Improve your business credit score to secure financing Aug 14, 2014, 8:10 am By Heidi Carmack Pfaffroth

Guest post by Richard Gray

You’ve probably had your personal credit affect your ability to obtain credit—whether it helped or hindered—but have you spent much time considering your business credit score? You might know some principles for getting and keeping your personal credit score up and there are some principles that may also help your business. Businesses’ credit scores play a key role in securing financing. Do you know what your business’s credit score is? I’ve mentioned before some of the benefits to growing or starting your business now, and preparing for a loan by improving your credit score is a good start. Even if you don’t anticipate needing a loan for a few years, start now. It may take time to build credit.

If you’re one of the many business owners that recently chose Utah as a spot to start—since we’ve had some good attention about our business-friendly state—you probably haven’t had time to build up an adequate credit score. Or perhaps the recession hit your business hard, and you need to rebuild. Regardless, these are some ways to build credit so you’ll be ready when your business is ready to grow.

Analyze current credit reports. Request your business’s credit reports from various credit bureaus and pay attention to items that are poorly rated. Negative items may be due to mistakes, fraud, identity theft or outdated information. Work with credit bureaus to correct false information. If the negatives are accurate, be aware that they can stay on your credit report for up to seven years.[1]

Scores are given by business credit bureaus, including Dun & Bradstreet, Business Credit USA, Experian Business and Equifax Business. Business credit scores range from 0-100 with 75 or higher considered an excellent rating.[2] Scores are based on many factors, including whether or not bills are paid on time, the amount of available credit on bank lines of credit and credit cards, the length of time you’ve had a credit profile and the number of inquiries made on your credit profile.

Separate your business and personal scores. Sole proprietors or those in a partnership may have their personal credit information on their business credit report, and vice versa. Forming a corporation or LLC allows business and personal profiles to remain separate. If doing so doesn’t make sense for you, be sure to improve your personal credit score if necessary.

Pay off credit card balances. The percentage of people in the U.S. who carry a credit card balance is decreasing, which may be good for the long-term health of the economy and for those who have paid off balances. Experian states that decreasing the balance on your business credit cards can have an immediate impact on your business’s credit rating. If you must keep a balance, make sure it is less than 30 percent of your credit limit.[3]

Increase capital and assets. Credit is determined using a complex algorithm, a key part of which is how much worth your business has compared to its debt. By building up your assets and capital, you weight the ratio in your favor.[4]

Build credit before you need it. Begin building a business credit history by getting and using a business credit card. (Do not open too many credit cards, however, as this can decrease your score.) Once you’ve established a payment history, consider requesting an increase on your credit limit, even if you don’t need it. Once a higher limit is granted, don’t utilize it. Instead, keep a healthy credit-to-debt ratio that doesn’t push your balance too close to your credit limit.

Request credit-lending companies to report. Credit bureaus create business credit reports with information provided by creditors. The problem is that creditors are not required to send in such information.[5] When a lender extends credit to your business, ask that they report your payment history to credit bureaus. The more vendors that report a positive credit history to the agencies, the higher your business credit rating will be.[6]

Add credit references. One way to do this is to set up a profile with a credit score company. For example, you can set up a profile with Dun & Bradstreet, for a fee.[7] You can then add credit references, such as suppliers you’ve worked with, to support your business’s credit profile.[8]  Additionally, having a relationship with your lenders or creditors may make it easier for them to provide details about your track record with payments on loans, which brings me to my next tip.

Build relationships with your lenders. Get to know the employees—particularly the loan officers and managers—at your financial institution. Community banks are an especially good place to get to know your banker, as their lenders often have a say in loan decisions made by local approval boards.

Richard Gray is senior vice president of SBA lending at Bank of American Fork, Utah’s community bank leader, an Equal Housing Lender and Member FDIC. Richard also manages the bank’s Murray branch, and he has assisted local small businesses in obtaining SBA funding for more than 25 years. He served on the board of directors for nonprofit Kostopolus Dream Foundation and was the chairman for nonprofit Utah Microenterprise Loan Fund, Salt Lake City.

[2] Glass, David. “The ABCs of Business Credit,”

[4] Connor, Duncan. “How to improve your business credit score,”

[5] Glass, David. “The ABCs of Business Credit,”

[7] Spors, Kelly K. “Five Ways to Build Business Credit,”, 08/25/11.

[8] Spors, Kelly K. “Five Ways to Build Business Credit,”, 08/25/11.

Six keys to an effective strategic process Aug 07, 2014, 8:00 am By Heidi Carmack Pfaffroth

Guest post by Richard H. Tyson, President, CEObuilder

One of the most fundamental challenges in business is how to convert vision and strategy into reality. This is the essence of change management, and it is where every business owner or CEO faces his or her defining moment. The fact is, you can have incredible breakthrough business strategies, but if you are unable to successfully implement them, your days as a business leader are numbered—and your company’s existence is in jeopardy. 

Many experts teach the importance of strategic content. While this is essential, it is equally important for every leader to manage the process of strategy implementation. 

We naturally assume that execution will follow the development of strategic content, and that desired outcomes—like corporate culture change—correspondingly follow strong execution. Too often, however, this assumption is disrupted by a failure of leaders to understand and manage the process whereby their strategy is implemented.

My experience has been that successful strategic process almost always includes the following six steps: 

1. Catalyst for Change: Strategists must constantly assess and respond to customer needs, as well as keep a keen eye on how their competitors are responding to those needs. Such assessments and observations provide the catalyst for altering the status quo and the benefits of doing so. 

2. Compelling Vision: This is what leadership desires to accomplish—often a higher level of service, quality, performance or profitability—and how that vision responds to and addresses the catalyst for change. 

3. Collaboration: Collaboration with your executive team (and, where possible, with all employees) is imperative. In the collaboration phase, your ultimate objective is to develop the content of your new strategy and create buy-in so you can have success in step number four, compliance. 

4. Compliance: At this point, you must counter the natural resistance of stakeholders and others by being open to improvements, but absolutely resolute in your expectation that the strategy will move forward. From among those who are supportive, identify a champion or evangelist. This person should be someone with the time, energy and enthusiasm to focus attention on the initiatives or projects that grow out of strategy. By using a champion, CEOs will feel less isolated in taking on the challenges of implementing new strategies—and they will find that their ability to move rapidly from compliance to concurrence will be enhanced. 

5. Concurrence: At this stage, your team members will begin to express their understanding that the strategy actually works and that they approve of it. Continued attention to the actions necessary to implement and maintain strategy is critical here. If ignored, the last step of achieving real culture change will never be realized. 

6. Company Culture is Changed:
When the previous five steps are followed, leaders will find that eventually most, if not all, employees will extol the virtues of the strategy. They will not only attest to its effectiveness but will begin to express their feeling that the strategy is “who they are.” This is where your strategy has become your culture. Your people willingly adopt the sustaining actions required to keep the strategy intact. And you, as the leader, will have increased ability to extend your attentions elsewhere.

It is impossible to achieve the ultimate goal of having the strategy become the everyday culture of your business if you don’t move through each step of the model. A catalyst for change must establish the need to move forward from past strategies. That catalyst must be followed by a compelling vision of where a new innovative strategy will take the organization. 

Compelling visions are rarely achieved without the participation of key stakeholders working in a collaborative way. Collaboration leads to the development of a plan, for which compliance is demanded. Fine-tuning occurs until the plan begins to work. When it does, concurrence results. The concurrence phase is continually supported by diligent and determined engagement of both stakeholders and leaders until it becomes how business is done at your company. When stakeholders and other employees become self-governing in working the strategy, culture change has been achieved. 

Richard Tyson is the founder, principal owner and president of CEObuilder, which provides forums for consulting and coaching to executives in small businesses. For 21 years, CEObuilder has successfully brought about an outstanding financial return for CEO and executive clients through providing leading-edge content in the areas of strategizing, team-building, problem-solving and managing for results, as well as the use of proprietary learning and coaching.

How some of the latest technology can help your business run smoothly Aug 04, 2014, 7:30 am By Heidi Carmack Pfaffroth

With a steadily improving economy, your business may be picking up, and you might be looking for more ways to improve efficiency. If this sounds like you, or if you’ve ever wished you had more hours in the working day to get everything done, we may have solutions for you. Bank technology is ever-improving, and we have a suite of online products designed specifically to help you get everything done, more easily.

Below are some of the products and services we offer—when you check out this list, you might even find a service you didn’t know you need, but could make a big difference.

Online Business Banking

Online business banking is a free service that allows business customers to manage their business bank accounts using the internet from any location at any hour, day or night. We tailored our online business banking for businesses. It allows customers to do things like transfer funds, send ACH pay to employees and send money by wire transfer. You can grant customized account access to authorized staff, download our free security software and more. Read about more of these services below!

Positive Pay

Positive Pay is a unique fraud protection service available to online business banking users. It allows business customers like you to ensure that checks they have written are cashed by the correct parties and for the correct amounts. When you choose to use Positive Pay, the information you input electronically is compared against the check presented for payment at the bank, to make sure there’s a match. Fees apply.


ExpressDeposit is a remote deposit service that allows you to electronically deposit checks into their Bank of American Fork accounts without going to a branch. Deposits are made from any location with internet access by using a small check scanning device. This will save you the time and expense of going to a branch, and you can make deposits after branches are closed. Fees apply.

Non-Analyzed ACH and Wires

Non-analyzed ACH or wires provides small business customers who send minimal wires or process few ACHs the ability to send wires and initiate ACH items using online business banking. One of our online banking team members can visit you for training, and then you can save time and money by paying your employees from home. Fees apply.

Business Bill Pay

Business Bill Pay is a simple service that allows you to make payments via the internet to any checking account without writing a check. You can set this up by clicking the PowerPay tab when you log into your online business banking account.

SaveSmart Commercial

SaveSmart Commercial is a high interest-bearing savings account offered to businesses. Because you open and access it exclusively online you can earn more on your savings and manage it all from home or your business. Fees may apply.


ExpressCollect is an easy way for small businesses, non-profits and other organizations to accept online payments or donations directly from their customer’s bank account or with bank cards. This is ideal for organizations that do have access to or the need for an online shopping cart but want to provide the convenience of online payments or donations for their customers. This may benefit you and your managers by improving your cash flow because of timely deposits. Fees apply. Subject to approval.

At Bank of American Fork we have solutions for your business to save you time and money. Talk to one of our eBanking team members by calling 800-815-BANK or go to and find the “live chat” button on the top right corner.

When does it make cents to use ExpressCollect®? Jul 28, 2014, 8:56 am By Heidi Carmack Pfaffroth

Forget paper checks. Now you can accept online payments or donations directly from checking or savings accounts.

First off—here are just a few examples of businesses, organizations and groups that may benefit from using ExpressCollect to accept online payments directly from their customers’ bank accounts or credit cards:

• Home Owner Associations (HOAs)

• Charities or non-profit organizations that accept donations

• Landlords

• Dance studios that charge a monthly fee

• Daycare centers

• Business owners paying more than $600 per year in fees to collect payments

If this sounds like you, or if you’re a small-business owner looking to provide your customers with the convenience of online payments, we’ll tell you more. Bank of American Fork’s ExpressCollect is an online solution that allows businesses to accept online payments or donations directly from their customers’ bank accounts or credit cards. The service is ideal for organizations that do not have access to, or the need for, an online shopping cart but want to provide to their customers the convenience of online payment or donations.

ExpressCollect offers businesses a unique URL at which to accept customer payments and allows each business to customize its payment page with branding, including logos, color scheme and content. It does not require that you store sensitive transaction information on your network. Our professionals will walk you through the minimal amount of technical work required for setup.  

It’s an affordable, effective solution that makes collecting payments easier and more convenient for business owners and managers. It may even help business owners and managers to improve cash flow because of timely deposits.

For more information, or to apply for our ExpressCollect service, visit any Bank of American Fork branch or contact us at 1-800-815-BANK.

Training Skills Series: Performance assessment Jul 17, 2014, 8:13 am By Heidi Carmack Pfaffroth

Guest post by Ken Burnett, VP/ Director of Training and Business Development, Bank of American Fork

This series is written from experience and is part of Bank of American Fork’s training program. The program embraces the philosophy that training is a skill-based job, and managers need to learn specific skills to be successful.

As a training professional I am often told, “This associate needs training to support that initiative or new system or performance problem.”  Some expect that I will run back to my computer and write a fabulous training course that makes everyone feel great.  Unfortunately feeling great is not the same as improved performance.  To improve performance and not just do training, first start with assessment.

It is important to note that using the following to look at problems in performance differently will be a huge benefit to your organization, even if the performance assessment is not fully implemented each time.

Here’s how.

Once you have determined a new or existing task or tasks, determine the output of the task, and what quality measure is used to measure that output.  Unfortunately, some use arbitrary measures, so be certain that the metric has data behind it that can be verified.  For example, you may ask your employees to complete a stock trade and they report back with 100-percent accuracy.  The first question you should ask is, “How do you know that the trade is accurate?”  Use this question as a starting point to verify the metric.  In addition, you won’t have performance data to compare current performance for a new task, but you should have specific performance goals to use as a measurement. 

If performance is not meeting expectations, get both qualitative and quantitative data to determine the cause.  Training may be part of the answer, but you need to determine what the skill gap is before you begin to develop training.  The following chart lists types of performance issues, diagnostic tools and the appropriate remedy.

Performance Issue Responsibility for
Diagnostic Tool Appropriate Intervention
Motivation Business Function (e.g., sales operations etc.) Ask the employee to list their priorities.  If the item you think is an issue, and it isn’t mentioned, then the employee or the organization doesn’t think it is important .  The performance requirement must be supported by senior management and woven through the associate’s reward and recognition system.  Spot awards and public recognition can also be motivators. 
Aptitude Human Resources, Training Determine what about the employee’s situation is unique, and then address that issue. If the employee is not able to perform the task, they may need additional training.  If all the other factors work out, they may be on the wrong seat of the bus, or need a new bus. 
Skills and knowledge Training A test or observation to determine if the employee can perform the task.  It is also important to develop the perfect working environment to make sure it is a skill issue. Match the learning intervention (e.g., classroom self-paced, job aids) to the need.  During training, train the learner to refer to materials instead of having them try to memorize materials. 
Environment Business Function (e.g., sales operations etc.) Does the associate have the resources, technology and references necessary to perform the task? These usually take the longest to fix, because they can be big ticket items.  You may need to triage a short-term solution. 
Coaching and Feedback Business Function (e.g., sales operations etc.), Human Resources and Training How often does the employee receive specific actionable feedback from their manager regarding the performance of the task? Provide specific coaching and mentoring training.  Set specific expectations for the frequency of coaching and feedback.
Measures and Metrics Business Function (e.g., sales operations etc.) Does the employee know whether or not they completed the task correctly?  Is the feedback clear and specific? The measurement should be attainable, meaningful and visible to the associate.  Meeting or not meeting expected performance should have consequences. 


A couple of points before you think this process is too hard.  For a big project, you may do all the items on the chart.  For a smaller-scale project, you may only need to place a couple of phone calls or talk to a few employees to move forward.  If the conversations raise concerns, then you need to look at the whole picture of performance.  Remember, if any of the performance issues exist, you won’t get the performance you are looking for and the training won’t stick. 

Think of this as building a performance bridge to cover a skill gap.  The last step in performance assessment is making sure the bridge you are building fits into the road, or overall workflow.  If you built a solid bridge and attach it to a sandy mountainside, it will sink.  The questions you asked about the performance issue to fill the gap need to be asked of the overall workflow as well.  If the associate loves the task you are introducing, but hates the rest of their job, you still have performance issues that need to be resolved. 

The tremendous benefit to the organization is that after providing the performance assessment service a couple of times, you will be relied on by management for more than training.  You will be on your way to becoming a performance consultant—a critical person in any organization.    

Ken also wrote a series for manager skills. What other business skills do you want to know more about? Tell us in the comments!

Ken Burnett is vice president/director of training and business development for Bank of American Fork. He is responsible for training more than 300 employees on a variety of topics, including coaching and feedback for dozens of senior managers within the organization.

Inspired to reach higher, try harder and work smarter Jul 10, 2014, 10:09 am By Heidi Carmack Pfaffroth

Bank of American Fork was recently recognized as Best of State’s® 2014 Best Community Bank.

“The Best of State Awards were created to recognize outstanding individuals, organizations and businesses in Utah. By recognizing excellence in our community and sharing examples of success and triumph in so many worthy endeavors, we hope all will be inspired to reach a little higher, to try a little harder, and to work a little smarter for our dreams and goals,” (

Bank of American Forks is proud to be recognized as one of Utah’s outstanding businesses and this award does inspire us to reach higher, try harder and work smarter. We’re constantly working hard to figure out how to offer you safe financial services with exceptional care in an ever-changing economy and feedback is invaluable. We love to hear feedback from our customers and our communities. Being awarded Best of State is feedback that helps us remain committed to our purpose: strengthening individuals and communities.

We’re proud of our roots in offering loans to sheep ranchers in American Fork, Utah in 1913—the founders of Bank of American Fork reached higher, though, innovating and growing for the next 100 years. Not very many businesses survive for more than 100 years. Bank of American Fork did because its leaders were reaching higher, trying harder and are constantly working smarter. We’ll keep doing that, constantly evaluating and making sure we’re offering the products and services our communities need.

To see the full list of 2014 Best of State winners, visit To find out more about what we’re offering to your community, visit

New St. George branch! Jul 09, 2014, 8:10 am By Heidi Carmack Pfaffroth

Bank of American Fork’s locally-owned, locally-invested model a perfect fit for vibrant and growing St. George

On August 18 Bank of American Fork will open the doors to its new St. George branch at 335 East St. George Blvd. Bank of American Fork has operated a mortgage-loan office in St. George since last year. The bank’s commitment to small-town service has been a natural fit in the St. George community, and now Bank of American Fork will be able to offer the technology, products and services of a big bank to the consumers and business owners of the St. George area.

“Bank of American Fork is excited to offer community banking services to the people living in and businesses building up the St. George area,” said Richard Beard, president and CEO of Bank of American Fork. “We have a strong customer base in Washington County. We are excited to offer our customers, the community and business owners the big-city banking we’ve been building for more than 100 years. Our strong, locally-owned community bank will be valuable by providing personalized services to this vibrant area of Utah.”

The bank already has a mortgage-loan officer, Chris Palmer, and some additional associates in the mortgage-loan office that will work at the new branch. In addition, the bank has hired Bradley Stucki as branch manager, John Allen as a business development officer and Mike Draper as operations manager. Stucki and Allen bring years of Washington County experience to the new branch.

“I’m looking forward to being a part of the Bank of American Fork branch in St. George,” Stucki said. “I love Washington County and I’m pleased that we’ll be able to provide the services this community needs so we can be a vital part of the economy here.”

It’s rare for a business to last 100 years, and Bank of American Fork is still locally-owned and invested in the local economy. Its community-banking model has survived and thrived in the 14 communities it serves.

The new branch will open for business on August 18, and a grand opening will be held later in the month. You can reach the new office at 435-319-6900. For other questions, please feel free to call 800-815-BANK or visit us at .

Meet the Saratoga Springs branch associates Jun 30, 2014, 5:23 am By Heidi Carmack Pfaffroth

Do you know where your nearest Bank of American Fork location is? Do you know that we have branches throughout Salt Lake, Utah and Davis counties? Have you heard that we opened a mortgage office in St. George? Do you know how to find us online?

We’re working on making sure you know where we are, because we heard that some of you don’t know about our branch in Saratoga Springs, or our branches in Salt Lake County, and some of you didn’t realize we were even outside of American Fork. We want to make sure you know where we are, so you can get the services you need, when you need them.

Here’s a little bit about our great team over in Saratoga Springs:

Megna Brown, Loan Secretary

Loves about her job: “I love living close by where I work and interacting with all the same wonderful people from the community. I love recognizing the smiling faces from the local stores and kids’ sporting events.”

Favorite Saratoga Springs spots: “Kneaders and Smith’s.”

Leah Hickenlooper, Vault Teller and New Accounts Representative

Why she’s a banker: “I love working with numbers and helping customers and I love the people I get to work with every day.”

Favorite Saratoga Springs spot: “I love the Kneaders just across the street from the bank.”

Angie Allen, Branch Operations Manager and Customer Service Chair

Loves about her job: “I enjoy getting to know customers and helping them with their financial needs. I am also proud to work with such a great team in our Saratoga Springs office.”

Favorite Saratoga Springs spot: “I have seen our rural community grow from just a few stop signs, cows and a swimming pool to our full city of Saratoga Springs. When I want good Mexican food I enjoy eating at Café el Lago right here in Saratoga Springs.”

Faith West, Teller and New Accounts Representative

Why she’s a banker: “I LOVE getting to know each of our customers. I love customer service, so talking to the people that come inside our branch is my comfort zone.”

Favorite Saratoga Springs spot: “Kneaders and Café el Lago are my two top favorites.”

Dustin Phillips, Vice President and Branch Manager

Loves about his job: “The feeling of knowing I’ve helped a business owner start up, expand or succeed, especially when they may have been turned down somewhere else first.”

Why he’s a banker: “It’s not glamorous, but I started as a teller while I was in college and decided not to leave.”

Favorite Saratoga Springs spot: “Café el Lago.”

Rochelle Mitchell, Teller

Loves about her job: “I am the newest convert to Bank of American Fork. I love my job! I really enjoy being able to interact with customers.”

Favorite Saratoga Springs spot: “For shopping, I enjoy Maurice’s. My husband and I go to Café el Lago for dinner, but I love Won Won Wok.”

Lindsey Kilpack, New Accounts Representative

Loves about her job: “I love meeting new customers and building relationships with them as I see them come back into the branch.”

Why she’s a banker: “My mother always said to find a job with a bank so I’d have good benefits and holidays off. I followed her advice and it turned out I love accounting and working with numbers!”

Favorite Saratoga Springs spot: “My favorite park is Neptune Park—there are so many fun things for kids to do. I also love watching Saratoga Springs develop because it’s exciting to see what will pop up next.”

Local lending for local businesses Jun 26, 2014, 8:00 am By Heidi Carmack Pfaffroth

Have you seen this one-minute-and-30-second video featuring local Donna Johnson of Johnson’s Medical? Donna works with loan officer Dustin Phillips at Bank of American Fork’s Saratoga Springs branch to get the financing she needs to grow and keep her business running so they can provide medical supplies to local hospitals and doctors.
YouTube Preview Image

Bank of American Fork offers different types of loans to suit the needs of different types of businesses. Whether you need a line of credit that will allow you to purchase and build up inventory to satisfy your customers’ needs and then make payments when cash comes in during another part of your cycle, a long-term commercial mortgage so you can buy your office space or a loan to purchase equipment so you can offer your customers what they need, our loan officers may be able to help your business get into the right type of loan.

“I love the feeling of knowing I’ve helped a local business owner start up, expand or succeed,” Dustin said. “It’s especially rewarding when I know they’ve been turned down for a loan elsewhere, but they find us and realize we can help.”

Dustin at the Saratoga Springs branch and other officers at our 14 locations are ready to help you find the loan you need. Then, approval comes from a local loan committee made up from bankers who live and work in the same community you do, so they have a vested interest in seeing it thrive.

“The loan committee doesn’t say ‘Person XYZ.’ They say ‘Donna Johnson at Johnson’s Medical and she always pays her loans off early, so yes, we can take a little chance on her,” Donna said. “You don’t get that at a big bank.”

Contact a business banker today, visit a branch or call 800-815-BANK.


Category: Business, Loans | No Comments

Things to consider while buying commercial real estate May 29, 2014, 8:10 am By Heidi Carmack Pfaffroth

Guest post by Jarrod Hunt, Senior Vice President of Industrial Services, Coldwell Banker Commercial Intermountain

Unlike residential real estate, particularly the homes we raise our families in, buying commercial real estate should not be an emotional decision, but rather a means to execute a business strategy.  There are several things to consider when evaluating whether you should buy or lease space for your business.  I will focus on the assumption that the evaluation is based on your own company occupying the space rather than buying it as an investment to be leased to another party.  Investing in commercial real estate with the intention of leasing it to another party is a different decision-making process.


Appreciation- Generally speaking, well-located and constructed commercial buildings gain value over a period of time.  It is common to assume that well-located and constructed properties will appreciate at similar rates to the Consumer Price Index.  This helps keep your monetary value consistent over long periods of time in terms of buying power.

Equity Increase- As a mortgage is paid down, the owners’ equity, in turn, increases.  Be careful to understand that a considerable portion of each monthly payment goes towards interest in the early years of the loan.  This equity increase grows faster the longer you pay on the loan.  Ask your lender to provide a full amortization schedule so you can see how that works.

Control- Many business owners need specialized improvements within buildings for their unique operations.  If this is the case, buying may be a good fit. Often the high cost of those specialized improvements may be included in your mortgage loan so they can be paid off over a longer period of time.  Additionally, you may not want a landlord telling what you can or can’t do within the space.

Tax Advantages- In certain cases, the depreciation of certain aspects of the property along with the direct write-off of mortgage interest can benefit an owner in ways paying rent doesn’t.  True, rental payments can be deducted as a business expense, but perhaps not to the same level as the depreciation and interest.  Consult your tax advisor for a more detailed analysis of your situation.

The real tax advantage comes at the time when you sell the asset.  Any profits made on sale of a property held for a period of time are taxed as capital gains, which is generally at a lower marginal rate than ordinary income.  There are also opportunities to defer the tax obligations on capital gains by using the proceeds to buy another “like-kind” property in a tax-deferred, Section 1031 exchange.  This strategy keeps money working for you that otherwise would have been paid in taxes until the time you ultimately exit the real-estate market, which may be upon death and transfer to your heirs.  Again, consult a competent tax advisor on your individual situation and how this can help with retirement or estate planning.


Location- Leasing may be the only option when location is important and the preferred location is limited to leasing, such as a shopping center or premier office/business park.  It is often much more cost effective to occupy space as a tenant in a project that took considerable capital to establish. The project landlord can spread out that large capital outlay more efficiently than a single smaller-property owner.  There are also significant cost savings when constructing a single larger building than many smaller buildings with an equal aggregate square footage, which translates into lower lease rates.

Flexibility & Mobility- Leasing can provide significant flexibility if a business is new, growing or uncertain about its future.  Lease commitments can be measured in terms of months, where mortgages are much longer and a significant commitment often involves personal guarantees from the borrowers.  Leasing also allows a business to keep its space needs in line with its growth or customer needs.  If your business is stable and can be predicted for several years down the road, then this advantage is less valuable.

Financing & Leverage- This is a big one!  Leasing requires a modest deposit, usually 1-3 months of rent based on your credit scores, business profitability and balance sheet.  Many new businesses simply can’t qualify for a mortgage loan, so leasing is their only option.  Also, a growing business may not want to tie up needed capital in real estate if those funds can be used to expand the business or replace more expensive capital being borrowed at a higher interest rate than a mortgage allows for.


To summarize, the decision to buy commercial real estate should be analyzed from a variety of perspectives.  There are many good reasons to own real estate and many good reasons not to own. Engaging a competent commercial real-estate agent, lender and tax advisor will help you compile the information needed for this decision and help you keep your emotion in check. 

Jarrod Hunt brings many years of business management and financial analysis experience to Coldwell Banker Commercial Intermountain. His 16 years as a real estate advisor coupled with a broad spectrum of experience managing his own company, he has a proven track record of providing solutions for a myriad of real estate and business challenges. His expertise includes market demand and feasibility analysis, investment structure and analysis, and organized property disposition.

Jarrod provides analysis and strategy for lease and sale negotiations, cash flow and investment analysis, organized and accelerated disposition for excess properties, and valuation/feasibility consulting.

Coupled with the technical expertise of how to structure the deal, Jarrod also adds a personal touch to the equation. With demonstrated ability to fully understand the end goal of the client and resolve off sheet issues involved with the transaction, Jarrod is truly the next generation of real estate advisors.

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