What does Commercial Property Loan Signify?

Commercial real estate is a property used for business purposes and good sources of income. A few examples of such properties are offices, hotels etc.

Commercial property loan is a mortgage given by a lien on commercial property.These loans are best for the business owners who are looking to purchase or expand their offices.

How commercial real estate loan works?

Like residential properties banks, independent lenders etc., theyare actively involved in providing commercial real estate loans. They have different risks that they need to look after and offer the loan..

These loans are comparatively expensive compared to residential loans. The down paymentranges between 20% to 30% off the price. Interest rates are also higher and fluctuate between 10% to 20%. There are some loans given by small business administration which are cheap and have an interest rate between 7.75% to 10.25% depending on the size and duration of the loan.

Types of commercial real estate loans

There are three types of commercial real estate loans:

·        Permanent loans– They are the initial mortgages on a commercial property. These loans need to have some amortization and a minimum term of 5 years.

·        SBA loans– They are provided by traditional and nontraditional lenders but are guaranteed by the SBA. There isa different type of SBA loans available for a different type of borrowers for different purposes.

·        Bridge loans - Theyare the short-term loans provided with the term of 6 months to 3 years. These loans are often provided when the borrower is waiting to get longer-term financing or reference an existing obligation.

Wrapping up

Getting a commercial property loan can be difficult without having any knowledge about it. When securing a loan, the borrower needs to keep in mind the purpose for loan and the amount he requires and the time he is willing to pay it back. If you are searching for a commercial property loan, feel free to get in touch with us a JBN Capital.