Commercial Real Estate FAQs

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Commercial Real Estate FAQs

What about a Phase I Environmental Report?
What is a Lenders Title Policy?
Should I order a survey?
What will my interest rate be?
Why a personal guarantee?
Do I need an appraisal?

Q. What about a Phase I Environmental Report?

A. A Phase I Environmental report is required on all commercial property and is also ordered by the bank from a third-party vendor. This report assesses the property for potential environmental problems such as underground storage tanks or asbestos. If the Phase I report indicates there may be a potential problem, further investigation and remediation will be required. It is important to be aware of potential environmental problems before you purchase a property. Clean-up is the responsibility of the owner and unanticipated environmental remediation can be extremely expensive. The fee for the environmental report may, in certain cases, be financed as part of your loan.

Q. What is a Lenders Title Policy?

A. A lenders title policy insures that the bank has a clear lien position on the property. The initial title report tells us if there are any other encumbrances to the title prior to loan closing. The fee for the title policy may, in certain cases, be financed as part of your loan.

Q. Should I Order a Survey?

A. A survey can be provided to the purchaser by the seller or can be purchased by the buyer. A survey is important in order to establish the boundary of your property and to ensure that there are no easements, etc. Failure to establish boundaries may later compromise the value of your property.

Q. What will my interest rate be?

A. Interest rates on business loans are quoted on a case-by-case basis and are influenced by the type of collateral, the abundance of cash flow to repay the loan, the strength of the company’s balance sheet and income statement, and the quality of the owner’s personal credit. Most loans are priced as a percentage over Missouri Bank’s prime rate.

Q. Why a Personal Guarantee?

A. We ask for a personal guarantee of each business loan we make. Why is this important? We like to think of ourselves as creatively conservative, but perhaps more importantly, we believe in people and in their commitment to what they are doing. One common thread running throughout small businesses is that at the heart of each success lies the vision and determination of a business owner. When we make a loan to your business, we are not only saying we believe in your business, we are saying we believe in you.

Q. Do I Need an Appraisal?

A. An appraisal is required on most commercial property and is ordered by the bank from a third-party vendor. The purpose of this report is to establish the market value of the commercial property in question. Appraisals are also performed on construction plans to establish the value of a property after construction/renovation is completed. The fee for the appraisal may, in certain cases, be financed as part of your loan.