Commercial Real Estate Financing—Learn About Your Options!

The commercial sector hit record-high price levels recently, and it’s expected that prices will increase in upcoming years. If you want to dive into the realm of commercial real estate, now is the perfect time. 

But before you start looking for commercial properties to invest, you need to ensure that you have enough capital to fund your investments. Let’s talk about different financing options for commercial real estate to help you make an informed choice:

Small business administration—SBA 7(a) loans

SBA 7(a) is the most popular loan program offered by the Small Business Administration that allows investors to secure a maximum of $2 million. For eligibility, you must fulfill the following conditions:

  • Must be operating for profit within the United States
  • Must have resources to invest your assets in your business
  • Must have a business plan with financial statements
  • Must meet SBA size standards and be deemed as small for businesses 
  • Must demonstrate a need for the funds

However, the SBA does not directly lend money; it only guarantees a loan, acting as a co-signer. It’s only available for businesses so if you’re a real estate investor, you will not qualify for this loan.

Conventional mortgage loans

Conventional mortgage loans are provided by banks and financial institutes. They are not backed by the government, hence come with tougher requirements and higher rates.

The borrowers must put down 15% to 35% of down payment and have a good credit rating to qualify for conventional mortgage loans.

The loan period may vary but typically range from 5 years to 20 years. The higher the loan duration, the more the interest is charged. 

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Commercial bridge loans

Commercial bridge loans are a great choice for commercial investors who want to take advantage of lucrative opportunities available in the market and require quick financing. 

Bridge financing enables access to funds for a short-term duration, usually six months, which gives investors sufficient time to secure long-term loans for their commercial investment. 

The down payment of commercial bridge loans typically ranges between 10% and 20% of the loan to value (LTV).

Commercial hard money loans

Hard money loans are perhaps the best choice for funding commercial real estate investment, offering numerous benefits to investors.

For instance, it comes with fast processing time, which will allow you to negotiate a better purchase price. It also increases the chances of your offer to be accepted over other bids.

Moreover, there is no standardized underwriting process involved in hard money agreements, hence they are more flexible than traditional loan agreements. 

In addition to that, you don’t need to maintain a stellar credit rating to secure hard money loans, making it easier to secure financing.  

About GCP Fund

GCP Fund is a renowned commercial lender that provides fast and trouble-free financing solutions to its clients. Headquartered in New York, the company provides a wide range of commercial financial plans, ranging from hard money loans to bridge financing. They serve areas including Jacksonville FL, Tampa FL, Miami FL, Raleigh NC, Charlotte NC, Charleston SC, Columbia SC, and other cities in the US. For further details, call at 1-800-514-7350 or send an email at contact@gcpfund.com

Categories: Finance,Real Estate

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