3 Different Kinds of Commercial Loans Explained

Have you been struggling to decide what kind of loan you should get to expand your business? It happens to the best of us. Commercial property loans can help you secure a mortgage to grow your company, avoid foreclosure, or establish business partnerships. During 2020, commercial banks gave out nearly $2.4 trillion in commercial loans in the US.

Whether you’re constructing your new office or need urgent finances to close a real estate deal, understanding different commercial loans can help you decide which one’s suitable for your needs. Here are the various types of commercial loans you should know.

Hard Money Loans

Your commercial property must be listed as collateral to qualify for private loans, even if you’re saving the property through this financing. A private lender won’t have the same stringent requirements for a hard money loan as a traditional bank.

Instead, they’ll be more concerned about your collateral’s value compared to your credit history. You can use hard money loans when you’re on a time crunch like an imminent deadline or a foreclosure proceeding.

Bridge Loans

These loans are short-term financing that can provide you with instant funds to finance a project. Since they’re temporary, they typically last anywhere between six months to a year or two. If you’re up against a deadline and you need finances to fund a commercial property, bridge loans might work for you.

Usually, they’re used when long-term financing is yet to come through. Private lenders typically offer bridge loans; hence a strong credit history and income might be required. The point is to show the lender that you’re capable of paying back the loan and cover your property’s current expenses.

Joint Venture Financing

This type of financing can maximize your potential for cash flow. Think of it as a partnership for a particular project that can help you appreciate the value of sharing equity in a shared venture. You can apply for joint venture financing with a partner in the same group. It can help you obtain funds if you and your partner can’t do it alone. In this case, you and all involved parties can share the costs, profits, and losses of a property.

The relationship between you and other loan applicants doesn’t have to go beyond the financed property, nor does it have to be official. It can help your company gain a competitive advantage, as you’re able to go after more significant opportunities.

Ready to work with private mortgage lenders in New York who look out for you? Having quickly closed on loans from $1MM to over $100MM, GCP Fund offers hard money loans, mezzanine loans, multi-family properties finance, bridge financing, structured joint venture financing, and much more, with experienced in-house underwriting! Speak to a specialist today to discuss the funding for your commercial project!

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