Regarding the situation, Ukraine commercial property financing can be one of the most challenging sources of capital to locate and secure for your business.

Unlike residential property in Ukraine, the process of locating suitable commercial property lenders can be far more complicated. There is an amount of reasons for this disparity.

First, the resale property market for commercial real estate in Ukraine is much smaller than residential property because it's more of a business to business sale versus a consumer based sale which typically generates a much large volume of transactions throughout the year. The more little the potential market, the less predictable the resale possibility of the property.

Secondly, it can be complicated to accurately assess value. Commercial real estates are usually appraised by both an income approach to value and comparative sales in an intension to establish a more accurate value estimate. But even with this two pronged approach, there are difficult factors.

Regarding the location, there may not be any strong comparable sales. And an income approach to value by itself, can say more to the management of the business than the indexes of the physical location.

Yet, despite these difficult factors, commercial real estate financing is the financing jewel for all institutional lenders like banks, credit unions, and trust companies.

Why it happens?

Because big scale commercial premises in Ukraine in strong business areas command solid rental benefit from well established and financially stable firms. Because of the marketability of the rental space, and the financial power of the tenants, the commercial property financing options are both larger in numbers and highly competitive in terms of lending rates.

Even if a firm owns a large commercial real estate strictly for its own purposes, the resale value and income potential remains high because of location and use.

Couple all this with large investment rates and you can see why banks trip over each other for these types of real estates.

Even for more little scale properties that fall within the category of excellent location and strong tenant base, the commercial property financing options are very strong.

But once you go out of this model, where the risk of return becomes less certain, the commercial real estate financing market in Ukraine is much more difficult to navigate.

So for many small and medium sized businesses, commercial property financing can become quite a difficulty. Even if you locate an interested lender, the percentage of the loan to the value of the real estate will likely be 60% or lower, and the interest rate will be higher than for other commercial lending scenarios.

The good news is that because there is so much investment rate in commercial Ukrainian real estate, there are numerous lenders that service these markets.

And like other types of business financing, this larger number of smaller lenders manage their risk by being more place focused.

Commercial property financing for small and medium sized businesses can be impacted by geography, industry, sector, current real estate use, historical property use, and future potential property use.