Commercial real estate financing is a category of loans that are designed to provide funding for office spaces, warehouses, apartment complexes, or other types of income producing properties. With several loaning options available, it can be confusing to know where to begin and which type of loan is best suited for your needs.
If you would like to discuss commercial real estate financing options with a qualified broker, the team at POM (Peace of Mind) Capital & Funding Services knows the strict regulations and requirements to help you smoothly secure funding for your business endeavor.
Types of Commercial Real Estate Loans
There are several types of commercial real estate loans available depending on your circumstances. The most common commercial loans include:
- SBA Loans. For small businesses
- Permanent Loans. A first mortgage for commercial property
- Hard Money Loans. Lenders consider the value of the property over proof you can repay the loan
- Bridge Loans. A short term option with high interest rates
- Blanket Loans. For purchasing multiple properties under one loan
Each type of loan carries its own perks and pitfalls. Discussing your options with a qualified broker is your best bet to securing the type of loan that fits your needs. Be prepared with your business and personal financial information, along with expected profit projections, will help your broker understand the full scope of your business strategy to best advise which type of loan is right for you.
Commercial real estate financing is more difficult to qualify for than an individual loan. Lenders will inspect both your business and personal finances before approval. Because of this, commercial real estate loans may have a longer approval period compared to personal loans. Requirements for commercial loans are strict as lenders are providing large sums of money that may prove difficult to repay if your business doesn’t meet projected profits. Lenders will also evaluate your debt coverage ratio, meaning your ability to repay the loan with your current income sources.
Most lenders do not cover the full amount of financing as they would for a personal loan. They tend to have shorter loan terms, as little as a year, and higher interest rates. Many commercial real estate financing options cover up to a maximum of 80%. Additionally, you will be required to provide collateral and possibly even a personal guarantee.
We Can Help
At the POM Capital & Funding Services, we can schedule a consultation to learn more about your options and what to expect when acquiring commercial real estate financing. Coming prepared with the right financial documents and project expectations will help your broker become familiar with your circumstances to get you the best loan possible.
If you would like to discuss your commercial real estate financing options with an experienced broker, call POM Capital & Funding Services at (631) 354-9290 or write to us at [email protected] to schedule a free consultation with our team.
POM Capital & Funding Services is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.