Finimpact

Benefits

A simple product with a defined monthly payment making forecasting in the short term easy to do
Commercial Mortgage Interest Repayments are tax deductible.
Business Cash is not tied up in long-term finance; the company has more liquidity rather than being cash poor.

Drawbacks

Commercial Mortgage Contracts will commit a company to a longer debt period.
Variable rate of interest attracts higher payments if there are changes in the interest rate.
Repayment calculated on a monthly basis: Failure to pay involves penalties such as additional interest. Continued default on debt often results in the repossession of the property.
Due to the impersonal nature of a commercial property, little or no tolerance shown for default and repossession is almost immediate.

The Bottom Line

  • Lenders evaluate the investor’s creditworthiness and the loan’s collateral.
  • Financial statements going back three to five years are also investigated to show fiduciary and income tax disciplines.
  • The Commercial Property must demonstrate growth as an investment asset