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Commercial Real Estate
Conventional, SBA, Bridge Construction. We can help with any CRE Finance need.
Unlocking Opportunities with Commercial Real Estate Financing
In the world of business, real estate often plays a pivotal role in growth and expansion. However, the financial complexities surrounding commercial real estate can be daunting. Whether you’re an established business owner or a budding entrepreneur, understanding the intricacies of commercial real estate loans can be a game-changer. In this post, we’ll dive deep into the types, features, and benefits of these loans, providing you with the knowledge to make informed decisions and unlock new opportunities for your business. Stay tuned to demystify commercial real estate financing and propel your business forward.
Cash Flow Management
Enables businesses to manage cash flow effectively by allocating property costs over an extended period, thereby preserving capital for other operational needs or investments.
Property Appreciation
Allows borrowers to profit from property appreciation over time, while their initial investment is limited to just a fraction of the property's cost, potentially leading to substantial gains upon sale.
Build Equity
Commercial real estate loan payments contribute to building equity in the property, which can serve as a valuable asset for the business or collateral for future financing.
Tax Benefits
Offers tax benefits by allowing interest payments and property depreciation deductions, effectively reducing the overall loan cost.
Loan-to-Value (LTV) Ratio
A key feature of commercial real estate loans, signifies the loan amount in relation to the property's appraised value, affecting interest rates and loan terms due to the associated risk level for the lender.
Interest Rates and Terms
Commercial real estate loans come with either fixed or variable interest rates over a specified term. The term of the loan can vary significantly, from a few years to several decades.
Repayment Structure
Often features an extended amortization period with a shorter loan term, resulting in lower monthly payments but a larger balloon payment due at the term's end..
Collateral
Commercial real estate loans are typically collateralized by the property, offering security to the lender but presenting increased risk for the borrower, who could lose the property in the event of default.
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FAQs
In this section, you will find concise answers to common questions regarding commercial real estate loans.
There are several types of commercial real estate loans, including traditional mortgages, bridge loans, hard money loans, mezzanine financing, and construction loans. Each loan type has unique features and is suited to different kinds of real estate projects.
To qualify for a commercial real estate loan, lenders typically look at factors like the borrower’s credit score, the profitability of the property (or potential profitability for new constructions), the borrower’s business financials, and the Loan-to-Value (LTV) and Debt Service Coverage Ratio (DSCR).
The term of a commercial real estate loan can vary, but they are typically shorter than residential loans. Terms can range from a few years (for bridge loans, for example) up to 20 or 30 years for some traditional mortgages.
A balloon payment refers to a large payment due at the end of a loan term. This is common in commercial real estate loans, where monthly payments might be calculated based on a longer amortization period, but the balance of the loan comes due at the end of a shorter term.
Whether you can prepay a commercial real estate loan without penalty depends on the terms of your loan. Some loans do have prepayment penalties to compensate the lender for the loss of expected interest income. Always review your loan agreement carefully to understand any potential costs associated with early repayment.
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Loan Types & Products
Business Acquisition
Acquiring a competitor? Buying our a partner? Scaling your empire? We can help.
Working Capital
The quickest way to kill a business is to run out of cash. Let’s talk working capital to keep you alive and thrive.
Equipment Financing
Need any type of business equipment or machinery to operate your business. We can likely help finance it.