New Jersey Law Journal 

As interest rates continue to hover around historically low levels, it is a great time for businesses to purchase fixed assets (e.g., land, buildings and equipment) or refinance existing debt. Traditional loans are readily available for companies with significant accumulated equity to use as collateral. However, if you are a small business owner without sufficient collateral or cash to qualify for a traditional loan, the issue becomes how you can take advantage of the positive loan environment.

The following is a common scenario: a small business owner looking to grow finds a property at a favorable price that is perfect for its business. By purchasing the property, the owner can divert significant funds currently allocated to leasing space into paying off principal and interest on a mortgage loan. Assuming the property value increases, the small business owner can refinance the property some time later to take advantage of the increased value and pay off outstanding invoices, expand, or even move into a new, better space. The small business owner contacts a traditional lender, but the lender denies the loan application because of insufficient cash or lack of collateral.

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