Taking out a loan for commercial real estate allows you to secure the property you need. Whether you’re looking for a new business location or leveraging your capital to secure a rental property, take advantage of these excellent loan options to find your next professional property.
There are five basic types of loans for your commercial property: SBA, hard money, bridge, and conventional mortgage loans. Compare and contrast each one to find the best terms for your particular property and financial situation.
SBA loans are designed for small businesses and give you access to funding that you may otherwise be unqualified for. Whether you choose an SBA 504 or an SBA 7(a), you’ll find competitive rates on long-term loans. Don’t let your small business credit score and lack of financial history keep you from enjoying a quality loan.
Hard money loans are typically used when all other options fail. A hard money loan is secured with an asset that’s more valuable than the loan. It could be real estate, commercial equipment or other assets. These loans typically have high-interest rates and other unfavorable terms. However, they also have a quick turn-around time and don’t typically require a credit check or any other strict application procedure.
Bridge loans are short-term options that give you the capital you need for quick projects. The most common way to use a bridge loan is to receive enough funding to renovate a facility. Whether you buy a fixer-upper or choose to purchase apartments that could be updated for increased rental rates, this option needs to have a short-term strategy for refinancing.
Finally, conventional commercial mortgages offer fixed rates and other positive features for investors. You’ll typically find the best terms compared to other loan types, but you’ll also find a strict application. Expect to undergo a credit check and be prepared with a high credit score if you’re attempting to secure a commercial mortgage. You’ll enjoy long-term, easy-to-make payments that keep your business moving forward.
Choose the financial product that fits your situation and gives you the best options when it comes to securing your commercial real estate. Whether you’re looking for a long-term solution or need a quick fix to upgrade and refinance, these commercial loans are versatile enough to fit nearly any situation. Once you find the financing you need, it’s time to close on your dream commercial location to grow your business.