Are you looking for a new factory or office to develop your business, or do you need extra business funding to satisfy your cash flow requirements?
You can find out if you can afford a business property loan by using a commercial loan calculator. With an online commercial loan calculator, you can verify the monthly payment and total amount due before applying for a business loan. Depending on the period of time you select, this online tool calculates your loan EMI. This helps you to find out your commercial loan affordability.
Commercial Business Property Loan
In Singapore, loans for businesses and commercial property are provided by many reliable banks and financial organisations, like DBS. Your company can use a property loan to refinance an existing loan with improved terms or to fund the purchase of an office or industrial property. Exploring options with reliable money lenders in Singapore could also offer competitive financing solutions tailored to your business needs.
Most banks have a limit on loan-to-value (LTV) of 80% to 90% of the purchase price or, if lower, the property’s worth. This is dependent on the credit evaluations made by the individual institutions.
Compared to residential property loans, credit evaluation is more subjective for applicant organisations when it comes to industrial and commercial property loan regulations. Lenders are not required by MAS to follow any particular set of industry lending criteria. Banks have the option to use their credit underwritings when evaluating company loans for real estate.
Lenders look at several factors when calculating your maximum loan limit, such as the length of time the firm has been open for business, yearly sales, financial metrics like performance and gearing ratios, the type of property being financed, and cash flow strength.
In addition, businesses can apply for a loan with no collateral from a different bank to cover up to 100% of the acquisition price of the property while also submitting a request for a mortgage with their primary bank.
In essence, this eliminates the need for the company to deposit the acquisition.
When a firm plan to use a property for internal use instead of investing in it (i.e., renting it out), banks typically offer a greater loan-to-value (LTV).
The interest rate on loans for commercial property
The interest rate on a commercial real estate loan ranges from 4% to 5% annually.
Banks typically provide variable or floating rates in their rate packages. The quoted rates usually include the bank’s margin or spread in addition to the reference rate, often known as the benchmark rate.
The underlying rate is openly available and transparent. Examples include the lending board rate, the cost of funds rate, the fixed deposit rate offered by banks, or, more widely, the 3-month SORA rate.
How may a typical variable-rate offer appear?
First year: three months of SORA plus two per cent
Year 2: 3 months of SORA plus 3%
In this instance, the reference or benchmark rate would be the 3-month SORA, and the bank’s margin or spread would be 2% for the first year. In the first year of the loan, the total interest would be 5% per year if you anticipate a 3-month SORA of 3%.
In fixed-rate packages, interest rates are locked for the duration of the lock-in term, which is typically two to three years. The majority of banks do not now provide fixed-rate packages due to the sharp increase in US Federal Reserve rates.
Commercial and industrial property types
Retail assets: stores and older shopping malls are the typical locations for strata-title retail assets.
Industrial Properties: Industrial properties primarily consist of heavy industry manufacturing areas designated B2, industrial parks, and factory and warehouse spaces (classified as B1).
Commercial properties: Properties used for hotels, business parks, office buildings, etc. are classified as commercial properties.
Other specialised non-residential property subtypes exist as well, such as conservation shop houses and medical suites. When determining funding for these sorts of specialised real estate, various banks have varying credit standards and risk tolerances.
