Financing is a prerequisite for every activity from buying goods, refinancing of assets, to construction etc. Today one can choose to finance in a multitude of ways. One of the conventional but the best ways to do it is through fast low interest commercial loans. Here’s a snapshot of what you need to consider while choosing a commercial loan.

First, one must know the purpose and duration for which the funds are required. If the requirement calls for a huge sum of money over a long period of time, it is advisable to go for a secured loan because they incur a lower rate of interest. The loan is secured by a collateral security (i.e. an additional security to the primary security, whose possession lies with the borrower only, until and unless, no default occurs on his part in the repayment of loan taken). However if you require a smaller sum quickly, you should zero in on an unsecured loan as the processing involved is less and funds are available much faster.

A vital factor is the Annual Percentage Rate (APR) or to put it simply the interest rate. A loan with a lower APR is highly sought after as it means the amount that needs to be returned will be much closer to the amount borrowed. Lenders clearly outline the interest rate and also mention how the APR is calculated in black and white. Another factor is the repayment period. Provided the APR is the same, the shorter the repayment period the lesser the loan will cost you. However a shorter repayment term usually means the APR will be higher; therefore it is important to strike a balance between the repayment term and the EMI (Equated monthly instalments).

Today there are so many permutations and combinations possible when it comes to commercial loans that it can be difficult choosing the right loan. Like all commerce, the increase in the number of lenders also means that there is greater competition amidst lenders. In the longer run competition always benefits the end user, and it is now possible to get securedcommercial loans at never before seen APRs and EMIs. Therefore, it is important to shop around before finally settling on a commercial loan. Remember the ideal commercial loan should strike a balance between APR and EMI; in addition the security involved should also be proportional to the loan.

Commercial Loan Modification is a subject not frequently talked about while the whole country focuses on the residential market however the facts are overwhelming and clearly show a huge problem on the horizon. While the government seems to have begun to pay attention to the commercial side of the real estate ledger by extending TALF through June 2010 and beginning discussion about how to resolve outstanding loans before they implode, there are no guidelines as of yet nor direction from the treasury as to what if anything they will do. In other words, the banks are keeping quiet about this issue because they don’t want tax payers and share holders to be aware of the hundreds of billions they carry in commercial loans coming due on their balance sheets. The banks are waiting for direction (more money) from the government so they can modify with guarantees from perhaps Fannie / Freddie in the event of default after modification.

Now is the time for property owners and banks to execute a plan for Commercial Loan Modification to resolve current loans coming due. The issue for most property owners is not the ability to make the payments rather it is the ability to refinance with the current lender, another lender or sell the property under current lending conditions where the conduits are gone and CMBS is all but shut down completely. So there are trillions in loans held by banks with borrowers who for the most part are paying on time but who will need to restructure that debt in the form of a Commercial Loan Modification or risk losing the property despite their best efforts.

Commercial Loan Modification is the only reasonable solution to the current problem to protect investors who currently hold CMBS loans and lenders who wrote the other 80% of them on balance sheet. By modifying the loans the banks create a window of time where they collect payments and the borrower has more time to search for new financing. Most Commercial Loan Modifications result in an extended term with perhaps interest only payments making the process productive for the borrower and very profitable for Commercial Lenders.

Currently there is fear regarding commercial loan modification for CMBS loans because of legal restrictions however, loans currently in default or those for which default is imminent may and often do qualify under current law and regulations to be moved from the master servicer to a special servicer who has the authority to modify a commercial loan if it is in the best interest of the investors. CMBS (commercial mortgage backed securities) loans make up about 20% of the total outstanding with 80% being portfolio loans. The portfolio lenders can modify as they see fit as well as be more flexible in offering commercial loan modification terms such as extended term, interest only and reduced principle payments. Regardless of the type of loan now is definitely the time for all parties to begin the process of modifying commercial loans thereby staving off a sure catastrophe in the near future.