Here are some commonly asked questions or things people ought to know when considering a commercial loan modification.
You May Be Able to Negotiate a Lower Interest Rate
A lower interest rate is one of the most common things business owners want to negotiate when modifying their commercial loan. If you can demonstrate to your lender that you are having difficulty making your monthly payments, they may be willing to work with you to lower your interest rate.
This will help you reduce your monthly mortgage payments and enable you to stay on top of your loan. Even just getting a few points off your interest rate can make a world of difference when it comes to making your payments.
You May Have to Extend the Term of Your Loan
The term of the loan is another common negotiating point in commercial loan modifications. Many business owners prefer to keep the same monthly payment while extending their loan term to reduce overall payments.
While this is not ideal, it can assist you in keeping your business afloat during difficult economic times. You’ll want to carefully consider the pros and cons of this option, as it adds time to the period you’ll be making payments.
However, if it’s between extending the term of your loan and losing your building, the answer might be very simple.
You Will Need to Show Proof of Financial Hardship
Your lender will need to see evidence of your financial hardship if you decide to adjust your commercial loan. Tax returns, bank statements, and other financial documents may be included.
You must demonstrate to your lender that you are having difficulties making your mortgage repayments and that an alteration is required. Your specific lender may require different documents than another, carefully read through their correspondence to ensure you have the proper documentation.
The Process Can Be Time-Consuming
Modifying a commercial loan can be a time-consuming and frustrating process. The process typically takes three to six months.
However, it is critical to maintain contact with your creditor and keep them apprised of your financial position. This information will help them make a decision about your loan modification. Exercise patience, it should be worth the wait in the long run.
Be sure you’re working with a qualified professional, be upfront with them about your expectations, and get them any requested information as soon as possible to not further delay the process.
You May Need to Use a Loan Modification Service
If you’re having trouble modifying your loan, you might want to consider using a loan modification service. These services can assist you in negotiating the best loan terms with your lender.
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Using a loan modification service can be helpful if you’re struggling to make your monthly payments. You should consider using one of these services if you’re having difficulty negotiating a lower interest rate or extending the term of your loan.
When contemplating a commercial loan modification, you should know the process and what to expect. You can adjust your loan and keep your company on track if you understand the five points above.
Talk to your lender and a loan modification service to get the best loan terms possible. Always consult your financial advisor before making any modifications to your loans to ensure it’s the proper choice for your specific situation.
Image Credit: commercial loan modifications by envato.com
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