When it comes to commercial real estate loans there is never one that will work and fit for all. There are many different factors and variables that must be considered. The loan amount, eligibility requirements, the length of the loan application process, commercial real estate loan rate, and even fees are all variables that should be taken into consideration. Each loan option is different and is set for different types of commercial real estate purchases.
When trying to get a traditional commercial real estate loan, people must go directly through the bank. This tends to be the common way to go about it because banks will lend the most amount of money at the lowest cost. However, banks tend to be the most difficult to get the loan through because they choose those individuals that are more creditworthy borrowers. Those businesses that have brought in a decent profit over the years are typically the ones who they approve the loan for.
Commercial Bridge loans are another short-term loan option that are available for commercial real estate. This type of loan allows for a quick way to buy the property and take advantage of the purchasing opportunity. Once the loan reaches maturity there are two different options. The borrower must pay the loan off in full or either refinance into long-term financing.
Hard money loans are another option, but they are usually short term loans that can be received through private lenders or investors. Unlike borrowing from a bank this type of loan is usually much smaller in terms of the amounts that one can borrow. While a hard money loan also has a much higher interest rate, they are much easier to qualify for. Young businesses that are trying to get their feet on the ground typically get their start due to a hard money loan.
Crowdfunding platforms are an additional option for a commercial real estate loan. In recent years crowdfunding has become extremely popular. Crowdfunding allows the individual to receive small amounts of money for the project. In time these small amounts of money that are being received come together to form one giant commercial real estate loan. This type of platform operates just as a short-term loan would.