The commercial real estate industry is rapidly evolving, and with it comes new loan products to meet the needs of businesses. In 2022, many businesses will be looking for financing options to purchase or refinance commercial properties. To help make things easier and more accessible for you, here are four of the most popular types of commercial real estate loans that will be available in 2022.
1. Traditional Commercial Mortgage Loan
A traditional commercial mortgage loan is a loan secured by a commercial property. These loans are typically used for the purchase or refinance of an existing property and are available from a variety of lenders. Traditional commercial mortgage loans generally require a significant down payment and have longer terms and higher interest rates than other types of loans.
2. SBA 7(a) Loan
The Small Business Administration (SBA) 7(a) loan is a government-backed loan program designed to help small businesses purchase or refinance commercial real estate. These loans offer more flexible terms and lower interest rates than traditional loans, making them a popular option for businesses looking to purchase or refinance.
3. Bridge Loan
Bridge loans are an increasingly popular financing option for businesses looking to purchase a commercial property quickly. These short-term loans are designed to bridge the gap between long-term financing and the purchase of a property, allowing businesses to purchase the property before long-term financing can be secured.
Bridge loans are typically more expensive than traditional financing options due to their short-term nature. Interest rates on bridge loans are typically adjustable and can be quite high, ranging from 8-15%. Additionally, bridge loans often require a significant down payment, typically 20-30% of the purchase price. This can make bridge loans a difficult option for businesses with limited capital. Despite their high cost, bridge loans can provide businesses with quick access to financing.
4. Mezzanine Loan
Mezzanine loans are a type of loan that is structured as a combination of debt and equity. These loans are typically used to finance a purchase or refinance of a commercial property when traditional financing is not available. Mezzanine loans have higher interest rates than traditional loans, but they can provide businesses with access to financing when other options are not available.
Mezzanine loans offer a number of advantages over traditional financing. First, they typically have higher interest rates than traditional loans, which can make them more attractive to businesses that need to access capital quickly. Additionally, mezzanine loans are typically more flexible than traditional loans, allowing businesses to structure the repayment terms to meet their needs. Finally, mezzanine loans are often easier to qualify for than traditional loans, making them a viable option for businesses that may not meet the criteria for traditional financing.
These four types of commercial real estate loans are sure to be popular in 2022. Each loan has its own advantages and disadvantages, so it is important for businesses to do their research and find the best option for their needs. With careful planning, businesses can use these loan products to purchase or refinance commercial properties and grow their businesses.
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