but now you’ve had a rough year, and the banks aren’t interested.
If your bank is asking you to leave, and other banks wont have a bar of it, where are you to turn? Will you be forced to sell your commercial premises? Most likely you are using the property to operate your business from, or to generate an investment income, and you could be at risk of losing that, all because of one bad year.
Even worse, who’s to say that the commercial property market wont be at a low point when your unfortunate low revenue year occurs. This could even see you being forced to sell your commercial property at a loss!
Whilst most of you will be fortunate enough to never experience this turn of unfortunate circumstances, for those who do, it can very stressful.
There are options available for lo doc facilities, where you may be able to come out of the other side, but generally this is only if most of your commercial mortgage repayments have been kept up to date. Often, by the time the bank asks you to leave, you may have already missed several payments, which can make you a very undesirable candidate.
Whilst we are speaking about two distinctly different topics here –
1. An annual review going sour, or
2. Missing payments on your commercial property
The message is somewhat the same.
No-one expects to have a down turn in business, but fortunately there are some lenders available whom do NOT conduct annual reviews. These “set and forget” facilities, could provide you with the peace of mind needed, if you do happen to have a bad year at some stage. Missing payments is never going to make things easy, but imagine being asked to leave your bank, when you haven’t missed a beat!
The above information can be a little complex, but that is why it is important to understand what your lender is really offering you – in good times and in bad!
If you would like to know more about your options for commercial property finance, including 20 and 25 year loan terms contact Bee Finance Savvy on 1300 140 554.
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