Commercial Land Loans
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The choice to buy a commercial real estate property, as opposed to leasing it, will come with various advantages. The right investment can be particularly financially advantageous, especially because purchasing property usually helps you to accumulate equity and take advantage of additional tax benefits. And, because certain commercial land loan rates are as low as 3.9 percent, buying property will contribute to long-term savings.
Choosing the best commercial real estate loan
If you’re worried about buying or renovating an income-earning property, one of the first moves you’ll need to take is to decide which lending opportunity is a better fit for your needs. Commercial Real Estate Loan Pros of Miami can assist you, and provide the relevant options.
For several, this choice boils down to conventional small business loans from financial entities such as a bank or credit union (a.k.a. commercial mortgages) versus SBA-related loans. There are, however, other commercial real estate loan choices that you might want to explore, including bridge loans, hard money loans, and building loans.
SBA 504 loans
SBA 504 loans are arguably the most sought-after commercial real estate loans, but Certified Development Companies (CDCs) that make them accessible. they are often considered the most challenging to receive.
Built to stimulate economic development, SBA 504 loans are long-term lending opportunities (10- or 20- year) for fixed assets and may be used to purchase, modernize, or extend a company, including refinancing costs associated with such expansion. These loans are often commonly referred to as CDC loans, a nod to the
Despite clear advantages, SBA 504 loans do come with a few cons. For instance, 504 loan funds are restricted in use and thus not suitable for those needing versatile financing. If you’re contemplating this loan, bear in mind that funds must only be used for the following approved project costs:
- Purchase current commercial real estate such as office buildings
- Purchase or develop the property
- Build a modern commercial property
- Renovate, convert, or modernize the current property
- Purchase long-term machines or appliances.
- Refinance debt correlated with growth and development as it applied to the previous list products.
SBA 7(a) loans are another common lending choice for small business owners who want to fund building, upgrades, modernizations, or long-term machinery purchases. SBA 7(a) loans, though, can often be utilized to manage expenses associated with the acquisition of machinery, inventory, and fixtures, as well as for working capital requirements, loan refinancing, and start-up costs. As such, this loan is deemed more versatile than the SBA 504 loan. SBA 7(a) loans, while always governed by strict standards, are now more available to small business owners, especially for those with good credit. The SBA is not the only company that backs or offers commercial real estate loans. Instead, several commercial lenders, including JP Chase and Bank of America, provide commercial loans to interested borrowers. Loan conditions, limitations, and commercial real estate loan rates also differ based on the lender, and so it’s better to appeal directly to a prospective lender for loan details. Bridge loans apply to short-term commercial real estate loans. The loan word for a bridge loan is typically anywhere in the period of six months to two years. Bridge loans are generally used for one of two reasons – either the buyer expects to sell the property during the period of the bridge loan or they hope to be able to substantially boost their credit value within that time frame. Bridge loans are often utilized by commercial investors who, for example, plan to complete the development of an office building on the acquired property, which they would then market to another group. They are often utilized by real estate developers who buy residential properties and “flip” them within a narrow period. Hard money loans are short-term loans based on the valuation of the property. These loans are typically made by private firms and appear to have higher down payment criteria. Qualifying for the loan is simpler and obtaining the loan appears to be smoother than a typical mortgage. Crowdlending sites match investors to specific lenders. There are several marketplaces centered on commercial lending. These services are a good choice for short-term bridge loans, which are used to "bridge the gap" before long-term funding is obtained.
SBA 7(a)
Conventional Bank Loan
Bridge loans
Hard-money lenders
P2P marketplaces
How to acquire a Commercial Real Estate Loan
Commercial land loans are typically used to buy or renovate commercial property. Lenders typically demand that the property be owner-occupied, implying that the company would have to occupy at least 51 percent of the house. To get a commercial real estate loan, you’ll need to settle about the kind of commercial loan you need — based on the property and company — and then narrow down the lender choices.
What Do Lenders Check For?
Lenders have three sets of conditions before issuing a commercial loan to your small company. These conditions pertain to the business’s financing, your finances, and the property’s characteristics:
Business Finances
Usually, commercial real estate loans need greater diligence than residential mortgages; small companies are deemed speculative, and often don’t end up surviving. Banks and commercial loans may continue to check over the accounts and ensure that the company has the cash flow required to repay the loan.
Personal Finances
Small businesses are typically owned by an individual or a few shareholders. Banks and commercial loans may like to check your credit score and history and see whether you’ve got financial issues in the past, including defaults, foreclosures, tax liens, legal decisions, and more. A low personal credit score may hurt your company’s chance of approval for a commercial loan.
Importance of Commercial Real Estate Loans
Commercial real estate loans are a vital aspect of the economy for a couple of big factors.
- First, they are typically necessary funding for almost all companies to be able to function.
- Second, since commercial real estate loans are usually much greater than residential real estate loans, they represent the majority of profits received by commercial banks and other lenders who provide them.
While foundationally somewhat comparable to residential real estate loans – loans for the acquisition of property typically backed by the property itself – commercial real estate lending covers a far broader scope of loan forms and is issued by a wider range of types of lenders.
Commercial real estate loans can be sought for different reasons. A company might be looking to buy office, storage, or industrial space; a firm might search for funding to obtain rental property; a home development company might require a real estate loan to finance a new development project. Either way Commercial Real Estate Loan Pros of Miami is here to assist you.
There are so many areas or regions where we offer these services with most of them being cities.
However, if you need any of these services, you need to contact us. The list below comprises the areas where we offer these services.
We service all counties and cities throughout South Florida. However, if you need any of these services in other cities throughout the state of Florida, please contact us. See what services we offer below: