Factory Loan and Land Financing
Factory loan
Factory loan refers to a type of financial assistance used to acquire a factory or an industrial property. The funds are not limited to acquisition of the property; the loan can also be used to expand an existing factory or to even purchase machinery and equipment for production. Depending on the respective bank’s criteria, some lenders granted a factory loan judging by the location, type of commercial property and the number of floors in the building. The banks can be pretty strict with the types of commercial property they finance, unlike home loans. Banks tend to disapprove loans meant to finance factories situated within shopping complexes. If the factory is on an upper floor of a mixed development, the loan is likely to get rejected too. If your intended factory falls within any of these categories, you have a reason to consider private lenders to fund especially if your financial status isn’t strong as well.
Land financing
Land financing involves purchasing a piece of land that is divided into two types of lands: the raw land and the lot land. The loan for raw land commonly refers to a land that has no plans for improvement. Most bank lenders consider raw land as the least favourable collateral and are particularly difficult to obtain a loan. Moreover, purchasing a raw land requires a higher down payment up to 50% and a higher interest rate. As for the lot land, it refers to one or more building locations for residential construction. The down payment for a lot land typically requires at least 10 to 20%.
To acquire a land, you have to do a lot of homework since purchasing a land is not as simple as borrowing money to buy a house. Unlike houses or condos that can be valued by the bank, a piece of land is difficult to determine its worth. Therefore it is vital for you to gather valuable information such as conducting a land survey, as well as understanding the zoning laws & land use restrictions beforehand.
Conclusion
Starting a business can be a daunting experience. But instead of waiting for an opportunity to knock on your front door, it is best to get proactive and make the first step as long as it makes financial sense.