Commercial Mortgages Secured With Different Assets

Commercial mortgages are not as limited as regular mortgages when it comes to collateral. While regular home loans require that you pledge the property being purchased or improved as security for the loan, commercial loans provide you with many different alternatives for guaranteeing the loan repayment without limiting it to real estate property. Each option is still pledged to the lender in order to secure the loan amount desired and the lender has special legal rights to seize those assets in case you default on your loan. But, given the need for flexibility that commerce has, these alternatives provide an excellent solution to avoid limited financing.Commercial Mortgage Loans and The Usual GuaranteeCommercial mortgage loans are loans that fund the purchase of a property which will be used for generating revenues by means of renting or other transactions non rental related. Usually, the loan is guaranteed with the same property being purchased. Just like with regular mortgage loans the asset which is the object of the purchase guarantees the repayment of the loan so the lender can force the sell of the property in case the borrower fails to cope with the monthly payments. However, these loans are different than regular mortgage loans due to the amounts involved and sometimes the usual collateral is not enough or other assets are used to secure the loan for different reasons.Income or RevenuesSince your business has income, you can use it to secure a commercial loan. The issue is how you can guarantee the lender that the money will be use first to repay what you owe. Though there are legal agreements that can offer this guarantee, the usual and most simple method for this security method is to process client payments with the same company lending you the money. There are certain banks and financial institutions that will process your clients’ credit card payments and debit first the payment on the loan or line of credit awarded to you before delivering to your account the rest of the revenues.Machinery and EquipmentSometimes immovable property is just as valuable as or even more valuable than real estate. Maybe your business has spent a lot of money on equipment over the years and those assets besides doing what they are meant to do can provide you with a source of funds. Machinery and business equipment can be used as collateral for commercial loans as well as many other immovable assets. For instance, it is not uncommon for companies on the field of logistics to use vehicles as collateral for a line of credit awarded for maintenance and other costs associated to the vehicles.As you can see, there are many different possibilities for financing your commercial project. Though the first option is always to use a property as security for the loan or line of credit, you can make use of any or some of the above alternatives to secure your loan. If you cannot get financing with a particular asset or if the lender offers you less money than what you need, you can always request a new quote from your chosen lender by offering another form of collateral.