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WHAT IS A COMMERCIAL REAL ESTATE LOAN?

Commercial real estate loans are ideal for businesses looking to either purchase, develop or construct new property as well as current commercial property. The way it works is businesses can apply for this type of financing in order to secure a loan (may also be referred to as mortgage for this specific financing) which itself is secured by liens on the commercial property. As the name states, this is for commercial properties only and not for residential properties. Understanding that this loan is for commercial real estate, the terms and rates may differ from a traditional residential mortgage.

 

How To Use The Kind of Financing

The use for this type of financing can vary, meaning the business does not have to acquire new property in order to apply. This loan can cover expenses such as refinancing or renovations needed on current business real estate in addition to covering new real estate property. Small business owners or even large corporations may be eligible for this type of loan. Keep in mind, this type of financing is very different to a traditional residential mortgage that you would apply for when purchasing or refinancing a residential property. Aside from different terms and rates (as mentioned above) the requirements and application process vary as well.

Fix N Flip

Loans for investors who are buying distressed properties, rehabbing, and selling

 

New Construction

Loans for builders with shovel-ready lots or teardown projects. Spec houses or model homes, infill, teardown, or subdivisions.

 

Rental

Loans for real estate investors looking to rent out single properties or portfolios and refinance or purchase.

 

Multifamily

Loans for investors buying distressed multifamily properties that need capital expenditures and rent increases to stabilize and bring value to current market standards.

Avg. Term Length: 24 - 60 months

Real Estate Financing Details

 

Qualifying Criteria:

Required Items:

  • 700+ personal credit score for LTVs over 50%

  • 700+ personal credit score for LTVs 50% or less

  • 12+ months mortgage history

  • Signed one page funding application

  • Lease agreement required for subject property on refinance transactions

  • Details on the property to be acquired

No Collateral Requirements

 

Advantages

  • Businesses typically not approved for traditional bank loans could qualify

  • With large loan amounts and low loan rates, these small business loans can be ideal for growth initiatives.

 

Disadvantages

  • The borrower may be required to make a down payment

  • Collateral may be required and low-credit applicants may not be approved.