Different Types of Commercial Real Estate Financing for Business Owners

People purchase commercial properties every day for a variety of reasons. Usually, business owners look for financing to secure a piece of property to house their business enterprise. Commercial real estate loans can also be acquired by investors for investment property or by developers to begin construction. Regardless of how you’re wanting to use your real estate, there are different financial products out there to help meet your exact needs. Certain kinds of loans are helpful for investors and entrepreneurs.

Traditional Commercial Loans

One of the more common ways people acquire commercial real estate loans is with a traditional commercial loan. These loans are similar to the mortgages that people take out when they’re buying their own house. Usually, a bank will expect an applicant to put a good percentage of the property value down to begin the loan. The remainder of the balance will be spread out over several years. These kinds of loans typically have fixed interest rates that stay the same throughout the duration of the loan. When business owners also want to own the property that they use for their business, this kind of loan can be beneficial.

SBA Commercial Loans

Another solution to finding a loan for your commercial real estate is with a loan that’s guaranteed by the Small Business Administration. The SBA works with banks and lenders all around the country to formulate these loans to help small businesses. The organization creates the terms for the loans they back to make them more favorable to business owners. Entrepreneurs can use these loans to either purchase new property, refinance an existing property, or renovate a property. The two most common types of SBA loans are the 7a loans and 504 loans. 

Commercial Bridge Loans

Bridge loans are a less common product for financing commercial real estate. Investors typically use bridge loans to help with short-term financing needs on an investment property. The short-term nature of bridge financing, however, can usually mean higher interest rates. They can be used by investors to pay for balloon payments, renovations, and acquisitions. Business people use these loans to buy a property and complete renovations in a given period of time. Bridge loans are helpful when an investor wants to purchase a property quickly and resell it for a profit.

These are just a few kinds of commercial real estate financing available. Loans help business owners become successful every day.

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