Many business owners in California find it difficult to qualify for a mortgage when they wish to purchase or renovate a piece of commercial real estate. Conventional lenders generally look at only established cash flow when they assess a business application, and the increased revenue that the property will bring into the company is not usually considered. Another challenge facing entrepreneurs is the strict loan to value guidelines that lenders follow, which can make things difficult for business owners who are not able to put a significant amount of money down.
When a business is choosing a new location in California, it is important to research the commercial zoning ordinances and regulations that apply to it. Commercial zoning laws prescribe that certain areas be used in certain ways. Just because a prior tenant used a location in a certain way, if its use was nonconforming, a new business may not use it in the same manner.