If you own a small business, you may be thinking about buying real estate for your organization. Perhaps you need a new office, warehouse or factory. In many cases, it can be beneficial to purchase the property rather than lease it. However, it can be hard to find sufficient commercial real estate financing options for small businesses. These are a few of the options.
1) SBA Loans
The Small Business Administration offers loans for companies like yours. They come with low-interest rates and large loan amounts. You can apply for one through a lender (the SBA itself does not offer the loan).
These can take a while to be approved. Additionally, they are only available for owner-occupied and a few other building types. So, you can’t use this to buy an investment property. Speak with your preferred business lender to learn more about this option.
2) Conventional Mortgage
The vast majority of real estate is purchased with a conventional bank loan. This can be a simple process with relatively good rates and terms. However, banks are slower moving than some other lenders and they may require a down payment of 20% to 25%.
Additionally, banks have fairly strict requirements for lending. If you don’t have the best credit, this may not be the option for you. Nonetheless, it is a popular choice and worth exploring.
3) Private Money Loan
If you know anyone with significant liquid assets, they may be interested in helping you purchase the building. You may be surprised how willing people are to get involved, provided that they will get a return on their investment.
You can also find people through certain lenders. They work with high net worth individuals and groups to offer special, tailored real estate loans. Private money lending has a lot to offer but expects to show a clear plan for how the lender will get a return.
4) Seller Financing
In some cases, the building seller will finance it for you. This can be advantageous to both parties. The seller gets guaranteed returns through the interest and you get a better rate than you may otherwise qualify for. Of course, this is only an option with a seller who is willing.
These commercial real estate financing options can help you buy a property for your business. Learn more about each option so that you can make a well-informed decision when you find the right building.
