Out of all the reasons to apply for financing for your business, the most important is a need for commercially used real estate. There are many types of loans available to finance commercially used real estate, and the offering varies by your needs. Here are the top 3 types of commercial real estate loans.
Purchase Loans
Purchase loans are somewhat self-explanatory. Purchase loans are designed to help finance the purchase of a real estate property. These loans are tied in closely with mortgages. Most purchase loans require you to already have a mortgage from a bank or other traditional lender. The purchase loan can then be taken out over the mortgage to provide extra funds to finance the purchase of the property. Purchase loans are advantageous because they allow you to come up with a larger amount of money to finance the initial purchase of the property, and can reduce your payments down the road.
Bridge Loans
Bridge loans are used to bridge the gap between different financing options over the course of a commercial real estate transaction. A bridge loan is a short-term lending option designed to be based on your initial traditional loan option and merge into a second traditional loan option. Most terms for bridge loans last only a couple of months and can serve as a buffer while the transaction is being processed by the banks involved. Bridge loans are a valuable asset and can help you maintain cash flow for your business during an intermediate period.
Fix-and-Flip Loans
Fix and flip loans are the most exciting option on this list. These loans are designed for businesses who are not purchasing commercially used real estate to house their business but to make repairs to the property and resell it for a profit. There are a few defining characteristics of fix and flip loans that differentiate them from other financing options. Fix and flip loans are generally low interest and short term, lasting anywhere from 6 months to 2 years. This is because most businesses engaging in fix and flip operations do not need a long-term loan to finance their commercially used real estate property.
These are the top 3 loans to finance the purchase of a commercial real estate for your business. All of these are great options for different situations. Keep this information in mind when searching for a commercially used real estate loan that is right for your business.
