Finding a real estate business loan to purchase property for your business can be overwhelming. Interest rates, down payments, and loan types constantly update and change. With so many companies competing to get your business, how can you decide which one is truly best for you?
We’re here to guide you along in the process. Below, you’ll find a summary of the most common and best types of real estate business loans and why you might want to choose that option. Before you decide on a real estate business loan, keep reading!
To make your research process a little easier, here’s a list and small summary of different real estate business loans you can apply for. We’ll explain why that loan might be best for you, depending on your needs and situation.
A blanket loan is best for people planning to buy multiple properties for their business. So, if you’re hoping to launch numerous offices or stores at once, the blanket loan might be best for you.
However, keep in mind this type of loan comes with several downsides. If one of your properties does not do well, it can bring down the other real estate options since they were purchased together. It also makes it much harder to sell your real estate individually if you haven’t paid off your loan. The blanket loan might not be the best option if you want a flexible loan.
As the name suggests, the bridge loan is an investment that helps connect you to more stable, full-time credit options. Bridge loans are short-term, usually for about a year, and provide smaller amounts of money.
If you’re looking for quick access to more cash for an improvement project for your office, this loan might be for you. However, be wary because this type of real estate business loan has a high-interest rate.
A business line of credit loan is one of the most common commercial real estate loans. They work similarly to credit cards. You have access to the money whenever you need it, there is no time limit, and you can reuse it later. Once you repay any amount of your loan, you have access to it again.
This type of loan is excellent for business projects you don’t know the total cost of or ones that might stop and start again later down the road. Of course, like with credit cards, the interest rate is high, and there are no payment deadlines. So, if you aren’t careful and diligent in repaying, you might find yourself in steep debt.
If you’re looking for a type of loan that is very flexible, don’t mind a higher interest rate, and want to reuse the loan amount, then the business line of credit loan might be best for you.
The benefit of a hard money loan is that you work with private companies that don’t require proof that you can repay the loan. If you’d rather avoid all the nuances of applying for loans and working with large businesses to receive money, then consider a hard money loan.
However, if you default on your loan, that private company can take your property and resell it to get their money back. The interest rate is higher, and you must pay back your loan in a short time frame, around one to five years.
Small Business Administration (SBA) loans are government issued. There are two types, the 504 or the 7(a) loan. Depending on which you’d like, either type has benefits and downsides. Luckily, we have two blogs that go into each of these types of loans in more detail. Click here to read more about the SBA 504 loan, and click here to learn more about the 7(a) loan.
When you think about a traditional loan, you probably imagine a term loan. Another one of the most common types of real estate business loans, they consist of one lump sum you pay back over time. Each term loan is unique to the person borrowing. However, in most cases, you pay back your loan over five years after borrowing from financial institutes, like banks or online lenders. The qualification requirements for these types of loans are strict and require proof you’ll be able to pay back the loan.
If you’re looking for a more traditional loan and feel confident you’ll be able to pass the rigorous approval process, feel free to apply for a term loan.
Do none of those loan options sound like they fit your business needs? Consider working with with.co through another option: lease-to-own. After all, you already own a great business. We’d love to help you own its property too.