- Introduction
- Acknowledgements
- 1: Getting Ready
- 2: The Costs of Space
- 3: Understanding Credit
- 4: Professional Services
- 5: Finding Space
- 6: Residential Leases
- 7: Commercial and Industrial Leases
- 8: Buying Real Estate
- 9: Types of Mortgages
- 10: The Mortgage Application
- 11: Ownership Models
- 12: Purchasing Alternatives
- 13: Chicago Zoning Ordinance
- 14: Chicago Building Code
- 15: Chicago's Neighborhoods
- 16: Property Taxes
- 17: When You Find a Property
- 18: Inspections
- 19: After Moving In
- 20: Insurance
- 21: Utilities
- 22: Rehabbing Your Space
- 23: Safe and Healthy Spaces
- 24: Green Practice
- 25: When Disputes Arise
- 26: Space Emergencies
- 27: Facility Development Planning
- Bibliography
Small Business Application
For small businesses, the road to property ownership can be a bit more difficult than for individuals. Many lenders shy away from start-up businesses, which are viewed as a higher credit risk. Lenders want to know that they will get a return on their investment, and are usually more likely to finance businesses that have a proven track record in the marketplace.
The first step for small businesses that wish to apply for a mortgage is to organize their paperwork and find an affordable mortgage. Neighborhood community banks and other lending institutions often specialize in working with nonprofits or small businesses. Local examples include South Shore Bank, Harris Bank and LaSalle Bank. These types of lenders often have less stringent guidelines than larger lending institutions, and might consider lending to businesses or nonprofits that agree to relocate to their particular communities. For more information about lending resources, see the resource section of Chapter 8: Buying Real Estate and Chapter 11: Models of Ownership.
In contrast to individual purchasing, it is very uncommon to get a loan pre-qualification assessment for a business. Lenders are interested in a variety of elements of your business, but are especially concerned with your monthly income and debts. The lender will examine and compare the following:
- Gross Income: The income companies make before taxes, insurance and other expenses are paid. Businesses can include profits from selling products (artwork, tickets to events, murals, etc.) or services (consulting, commission, contract work, classes), as well as income derived from dividends.
- Debts: When calculating monthly debts, divide bills paid through lump sums or other payment arrangements (i.e. property taxes, insurance premiums, etc.) over a 12-month period in order to accurately assess monthly debt.
Include debts paid each month, such as:
- Business loans or credit cards,
- Mortgages on other properties,
- Employees’ salaries, and
- Insurance premiums to cover space, business or employees.