Below Market Rate


Also found in: Acronyms.

Below Market Rate

An interest rate or return below prevailing rates. A below market interest rate may be given to a borrower if he/she has an exceptionally good credit history. On the other hand, a below market return rate usually happens if one takes too little risk relative to the market or too much risk relative to the potential return.
References in periodicals archive ?
There are, however, many economic and other reasons that interest-free and below market rate loans are viable and in many cases very appealing planning techniques.
Transfers of income through interest-free or below market rate loans can be used to support parents, provide support for children in school, or to help them purchase a home or business.
There should be a provision in the debt instrument (assuming a no-interest loan is desired) expressly precluding interest or, in the case of a below market rate loan, stating the interest to be charged.
Loans with no interest or a below market rate of interest generally are re-characterized for tax purposes as loans bearing a market rate of interest accompanied by a payment or payments of interest from the lender to the borrower.
In other words, interest is imputed (fictionally treated as if charged) on interest-free loans and on other below market rate loans.
Question--How will interest-free or below market rate loans to shareholder-employees be treated?
"The existing rents in the building are below market rates. We plan to re-position and re-lease the building at market rents.
"The existing tenants are paying rents that are substantially below market rates. We are looking to improve the tenant mix by adding exciting new retailers."
"This was an excellent opportunity to acquire a stable income producing property with apartment rentals below market rates. The upside potential is phenomenal," said Dario Zar, president.
Nearly $16 million was provided in loans and grants for the three phases, with MetLife providing $7.3 million at below market rates and CPC lending more than $5.8 million.
Explaining that the current tenant has a mid-term lease below market rates, Heller added, "When those expire, there will be opportunity to materially improve income by finding new tenants or releasing to existing tenants."
To stem the flow of dollars spent every month on empty space, tenants still on the hook for space they no longer require are often quite willing to offer below market rates to tenants with strong credit.