Originally published in Entrepreneur

By Mark Abell

The recent rise in interest rates is resulting in large drops in property valuations, making it harder for small businesses to refinance their commercial real estate loans.

This looming cloud is gathering even with a robust U.S. economy and regardless of whether the businesses’ underlying performance is strong. It is undeniable that as interest rates go up, affordability goes down, and commercial real estate appraisals reflect this with lower values. As values drop, existing owners may find themselves underwater with their conventional mortgages when it comes time to renew or refinance.

It is a trend that is likely to accelerate, particularly for businesses that are closely linked to real estate, such as manufacturing firms, wholesalers, hotels and restaurants.

While some business owners may find the current situation desperate, one solution is often ignored or little understood: a Small Business Administration-backed commercial loan can often work around the downward pressure on appraisals.

Read the full article at https://www.entrepreneur.com/article/323844