West Virginia Commercial Loans

Securing a commercial loan in West Virginia

A commercial loan in West Virginia can get you started on your new business or business expansion with the funding to purchase the commercial property you need.

Commercial Real Estate Loan Types

There are many different types of commercial loans. The type depends on the purpose of the property being purchased. A commercial loan could finance a hotel or motel, light industrial building, marina, apartment building, auto services building, bed-and-breakfast, mixed use property, mobile home park, multi-family unit, office, campground or RV park, convenience store, gas station, health care center, retail space, self storage compound, warehouse, or restaurant. Here are some of the most common types:

Traditional Purchase Loan

Purchase loans have fixed or adjustable rates, much like a residential mortgage. Interest rates are contingent on loan-to-value ratio, or LTV, and the property is used as collateral. There is some relative flexibility where credit and income is concerned with traditional commercial purchase loans.

Bridge Loan

Outstanding credit and high, steady income is often required for bridge loans, since they offer immediate capital on the short-term - typically one year - to suit a commercial project's beginnings, often from a private lender. Longer term financing should be pending while these short-term funds are borrowed.

Participating Mortgage

Most used among lasting retailers and stable offices, the participating mortgageholder gives the lender a cut of the business or real estate revenue along with interest and principal payments every month.

Hard Money

Usually offered by private lenders because of their substandard requirements, hard money loans carry unusually high interest rates since they are particularly high risk. The property serves as the collateral for financing.

Commercial Loan Requirements

Credit and NOI

Commercial loans typically have strict credit and debt requirements, although the spectrum is wide thanks to the flexibility many private lenders offer. To have a credit (FICO) score of 700 or higher is ideal, but certainly many commercial loans have been approved for borrowers with credit in the 680 to 700 range. There is hope for borrowers whose credit is even lower, but lenders will look for compensating factors, such as a high net operating income (NOI), which should surpass the monthly mortgage by at least 25%.

Debt Service Coverage

Another factor lenders will examine is borrower debt service coverage, which is a ratio of the yearly net operating income over the mortgage payment. Businesses should have a debt service ratio of over 1.25, as determined by a licensed appraiser's estimates.

Debt Yield Ratio

Lenders will also consider a commercial loan borrower's debt yield ratio, which is their NOI divided by the total mortgage loan. A business with an NOI of $500,000 per year and a prospective loan amount of $7,000,000 will have a debt yield ratio of 0.0714, or 7.14%, meaning even if the property is foreclosed out the gate, the lender will receive a 7.14% return.

West Virginia Commercial Loan Lenders

Commercial lenders, whether for small business, hard money or others can be difficult to find. Lender411 has a number of commercial lenders in its directory. Find one near you by filling out the form at the top of this page. 

Charleston, Huntington, Parkersburg, Wheeling, and Morgantown are among the most influential and highly populated cities in West Virginia.  These areas have seen significant business development.  There is plenty of commercial real estate available.  Contact a local lender to discuss your financing options.

West Virginia Small Business Loan Resources

The U.S. Small Business Administration, or SBA, offers affordable financing opportunities to help small businesses grow. The West Virginia SBA District Office is located in Clarksburg. Generally, small business owners can finance their endeavors in two ways: equity or debt financing. 

Equity Financing

Small business owners can receive funds through equity financing without acquiring debt. In exchange for ownership share, another company raises funds for the recipient. The SBA recommends business owners take the equity financing route if their business has a high debt to equity ratio; that is, if they have borrowed for their business more than they have invested. 

Debt Financing 

For the opposite case - a business owner has a high equity to debt ratio - debt financing is a safe option, and recommended by the SBA. Debt financing is the borrowing of money from a lending institution or private lender, to be repaid over time, and usually with interest. The allowable loan amount, length of repayment term, and interest rate will vary depending on the lender. 

Help Through SBA

Your local SBA office may be able to offer aid through the Financial Assistance Program. Eligibility depends on several factors, although special considerations may be made for franchises, farms, medical facilities and more. Here are the basic criteria for eligible companies:

• Must be for-profit.
• Must be operating within the United States and territories. 
• Must have a reasonable owner equity for investment.
• Must seek other funding sources including personal assets before seeking SBA's help. 

To see if you qualify for special considerations, contact the West Virginia SBA District Office: 304-623-5631.

About West Virginia Business 

West Virginia is known for its natural beauty and for its long history of logging and coal mining.  It is also a well known destination for those interested in outdoor sports such as whitewater rafting, skiing, and rock climbing.  The economy in West Virginia is volatile, which allows for rapid growth or the possibility of significant losses.

One of the major resources in West Virginia's economy is coal.  Charleston is both the capital and the largest city in West Virginia. Trade, utilities, government, medicine, and education play major roles in the city's economy.  Charleston also boasts numerous recreational parks and public state parks.  If you wish to own a business property in West Virginia, let Lender411 find the best commercial mortgage rates for you.

Lenders in: West Virginia.