6 Loan Options for Commercial Real Estate

Using commercial real estate financing wisely can provide many benefits for fix-and-flip businesses, real estate developers and companies that administer commercial properties. To maximize your profits, it pays to analyze which type of loan fits each project the best. Here are the advantages of six options for real estate financing:

1. Bridge Loans

Bridge loans are generally used as short-term financing for real estate purchases or expansion. They offer two main advantages: fast approval and easier credit requirements. Bridge loans can be an ideal choice for closing urgent real estate deals. They can be great for fix-and-flip projects, since they give you money to take advantage of low-cost properties, make a profit, and repay the loan within the shorter term length.

2. Fix-and-Flip Loans

This type of commercial financing is similar to a bridge loan, but it comes with a unique perk that can be ideal for startups. Instead of having to put up your personal collateral as backing for the loan, fix-and-flip financing uses the property itself as collateral. This means increased interest and shorter repayment time frames, but it can be a great solution for businesses that don’t have a solid credit history yet.

3. Home Equity Loans

This option is usually most comfortable for small business owners looking to expand. It uses your home’s equity to provide a sizable loan for commercial purposes. You can take advantage of this capital to renovate your business, expand your office or finance construction.

4. Conventional Mortgage Loans

A commercial mortgage is your traditional bank-funded loan for real estate purchases. This type of financing has additional qualifications for approval, and strict credit score requirements, but it also offers significant benefits. For example, a mortgage provides low interest rates and long repayment terms. This can save business owners or income property developers a lot of money in the long run.

5. SBA Loans

Small businesses can qualify for SBA loans for purchasing commercial properties. SBA financing features the best interest rates around, and some programs let you get around making a down payment. If you qualify as a small business, this can be an amazing option for generating regular income from investment properties.

6. Private Money Loans

Private investors are just regular people who want to make money with their finances. They allow for a lot of flexibility in terms and interest rates, and they can be an excellent option if your credit is less than perfect. You can even approach friends or family members in search of financing that lets you wait until the property sells to make payments.

The right commercial real estate loan is a huge help in growing your investment business. To get the best deals, choose your lender wisely. That way you maximize profits and minimize costs.