If you are looking to start up a new business or expand your current one, you may be looking to purchase property for commercial purposes. To help finance the purchase, you may be looking at various financing options to see which one would be best suited for your needs.

While looking at your options, you may want to consider trying to be approved for a debt service coverage ratio (DSCR) mortgage. There are a couple of benefits that come from applying for a DSCR mortgage loan when trying to purchase a new business property.

1. Financing Company Looks at Projected Profits Generated by the Property to Determine Eligibility and the Loan Amount

One benefit of applying for a DSCR loan over a traditional mortgage or business loan to finance the purchase of property is that the financing company looks more at projected income than past profits. When you apply for a specific piece of real estate, the loan company will look at various factors, such as location, trends, and local income information, to determine what profits the property will generate. 

Once they have this information, they will determine your debt service coverage ratio to see how much the property will generate compared to the loan amount. If they feel that the DSCR is enough to cover the mortgage payments for the foreseeable future, they will use this information to determine your business's eligibility and the maximum loan offer.

2. Approval and Closing Process Is Often Much Faster than Traditional Financing Options Such as Business Loans and Standard Mortgages

Another benefit of applying for a DSCR loan is that the approval and closing process is often relatively faster than other options. Unlike traditional financing options such as business loans and standard mortgages, the approval process proceeds quickly once the DSCR is calculated.

Along with faster approval rates, the closing process is streamlined to go quicker as well. Once you are approved, your business will have its financing so you can take ownership of the property.

If you are looking to purchase real estate to start or expand your business, applying for a mortgage based on your debt service coverage ratio instead of a standard mortgage or business loan may help you receive funding faster thanks to a faster approval and closing process. Since the loan company looks at projected profits from the property to cover the payments, you also do not have to wait for an extensive personal and financial background check to qualify. For more information, contact a local company like NewFi Lending.