How to Get Great Commercial Real Estate Financing

When it comes to securing the best commercial real estate, you need to have the right financing. Commercial property loans are mortgage loans that apply only to commercial property. You can use them to purchase retail locations and other office locations.

What Are Commercial Property Loans?

Commercial property loans are different from residential loans because they usually have shorter terms. Then, at the end of the loan, they require a balloon payment. Interest rates also tend to be higher than a typical residential loan.

Types of Commercial Property Loans

When you need financing, there are different forms of financing and places that you can seek out for funding. Here are a few of those places.

  • Bank loans – Bank loans tend to have lower interest rates. While their standards are higher and you may need a lot of collateral, this is the best option. When it comes to commercial real estate, most companies appreciate this route.
  • Bridge loans – This type of loan is a bridge to a longer-term commercial property solution. These loans have higher rates and many people fold the bridge loan into a longer commitment.
  • Crowdfunding – As one of the latest types of funding, crowdfunding is where you use an online portal to find potential investors. The investors evaluate their risk through the online portal and make a match.
  • Construction loans – These are short-term loans that you use to build a commercial property. Banks release money periodically so that the construction can progress.
  • SBA 7(a) loans – These are the most common SBA loan. You can apply to one to buy, fix up or to build a commercial property. These aren’t necessarily loans, but guarantees to banks.
  • SBA 504 loans – Like the 7(a) loan, this isn’t so much of a loan as it is a guarantee for a loan. It guarantees to back loans from traditional institutions. These are geared towards small businesses and fixed assets.
  • USDA Business and loan program – This program provides guarantees for commercial property mortgage loans. If you’re thinking about one of these loans, all you have to do is fill out one of the forms on their website.

If you’re interested in commercial real estate financing, then it’s important to get all of your information together before you decide to apply. This will make the entire process go a lot quicker and make it more likely that you will get the financing that you need.

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