Commercial Land Loans

SBA 504 loans are perhaps the most sought-after commercial real estate loans, but it is the Accredited Construction Companies (CDCs) that make them available. They are also known to be the most daunting to get. Established to promote economic growth, SBA 504 loans are long-term credit options (10 or 20 years) for fixed assets and can be used to buy, modernize or enlarge a business, including refinancing costs associated with such expansion. These loans are also referred to as CDC loans, a node to CDC loans.

Despite obvious benefits, the SBA 504 loans do have a few pitfalls. For eg, 504 loan funds are limited in usage and therefore not appropriate for those in need of flexible funding. If you are considering this loan, please bear in mind that the funds must only be used for the following authorized project costs:

• Purchase current commercial real estate such as office buildings
• Purchase or develop the property
• Build a modern commercial property
• Renovate, convert, or modernize the current property
• Purchase long-term machines or appliances.
• Refinance debt correlated with growth and development as it applied to the previous list of items.

SBA 7(a) loans are another popular option for small business owners who want to finance construction, repairs, upgrades, or sales of long-term equipment. However, SBA 7(a) loans can also be used to manage the expenses associated with the purchase of equipment, inventory, and fixtures, as well as the conditions for working capital, refinancing of loans, and start-up costs. As such, this loan is considered more flexible than the SBA 504 loan.

SBA 7(a) loans, though still regulated by strict requirements, are now more open to small business owners, especially those with good credit.

The SBA is not the only organization funding or selling commercial real estate loans. Instead, many commercial lenders, including JP Chase and Bank of America, are offering commercial loans to interested borrowers. Loan terms, restrictions, and commercial real estate financing rates, therefore, vary on the basis of the lender, and it is also best to apply specifically to the prospective lender for specifics of the loan.

Bridge loans refer to short-term commercial real estate loans. The loan term for a bridge loan is usually anywhere from six months to two years. Bridge loans are usually used for either of two purposes – either the purchaser hopes to sell the property within the bridge loan duration or they intend to be able to greatly raise their credit rating during the timeline. Bridge loans are mostly used by business developers who, for example, intend to finish the construction of an office building on the purchased land, which will then be sold to another group. They are also used by real estate investors who purchase and "flip" residential assets over a narrow span of time.

Hard money loans are short term loans dependent on the value of the land. Usually, these loans are made from commercial companies and tend to have higher down payment requirements. Qualifying for a loan is easier, and securing a loan tends to be smoother than a conventional mortgage.

Crowdlending platforms are matched from borrowers to particular lenders. There are a variety of industries focused on industrial loans. These programs are a reasonable option for short-term bridge loans that are used to bridge the difference before long-term financing is secured.