Why the Bank May Not Renew Your Commercial Mortgage

Why the Bank may not Renew Your Commer'L Mortgage

Small business owners often face many obstacles when working to obtain a commercial mortgage. They may face additional difficulties in the future even if they do manage to get a bank loan. Many banks have the option to  RENEW  A Commercial Mortgage  after a certain period of time, eve if the Owner has not been late with their monthly payments. However, if the Owner has proven too great a risk, the bank may decide NOT to RENEW  the loan and may demand payment in full of the remaining balance.

Here are some common reasons banks do not renew commercial mortgages:

  • Credit issues:   Many small business owners faced tough times throughout the financial crisis, and their credit may show it. Those types of borrowers with bank loans up for renewal may find it hard to convince the bank to extend their loan, even if the credit issues have been resolved.

  • Cash flow issues:   If a borrower has had any cash flow issues throughout the life of the bank loan, they will have a hard time persuading the bank to renew the loan. Any lender will want to be sure that a borrower has the means to repay a loan, but banks are particularly risk averse.
  • Losses on taxes:   Banks want to be sure that a borrower’s business is doing well before renewing a mortgage, so if your borrower has posted losses on their tax forms, they’re in for a challenge even if they’ve resolved the issue.

  • Liquidity issues:   Banks want assets that can be sold quickly if there are major problems with a loan, so if the borrower’s property is no longer a liquid asset it will be difficult to convince the bank to extend their mortgage.
  • In these situations, a non-conforming commercial lender can be the best solution. These lenders are often much more flexible than banks and usually close loans quickly so that the borrower can pay off their bank loan fast. A trusted  Commercial Mortgage Brokerage Firm  can find a lender that is willing to listen to your story and work with them to find a solution.

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