Comercial Real estate Loans

Costs: Pay only the interest while you build

Unique: Loans specialized for construction needs

Flexible: If construction stalls, you only pay part of the loan

Experience: Lenders are knowledgeable and can help guide a project

Construction Loans

Lending Overview

Commercial real estate loans cut the upfront costs of buying properties for your business. They can be used for various investments in commercial property, including buy and hold and buy and sell strategies. Get an owner-occupied loan when you’re tired of fighting with landowners and want more control over your workspace. If you want investment properties that generate steady income, try bridge and term loans. Commercial loans are great for “fix and flip” investments, too. Interest rate on commercial real estate loans vary widely depending on the lender, your creditworthiness, and the specifics of the property investment. These rates are crucial to consider as they significantly affect the total cost of your loan. Loans are available from various lenders to suit nearly any CRE need, so make sure to work with a professional broker to discover the best deals. We’ll work with you to assess your needs and find the right financing. No matter your credit score or how long you’ve been in business, we can help you get the loan you need. Our lender network is vetted and reliable. Remember that commercial lending also involve closing costs, which can include loan origination fees, appraisal fees, and other related expenses necessary to finalize your financing.

LENDING OVERVIEW

The Funding Lane

HOW TO EFFECTIVELY APPLY FUNDS

There’s no one right way to use a Commercial loan, as long as you’re using the funds for real estate. This includes financing to buy and renovate properties. Commercial real estate loans can help you get retail, warehouse, office, and mixed-use space as well as multifamily housing. Even if you can afford to pay the full costs of buying real estate right away, a Commerical real estate loan will save you capital that you can put toward interest-earning investments. You can choose a long-term loan, such as a commercial mortgage or SBA loan, or decide to go with a short-term hard money or bridge loan. Use our expertise to find the best deals. When applying for commercial real estate loans, consider SBA options backed by the Small Business Administration. These loans are designed to help small businesses thrive by offering more accessible loan terms and comprehensive support throughout the loan process. When applying for commercial real estate loans, it’s essential to consider your debt service coverage ratio (DSCR), which helps lenders assess your business’s ability to manage and repay the loan effectively. 

 

EFFECTIVELY APPLY FUNDS

OWNER OCCUPIED

An owner-occupied loan means you’ll be using most of the property’s available space yourself as a business owner. Owner investment encourages commercial lenders to offer lower rates and better terms than if you were renting the space out to other businesses. An owner-occupied loan gives you the best of both worlds since you can rent out what you don’t use.

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BUY & HOLD

The buy and hold strategy leverages both long and short-term loans. A bridge loan allows you to make a cash offer now and replace it later with a commercial mortgage, or you can opt for a hard money loan for the initial purchase, using rental income to manage loan repayments. Effective cash flow management is essential, as it ensures that loan obligations are met and property investments are sustained without overextending your business’s financial resources. Balancing rental income against loan payments is key to maintaining a positive cash flow, crucial for the stability and growth of your investments.

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FIX & FLIP

Residential Mortgages vs. Commercial Real Estate Loans

Understanding the differences between residential mortgages and commercial real estate loans is crucial for investors. A residential mortgage, often referred to as a residential loan, is designed for individuals purchasing homes and generally features longer repayment terms and lower interest rates compared to commercial loans. These residential loans are tailored for personal home financing, offering more stability in terms of payment schedules. In contrast, commercial real estate loans cater to business-related property purchases, usually commanding higher rates and shorter terms due to the greater risk involved. Recognizing these distinctions helps investors choose the right financing based on their specific needs and the type of property they are looking to invest in.

Risks and Challenges of Commercial Lending

While commercial real estate loans offer significant opportunities for expansion and property acquisition, they also present risks and challenges that borrowers should consider.

  1. Market Volatility: The commercial real estate market can fluctuate significantly. Economic shifts, industry changes, or consumer behavior can impact property values and investment returns. Borrowers should be aware of the potential depreciation of their investments.
  2. Loan Obligations: Not meeting loan terms can lead to serious consequences such as defaulting, which risks foreclosure and impacts both financial health and credit rating.
  3. Interest Rate Risk: Many commercial loans are subject to variable interest rates. If rates rise, so will loan payments, potentially straining finances. Planning for rate fluctuations is crucial.
  4. Economic Downturns: During economic downturns, reduced revenue can make it hard to cover loan payments and secure tenants, especially for properties dependent on rental income.
  5. Prepayment Penalties: Some loans include prepayment penalties, which can restrict financial flexibility, making it costly to refinance or sell the property early.
  6. Regulatory Changes: Updates in commercial real estate regulations can affect loan terms, property management, and compliance. Keeping informed about legislative changes is essential.

By understanding and preparing for these challenges, businesses can better navigate the complexities of commercial lending, optimizing their investment strategies and financial stability.

FAQ’S

We believe that the more you know, the better the decisions you make. And in the financing world, better decisions mean lower rates, better terms, and increased profitability.

These FAQs are only the start. Our team is here to answer all of your questions and support you in finding the best financing solution for your unique scenario.

Q. WHAT ARE CRE VS. C&I LOANS?

CRE loans are commercial real estate loans that help businesses buy property. C&I loans, or Commercial & Industrial loans, are used for working capital or capital expenditures.

Q. WHAT CREDIT SCORE QUALIFIES FOR A CRE LOAN?

Requirements vary by lender and loan type, but a good credit score is generally 680 or higher. You may still qualify with a lower score, however, if you’re seeking an asset-based loan like a hard money loan for real estate. Talk with a broker about qualifications and credit repair solutions.

Q. HOW MANY YEARS ARE CRE LOANS?

Commercial real estate loan terms are typically much shorter than residential property loans. The SBA has a maximum of 25 years and short-term CRE financing can have terms of just a few years. Get matched with a loan that meets your terms when you work with a broker.

Q. DO I NEED COLLATERAL FOR A CRE LOAN?

Yes and no. Asset-based loans do require an asset to secure the loan. Other loans rely on your credit history to determine eligibility and rates. Find out more by speaking with a CRE loan broker.

Q: ARE THERE PREPAYMENT PENALTIES FOR COMMERCIAL REAL ESTATE LOANS?

Yes, some commercial loans may include prepayment penalties, which are fees charged if you pay off your loan early. These penalties cover the lender’s lost interest revenue.


Q. WHAT ROLE DO BUSINESS CREDIT SCORES PLAY IN QUALIFYING FOR A CRE LOAN AND HOW DO THEY AFFECT THE LOAN TERMS?

This question sets the stage for a detailed response that can discuss how lenders evaluate business credit scores, the significance of a business’s credit history, and how these factors influence the conditions and terms of a commercial real estate loan.

Q: WHAT ARE THE ADVANTAGES OF SBA LOANS FOR COMMERCIAL REAL ESTATE?
SBA loans offer small business owners significant benefits, such as lower down payments, favorable interest rates, and extended repayment terms, reducing financial strain. These government-backed loans often secure better terms from lenders, particularly in challenging economic climates. Additionally, they cover property purchases, improvements, and equipment costs, facilitating business growth.

Q: WHAT ROLE DO BUSINESS AND PERSONAL CREDIT SCORES PLAY IN QUALIFYING FOR A CRE LOAN AND HOW DO THEY AFFECT THE LOAN TERMS?

A: Business and personal credit scores significantly influence the approval and terms of a CRE loan. A strong business credit score suggests good financial health, potentially improving loan conditions such as lower interest rates. A personal credit score is also crucial, particularly for small businesses, as they reflect the owner’s financial responsibility. Higher scores can lead to better loan terms, affecting the amount, rate, and structure of the loan.

Land

Buy and improve land with a land acquisition and development loan from our network of lenders. Prepare by grading, removing debris, installing utilities, and creating roads ahead of upcoming construction. We’ll help you find the best financing for all levels of your project and help you get it done right.

Building

Once your property is ready to build on, talk to our brokers about a construction loan. We’ll get you a great deal on loans for offices, strip malls, warehouses, airplane hangers – whatever you’re looking to build! Pay just the interest while construction is ongoing and save working capital.

Renovations

Construction loans aren’t just for building from the ground up. Use one to tackle renovation projects to hold or flip. No matter what the size of your next business is, we have a loan to cover your costs and get your commercial property looking like new again. Ask us for details!

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FAQ’s

We believe that the more you know, the better the decisions you make. And in the financing world, better decisions mean lower rates, better terms, and increased profitability.

These FAQs are only the start. Our team is here to answer all of your questions and support you in finding the best financing solution for your unique scenario.

Q. Is my business eligible for a commercial construction loan?
The answer depends on the lender you choose. Requirements vary based on the type of loan you want and how much you need to borrow. You have several options when choosing funding for your construction project, and a broker can help you qualify for the one you want.
Q. Where can I find the lowest-rate commercial construction loan?
You can shop around online for ages looking for the right lender, but only a broker can get you deals you won’t find online. Our brokers build relationships that take years, just to make sure you get the best terms possible on your next construction loan. Ask us to match you with the right lender.
Q. Can commercial construction loans be used for residential property?
The line between commercial and residential isn’t always clear. However, if you’re building multifamily housing or residential subdivisions, a commercial loan can likely pay for it. Ask a broker for more information.
Q. What are the downsides to a commercial construction loan?
Commercial construction loans often have high down payments of 20% or more. You also have to be prepared to pay the entire principal at the end of the loan term. It’s important to plan ahead when seeking a construction loan. Let our brokers be your guide.
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Get Funded

The funding process starts with a short 3 minute online application. Our team will then review your needs and quickly provide you with a custom funding proposal that targets your desired financing types, rates, and terms.