Are you looking for a commercial real estate solution and want to know all about its different types? You have hit the right place. Here you can find different options you got when it comes to a business mortgage.
As the name tells you everything, it’s a traditional style of mortgage for commercial and business purposes. The term of this loan is shorter than other options available in the market. Although real estate investors can opt for many other loan options too, 60 percent of them still prefer this kind of financing.
Lender of conventional commercial estate solutions offer a loan at fix rate requiring borrower to furnish a 30 percent down payment. The typical term for this fixed-rate financing is 5 to 30 years.
Commercial Bridge Loan
It is a short form of commercial estate solution that a borrower typically requires to handle a debt service. Let’s say the balloon payment of an old commercial loan is due in the upcoming months, since the owner of the property doesn’t have that much payment to clear, he will get a commercial bridge loan and clear that payment.
This kind of loan is a short term such as six to twelve months, which means you need to be fully ready to pay a high-interest rate.
Commercial hard money Loan
It is a loan that comes to rescue real estate investors when they got no other option to use. In a high-risk situation, a borrower can opt for it. This might not be an ideal choice but certainly, the last resort to visit.
The approval process for Commercial hard money loans is quite fast. You can expect payment within a week. The lender of such a commercial estate solution gets benefits from this loan with a high-interest rate such as 10 to 20 percent of the loan amount.
When you are out of options and can’t go with a conventional loan, this kind of loan seems like a blessing in disguise.
They are very common real estate solutions available. You can find two different kinds of these loans for the commercial market: one is SBA 7 (a ) and SBA 504. These loans are backed by Small Business Administration.
SBA 7(a) – It is a kind of loan that is issued to commercial investors who want to purchase or refinance their commercial properties. The maximum loan amount one can get is up to $5million.
SBA 504- Another Kind of SBA loan is one that investor uses for commercial purposes. This type is similar to SBA 7a but with the exception that there is no maximum loan amount defined for it.
It is an unconventional type of loan that works as a good commercial estate solution for investors. They opt for this option when they need to fill the middle of a capital stack. The best part of this loan is that one can structure it as an equity or debt. You can use this loan either as a secondary debt or mortage on your commercial property or structure it as convertible debt, participating debt, or preferred equity.