Industrial Property Loan

Industrial Property Loan

Industrial property is one of the major types of property apart from office or commercial property. Such properties are classified as general industrial buildings, warehouses, Special industrial building and Light industrial buildings. As your industry (either trading, manufacturing, distribution or service industry type) grows, there might be a need for an expanded working space. This expansion should not be hindered because of non-availability of resources including finance. Hence, the need to get a proper working industrial property loan. This will help you to plan your expansion in a manageable and affordable way.

Industrial property loan is a loan to a business and not just a person consumer. It is a type of loan granted for solely financing purposes which include financing construction or overhauling of an industry, financing purchases and any other financial need of a company. The main aim is to supply working capital to the borrower company or to provide finance for capital expenditure. This type of loan is usually a short-term loan. It is about one- or two-years line of credit or term loan. It is firmly secured by cash flowing from the company that requested the loan or by collateral from the same company. There are varieties of lease terms and some of these leases can allow for benefits and incentives that can encourage the application for loan by an applicant. The lease of industrial properties could be freehold or leasehold. It is imperative to know that just like any other business loan, there is a need for a specialist. One key to getting your industrial property loan in a reasonably short period and with terms and conditions you can bear is to ensure that you commence the process of seeking fund with a thorough evaluation of the situation of your company with a mortgage specialist that is vast in commercial and industrial projects. The features of a commercial and industrial mortgage loan comprise legal subsidy, prepayment penalty, bank valuation and credit assessment guidelines, valuation subsidy, fire insurance subsidy, loan tenure, lock in period and other lending characteristics.

The options for an industrial property loan are

  • CMBS loans
  • Bridge loans
  • Bank loans
  • Construction loans
  • Small Balance loans
  • Permanent financing
  • Life Company loans
  • Mezzanine financing etc.

For industrial property loans to be granted, some required conditions must be met. However, we will carefully consider mortgages on commercial and industrial loans. The mortgages are structured in a way that it would suit the needs of both lenders and borrowers. The first we will discuss is the warehouse.

Warehouse

It is a commercial building for storage of goods. Warehouses are usually big buildings which can be found in cities. They could be owned by importers, exporters, wholesalers, manufacturers, custom offices, transport companies and many others. Due to the peculiarity of what they do, they are usually not far from airports, railways or seaports. They have special cranes for moving goods. A warehouse could be Flex or Bulk warehouse. The flex warehouse is more like a hybrid industrial property because it is easily convertible as it contains both industrial and office characteristics. On the other hand, bulk warehouses are large properties usually used for regional distribution of products. Hence, a warehouse can serve as a mortgage for an industrial property loan.

Another industrial property type to be discussed is Manufacturing.

Manufacturing

This is also referred to as heavy industrial buildings. This category of industrial property is heavily loaded with machinery for the benefit of end users. Hence, they require appreciable renovations for the purpose of tenancy.

You might need to consider some things about your lender since you are doing business together. Of all things, your lender must have a good reputation. This will help you to negotiate a more favourable loan contract. When choosing a lender, you need a mortgage broker. The broker is knowledgeable and experienced so he knows the specific lenders for different clients. There is a better chance of getting your industrial property loan approves when you select a lender who has experience in lending to companies with properties similar to yours.

After all, has been said, one would need to meet certain requirements in order to be granted an industrial property loan. Lenders will like to know where those properties discussed above are located as well as their specifications. They would want to know if you have a good credit history. There will be a thorough appraisal of buildings and a survey of properties. A relevant and credible industrial experience will also be required especially for an existing business. Concerning accounts and incomes, a previous account of two years may be needed for evaluation of an existing business while for a budding business, a well-detailed business plan showing projection of income will be highly necessary. Another criterion for the loan grant is clean legal sheets. No lender wants to risk financial issues with an illegal business.

MHF has a team of experienced and competent broker ready to help you secure your industrial property loan. Let’s get started.