{"id":7237,"date":"2017-10-19T14:05:26","date_gmt":"2017-10-19T21:05:26","guid":{"rendered":"https:\/\/www.tmcfinancing.com\/\/?p=7237"},"modified":"2021-05-10T20:29:50","modified_gmt":"2021-05-11T03:29:50","slug":"commercial-real-estate-loan-rates-how-are-they-determined","status":"publish","type":"post","link":"https:\/\/www.tmcfinancing.com\/es\/commercial-real-estate-loan-rates-how-are-they-determined\/","title":{"rendered":"Tasas de pr\u00e9stamos de bienes ra\u00edces comerciales: \u00bfc\u00f3mo se determinan?"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]\"commercial<\/a><\/p>\n

There are many things to account for when taking out a loan for commercial real estate, and one of the most important elements to pay attention to is the rate. A loan\u2019s interest rate is the amount charged by the lender to the borrower for the use of assets, and is expressed as a percentage of the loan capital. <\/span><\/p>\n

There are a number of variables to consider when looking at interest rates for a potential loan\u2014including whether it is fixed or variable and whether or not it is fully amortized. But how are loan rates determined, and what outside factors influence them? Understanding the rationale behind commercial real estate loan rates will help you make a more informed decision when the time comes to choose a lender.<\/span><\/p>\n

Step 1: Look at the Economy<\/b><\/p>\n

One of the biggest factors that affect the interest rate of a loan are the current economic conditions. Interest rates are generally set in relation to the prime rate. The prime rate is the rate banks charge their customers for short- and medium-term credit. (You will see notations such as \u201cPrime + 1.5,\u201d which means 1.5% above prime rate.) <\/span><\/p>\n

Every lender can set its own prime rate, but most banks use the rate <\/span>The Wall Street Journal <\/span><\/i>compiles from the country\u2019s 30 largest banks<\/span><\/a>. These 30 banks, in turn, strongly base their decisions on the Federal Funds Target Rate, set by the Federal Reserve Board, which is adjusted when necessary to best limit inflation. <\/span><\/p>\n

The prime rate in mid-September 2017 was 4.25%. This is low from an historical perspective, although the rate was 3.5% a year earlier. For example, in August 1984, it was 13%.<\/b><\/p>\n

\"prime<\/a>The interest rate for the Small Business Administration (SBA) 504 loan is based on the market rate for 5 and 10-year U.S. Treasury issues, and is not actually set until the loan is <\/span>funded<\/b>. Your conventional lender provides a <\/span>bridge loan<\/i><\/b> to cover the cost of construction or purchasing during project implementation. The 504 loan is then closed after project completion. At that point, the 504 loan is submitted to the SBA and pooled in a monthly debenture sale. This means that private investors buy that debt, and are the ones who provide the actual money for the 504 loans.<\/span><\/p>\n

The interest rate on the 504 loan is set at that time. \u00a0Treasury issues follow a trajectory set by the market. This is not identical to the course of the prime rate, but it is often close to it. Using the Treasury issue rate as a base, an interest spread is negotiated with the investors. Since the borrower makes a monthly payment and the investors receive semi-annual payments, the borrower\u2019s rate is lower than the Treasury rate plus the spread. Two small fees are added to the borrower\u2019s payments. They go to the SBA and CDC.<\/span><\/p>\n

Step 2: Look at the Lender and Loan<\/b><\/p>\n

Conventional lenders will take a few factors into account when determining the final rate they offer. These factors can include:<\/span><\/p>\n