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If you run a successful, growing company, your company may eventually outgrow the building it's in. While you could sell the building, finding a buyer who is willing to pay a fair price for it can be difficult, and leasing it to another business can be lucrative. If you plan on moving your company out of a building it owns and leasing the building, however, you may need to refinance the building with a commercial bridge loan. Here's why, along with how to factor in the higher costs of such a loan.   

Switching to a Commercial Bridge Loan

As long as your company occupies the building it's in, your company may be able to take out a conventional commercial mortgage on the building (provided you and your company meet all financial requirements for such a loan). Once your company stops occupying the building, however, your company may no longer be able to have a conventional commercial mortgage on the building. It's often hard to find a mortgage if a commercial building isn't owner-occupied, and your company's mortgage agreement might be broken if the company leaves the building.

Thus, when you move out, you may need to find a new way to finance the remaining balance on your company's building. You'll want to look at bridge loans for commercial real estate because these loans usually don't have the same owner-occupied requirements. Thankfully, you should be able to get a bridge loan for your company's building even if you've sacrificed your credit to grow your company because these types of loans usually have lax credit requirements.

Paying a Higher Interest Rate

Because bridge loans for commercial real estate don't require borrowers to occupy the building, and since these loans have more relaxed credit requirements, the lenders that underwrite these loans assume more risk than those that underwrite conventional commercial mortgages. To compensate for the increased risk, bridge loans usually have higher interest rates than standard mortgages.

If you plan ahead for a higher interest rate, though, it won't be a burden on your company. You can build the increased cost into any lease that you offer to tenants, thus passing the cost of the higher interest rate right onto them.

If you're planning on moving your company out of its current building and leasing the building, you should contact a company (such as Riverside Park Capital Real Estate & Business Finance) that underwrites bridge loans for commercial real estate before your company actually vacates the building. Rates may change between now and when you're ready to show a potential tenant a lease, but knowing roughly how much companies are charging for interest rates will give you an idea of how much you need to charge for rent. Once you know what you need to charge for rent, you can compare that figure to the current rates for commercial real estate in your area and see whether your rental rates will be competitive.