Another way to accept a mortgage is to take exclusive possession of a loan for which your company is already the borrower. For example, you and your business partner get a mortgage with the company, with you and your partner as a co-borrower. At some point, during the term of the loan, your partner withdrew from the operation. The lender will agree to remove it if you and your business qualify for the loan without its income. If your debt coverage rate is too low, you need to refinance yourself to withdraw your partner and take out the mortgage yourself. If you accept a commercial mortgage that you are not previously interested in, the lender qualifies it as a new borrower. It requires, depending on its policy, two to three years of tax returns for your company and for you. It also requires a personal closing of your assets and liabilities and tests your debt collection ratio to ensure that your cash flow is greater than 1.2 times your debt. The lender may also order an appraisal, but this is for informational purposes. If you take out a commercial mortgage, your small business takes over the existing mortgage of the property they are buying. This process can eventually network a loan to your business at a lower rate than the current market interest rate. However, this is not always a simple process, as many commercial mortgages do not contain acquisition rules.

If you take out a commercial mortgage, you take on responsibilities that you don`t have as part of a traditional loan. Commercial mortgages have reporting obligations and covenants. You must provide the lender with commercial and personal statements and up-to-date financial reports each year. If the mortgage is rented property, you must also provide lease agreements and rental rolls. The lender will analyze the statements to ensure that you are not violating The Covenants. Typical covenants include maintaining an acceptable debt coverage ratio, indicating a minimum net asset, or maintaining a demand deposit account with the lender. To accept a commercial mortgage, the initial loan document must contain an acceptance provision – a clause in the mortgage itself that allows another borrower`s mortgage to be taken over if that borrower meets the lender`s qualifications. If a mortgage does not contain a clause making it mortgaged, the hypothesis must receive a new mortgage to repay the existing mortgage. . . .