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Determine the Right Type of Commercial Real Estate Loan for Your Goals

A proper loan will provide a business with the boost they need to succeed.

real estate loan

(SALEM, Ore.) - Individuals considering commercial real estate loans have more than one option available to them.

Commercial loans are often obtained to cover operational costs or to provide capital for other needs. Often, this type of loan can help to shore up cash flow concerns and provide more capital to continue projects.

Those who obtain these loans will pay closing costs and an interest rate to borrow the funds over the pre-set period of time. Private lenders can often provide competitive loans like this for business owners of all types.

Consider Commercial Real Estate Loans Closely

When looking to obtain financing for any type of goal, businesses must consider how well a particular type of loan fits the business’s current need and credit qualifications.

Commercial real estate loan rates remain highly competitive in hard money loans, but other factors must be a consideration as well. Consider a variety of commercial loans with varied terms to meet specific funding needs.

Commercial Property Loan

This type of loan provides funding to purchase real estate. They may also be utilized for real estate improvements such as expansions or large scale renovations. Typically secured by the real estate itself, this type of loan can be one of the more affordable options for borrowers.

Commercial Loan Refinance

Refinancing an existing commercial loan can free up equity and allow a business to affordably tap into capital for other goals such as funds to grow the business, expansion, cash flow, or to create a line of credit for ongoing needs.

Commercial Bridge Loan

Bridge loans can help to fill the gap. They provide short-term financing until a specific exit strategy occurs. This includes refinancing an existing loan, selling a property, or providing interim funding for the purchase or modification of real estate.

Though they are short term, this type of loan is often critical for businesses who are working on rehabs or significant property upgrades and cannot secure a long-term property loan until those renovations are complete.

Working Capital or a Cash Injection Loan

Many business owners lack assets (or may have minimal tangible assets) but need cash flow. A working capital or cash injection loan provides the business with near-immediate financial help.

The business owner can use the funds for virtually any need such as payroll, paying accounts payable, and meeting other financial obligations while repaying a portion of sales each week or month.

Recapitalization Funding

Businesses that need support in restructuring their existing debt may wish to utilize recapitalization funding. This type of funding is often necessary to help make the capital structure of the business more desirable from the view of interested buyers.

It also can help shore up weak areas to ensure a business can continue to operate in an efficient manner.

Acquisition Financing

To scale, some businesses need funding to help them purchase other business entities. This can be a high-risk scenario, but acquisition funding allows it to be a possible option. It allows companies to have the capital necessary to acquire other businesses in an efficient manner.

Growth Capital

Growth capital loans provide financing to help a business to meet their capital needs immediately to encourage and spur growth in the coming months and years. This type of loan enables the company to improve cash flow now based on the company’s projected cash flow later.

Commercial loans like these vary widely in terms of what their purpose is. However, private lenders can help businesses of all types to find the funding solutions they need for virtually all scenarios.

The key here is to understand how the funds will be used, and then to select a loan designed specifically to meet those goals.

Source: Special Features Dept.


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