As we step into 2025, the commercial real estate market presents unique opportunities and challenges for Minnesota property owners. Rising interest rates, fluctuating property values, and the need for capital improvements are prompting many to explore refinancing. This comprehensive guide highlights the latest strategies, benefits, and steps for refinancing commercial properties while positioning Security Bank & Trust Co. as your go-to partner for financial solutions.
Minnesota’s commercial real estate market continues to evolve. While inflationary pressures have eased slightly, borrowing costs remain elevated. However, forecasts suggest a potential drop in interest rates later this year, making 2025 an ideal time to evaluate refinancing opportunities. For property owners, these trends underscore the importance of partnering with experienced lenders who understand the nuances of local markets.
Refinancing can provide significant financial and operational benefits:
A reduced interest rate can lead to substantial savings over the life of your loan, particularly if you secured your initial loan during a high-rate environment.
Refinancing to extend loan terms or reduce monthly payments can free up capital for reinvestment or operational needs.
Leveraging property equity can fund renovations, expansions, or even new property acquisitions.
If your current loan includes a looming balloon payment, refinancing offers a chance to restructure and avoid a significant financial burden.
Refinancing your commercial property requires careful planning. Below is a detailed guide to help you navigate the process:
Review your current mortgage agreement, focusing on the interest rate, repayment period, and any prepayment penalties. This step will help you identify potential savings and areas to negotiate during refinancing.
Lenders will closely examine your financial stability. Ensure that your financial records, including income statements, rent rolls, and tax returns, are accurate and up-to-date. A strong financial profile increases your chances of securing favorable loan terms.
Research current commercial real estate trends in Minnesota. Compare interest rates and terms offered by various lenders. Staying informed will enable you to time your refinancing strategically and negotiate better rates.
An updated property appraisal is crucial to determine your property’s current market value. This information will impact the loan-to-value (LTV) ratio and influence your refinancing options. Lenders often require this step as part of the application process. In today's market, expect to pay between $3,500 to $10,000 depending on size and complexity of the commercial property.
Not all lenders are equal. Look for institutions that specialize in commercial real estate and have a solid understanding of the Minnesota market. Security Bank & Trust Co. is a Minnesota real estate lender that offers competitive rates and personalized refinancing solutions tailored to your business needs.
A thorough loan application can streamline the approval process. Include all relevant documents, such as:
Recent financial statements
Business plans (if applicable)
Property income and expense reports
Tax returns for the past three years
Rent rolls
Related Blog: Comprehensive Commercial Loan Application Checklist
Once your application is approved, work closely with your lender to secure favorable terms. Key points to understand include the interest rate, repayment schedule, and prepayment penalties. Be sure to fully understand all terms before signing.
At the closing stage, carefully review all loan documents to ensure accuracy. Address any discrepancies immediately. Once finalized, your refinancing process is complete, and your new loan terms take effect.
At Security Bank & Trust Co., we specialize in helping Minnesota business owners navigate the complexities of refinancing commercial properties. With deep expertise in local markets, we offer competitive rates, personalized service, and quick approvals.
Explore Our Lending Solutions:
A Minnesota business owner was looking to refinance their business loan. Security Bank & Trust Co. restructured their financing by breaking an SBA 7A loan—which was at a floating rate—into three components: a commercial real estate loan for their industrial property, a term loan for their business, and an operating line of credit for business operations.
This restructuring provided several benefits:
Fixed Rates: The variable rate on the original SBA loan was replaced with fixed rates on both the commercial real estate and term loans, offering more stability.
Improved Cash Flow: Separate amortization schedules for the real estate and business term loans allowed for more manageable payments and improved overall cash flow.
Flexible Capital Access: The operating line of credit gave the borrower flexibility to use excess cash on hand to reduce debt while maintaining access to working capital for day-to-day operations.
Refinancing your commercial property in 2025 can be a game-changer for reducing costs, improving cash flow, and accessing much-needed capital. By partnering with Security Bank & Trust Co., you’ll gain a trusted financial ally committed to your success. Contact us today to explore your options and secure the best refinancing terms for your business.
Ready to take the next step? Contact Security Bank & Trust Co. today for a personalized consultation and start your journey toward financial success.