How to Apply for Commercial Real Estate Loans

From owner-occupied storefronts to multifamily rental properties, the commercial real estate covers a wide range of property types. There are many reasons to choose a commercial property loan, and the number of loan options can feel daunting. Learn how to apply for a commercial loan today to accelerate your business growth or secure your ideal investment property.

A bank mortgage is a popular option for many businesses. This type of loan will feel most familiar to you if you already have a residential mortgage. Your credit score, tax information, and bank account details all determine your approval of a particular loan amount, length and interest rate. Generally, a bank mortgage requires a down payment and a higher credit score than a traditional mortgage. The application process is straightforward, but a credit check and approval could take some time.

Depending on the mortgage you receive, you may have a balloon payment or a fully amortized loan. A balloon payment has a short repayment plan, typically a few years, before the entire loan payment is due. Amortized loans have longer terms and your monthly payments over the course of the loan length will pay it back in full, including interest.

The Small Business Administration has several loan options for small-business owners who don’t have the business history, credit score or both required for a commercial mortgage. Learn more about SBA 7(a) and SBA CDC/504 loans to find out if one of these loans work better for your situation.

An SBA loan is backed by SBA but is disbursed by a bank or other lender. This means that you’ll need to fill out separate applications for both institutions. While it can be easier to qualify for an SBA loan instead of a conventional commercial mortgage, the paperwork makes the approval process far longer.

SBA 7(a) loans allow you to not only purchase your commercial real estate but also make any necessary repairs and cover other business costs. The flexibility of this loan makes it the more popular SBA loan option. Every lender has its own application, so the exact details can vary. However, you’ll need to provide your tax information, financial history, and credit score.

SBA CDC/504 loans are another popular loan option for commercial real estate investment. These small business loans are specialized for major asset purchases, like equipment, vehicles and real estate. While not as popular as a 7(a) loan, you can still receive the financing you need at competitive rates to grow your small business through real estate investment.

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