Restaurant Property Loan
“Restaurant Property Loan Or Mortgage Financing Solutions”
When we’re talking about a restaurant property loan, we are referring to a commercial building that is being used as a restaurant by the owner or the building has a tenant that is utilizing it to house a restaurant operation.
In either case, the main lending criteria are going to focus on the brand of the restaurant and the location. Most “A” and “B” lenders will only finance commercial restaurant properties that are branded under a national franchise or a well known restaurant chain.
This is not to say that standalone restaurant operations cannot secure commercial mortgage financing for their operations, but a commercial mortgage is likely going to be harder to come by unless a lender believes there are strong alternative uses for the building in the location where it is situated.
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For business owners and property owners looking to secure a restaurant property loan or mortgage, we work with a cross section of commercial lenders that can collectively fund a variety of different restaurant mortgage applications.
All the lenders we deal with can be placed into one of the three following categories.
The first and lowest cost category would include banks and other institutional lenders such as trust companies and credit unions. Lower cost from this group also means lower risk, so the lending and funding requirements will also be the tightest.
The second group or category of business lenders for restaurant real estate properties would include investment funds, hedge funds, and other quasi institutional lenders whose focus is on deals that do not quite qualify with group #1 above. These “B” lenders will still be focused the restaurant brand and cash flow, but will also provide greater consideration for the equity in the property and other risk mitigation factors to get the deal done. Their rates will also be higher, but that will be offset by providing terms and conditions that are more flexible than what you would be able to secure from an “A” type commercial mortgage lender.
The last group is private mortgage lenders which can be an excellent source of short term financing. Once again, the rates are going to be higher, but the application and funding process tends to be shorter in comparison to the other two groups, which can make a private commercial mortgage a preferred option in situations where you have a very tight timeline to work with to close a deal, generate incremental capital, or refinance an existing mortgage.
Application Process For A Restaurant Building Mortgage
To apply for a restaurant property loan, you’re going to need to complete a commercial mortgage application form detailing out the property and potential borrowers for the mortgage.
At least three years of accountant prepared financial statements are also going to be required with more value attached to review engagement or audited statements.
All commercial mortgage lenders will require an AACI property appraisal as well as an environmental audit as well.
Resumes and backgrounds of the owners and operators of the restaurant will also be reviewed by prospective lenders as well as any other information pertinent to a particular application, restaurant brand, and location.
If you are in need of a restaurant property loan or mortgage financing facility, I suggest that you give me a call so we can go over your requirements together and discuss different options that may be available to you in the market place.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel