Residential Mortgage vs Business Loan

[llongendyke]

Question for the masses!
Somebody recently suggested to me that I look into getting a combination of a commercial loan and a mortgage. His suggestion was to put 10% down, try to find a commercial loan that would cover 40 - 50%, and then find a mortgage to cover the remainder. Does this make sense to anyone?.

I don't see how that can work. Your house and business are one in the same. The bank loans you money and in return they can foreclose on you if you fail to pay. If you have a mortgage, the bank owns the property, but if there is also a commercial loan, what can they foreclose on?? Doesn't make sense to me.
.

Yeah, I don't think this makes any sense either. Just thought I'd ask in case I was wrong!

 

[Madeleine]

Question for the masses!
Somebody recently suggested to me that I look into getting a combination of a commercial loan and a mortgage. His suggestion was to put 10% down, try to find a commercial loan that would cover 40 - 50%, and then find a mortgage to cover the remainder. Does this make sense to anyone?.

Maybe the idea was to get some sort of backing on the loan like from the SBA out other small business group?

 

[egoodell]

We built with a residential loan/mortgage. Then opened the B&B. We checked into changing to a commercial mortgage and it made no sense. Also, when we retire and sell we can sell either as a B&B or as a private home.
Riki

 

[muirford]

Question for the masses!
Somebody recently suggested to me that I look into getting a combination of a commercial loan and a mortgage. His suggestion was to put 10% down, try to find a commercial loan that would cover 40 - 50%, and then find a mortgage to cover the remainder. Does this make sense to anyone?.

I don't see how that can work. Your house and business are one in the same. The bank loans you money and in return they can foreclose on you if you fail to pay. If you have a mortgage, the bank owns the property, but if there is also a commercial loan, what can they foreclose on?? Doesn't make sense to me.
.

I don't see how that can work. Your house and business are one in the same. The bank loans you money and in return they can foreclose on you if you fail to pay. If you have a mortgage, the bank owns the property, but if there is also a commercial loan, what can they foreclose on?? Doesn't make sense to me.

Well, I don't know. In a regular commercial building, the business owner often doesn't own the building but can still get a business loan based on some combination of credit-worthiness, business plan and/or inventory. Maybe you could do the same for a B&B. Get a residential loan for the property and a business loan for the furnishings, goodwill, market share or whatever that you will use to run the business.
I mean, if a retail store goes out of business with a business loan or investors, what do they get? Not the building, usually.

 

[sachi3679]

Question for the masses!
Somebody recently suggested to me that I look into getting a combination of a commercial loan and a mortgage. His suggestion was to put 10% down, try to find a commercial loan that would cover 40 - 50%, and then find a mortgage to cover the remainder. Does this make sense to anyone?.

That sounds kind of like an sba 504 loan. You put down 10% sba puts down 40% and bank puts down 50%.

 

[llongendyke]

Question for the masses!
Somebody recently suggested to me that I look into getting a combination of a commercial loan and a mortgage. His suggestion was to put 10% down, try to find a commercial loan that would cover 40 - 50%, and then find a mortgage to cover the remainder. Does this make sense to anyone?.

That sounds kind of like an sba 504 loan. You put down 10% sba puts down 40% and bank puts down 50%.
.

Yes I think that's what he was describing. Does this sound like a viable way to finance a bed and breakfast or small inn?

 

[sachi3679]

Could be. Most people see sba loans as almost impossible to get. I saw a financial advisor who suggested it to us. He had gotten an sba loan to start his business. It takes longer (he said about 12 weeks once we had all the paperwork submitted) but he suggested it because of the lower down payment. You would face the same challenges with an sba loan as you would with a business loan in that you have to convince a bank that your business is viable.

 

[Madeleine]

Question for the masses!
Somebody recently suggested to me that I look into getting a combination of a commercial loan and a mortgage. His suggestion was to put 10% down, try to find a commercial loan that would cover 40 - 50%, and then find a mortgage to cover the remainder. Does this make sense to anyone?.

That sounds kind of like an sba 504 loan. You put down 10% sba puts down 40% and bank puts down 50%.
.

Yes I think that's what he was describing. Does this sound like a viable way to finance a bed and breakfast or small inn?
.

Yes I think that's what he was describing. Does this sound like a viable way to finance a bed and breakfast or small inn?

Frankly, this sort of question can't be answered by us except in general terms.
You need to get yourself connected with the SBA or SCORE or an accountant who works with b&b's on a regular basis.
Part of your learning curve is to understand that you have to hire people and make up front investments to make this work.
You can, of course, do the 'seat of your pants' operation of your biz but you really should read that other thread about the biz owner who list everything trying to save money up front.
We really should have listened to the one broker who told us we couldn't afford the places we were looking at. We couldn't. We still can't.

 

[egoodell]

From what I understand a business loan does not lock you into a rate. We have a residential loan as we built first and then started the business. It gives us a locked in interest rate. We are an LLC .
Riki.

From what I understand a business loan does not lock you into a rate. We have a residential loan as we built first and then started the business. It gives us a locked in interest rate. We are an LLC .
Riki

Our rate was locked in for 5 years, now it floats. It is scary, to be sure to not be able to plan your mortgage expense every year.
.

From what I understand a business loan does not lock you into a rate. We have a residential loan as we built first and then started the business. It gives us a locked in interest rate. We are an LLC .
Riki

Our rate was locked in for 5 years, now it floats. It is scary, to be sure to not be able to plan your mortgage expense every year.

If I remember correctly, this is why we did not change from a residential mortgage to a commercial one. They could give us a lower rate but only for a couple of years and could not tell us what it would be after that. not worth dropping a couple of percentage points.
Riki

 

[drewmanly]

Thought they have differ interest, either of these are critical when you have not acquired the term...

 

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[dimitri]

Before getting a loan small businesses or future owners should look in to long island business insurance especially after the rain we got on Long Island and all the businesses which were flooded. Make sure you're covered. Seems that ever year there is some sort of natural disaster or another.

 

[ZoeHarley]

I was collecting some information on getting mortgage loan in Dubai, while searching on internet I found In house MS mortgage consultant they can briefly shared mortgage Loan guidance for the people who are looking for mortgage loan in Dubai.

 

[illenagrace]

By taking home loan and later using it for business loan is just cheating the firm, who is helping you. In such case it will be better for you to consult a professional.

 

[user 26]

OLD thread ... nothing to see here.

 

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[MichaelEstes]

OLD thread ... nothing to see here..

so sad!!!!!!!!!!!11

 

[garry95]

Chase bank can provide both the loans, you just need to have correct chase bank routing number