There are several different types of commercial loans available to borrowers. Selecting the best loan to meet your needs and the best lender is very important for the success of your business.

There are several different types of commercial loans available and each one is best suited for different needs. Understanding how these loans differ can help you to make a wise selection about which loan will best meet your current and long term needs. When you are evaluating commercial loans, think of your lender as a service provider and evaluate the product or loan just as you would any other service or product that you would be purchasing. Investing some time to learn about each loan can help to ensure your future success in the business world.

A bridge loan is a short term loan for around a year. This can be used for cash flow, to construct a building before refinancing or even to make a commercial real estate purchase quickly. These loans require very good credit and are normally provided by private lenders. Because the lender is a private entity, there are fewer rules regarding the terms and the processing and fulfillment times are substantially faster than conventional lenders.

Real estate purchase loans are much like fixed rate and adjustable rate loans and are typically only offered to borrowers with exceptional credit of 700 or more. The commercial property must be used as the collateral on the loan and the rate is determined by the loan to value ratio. Hard money loans are a form of loan which comes from a private lender and often has a very fast turnaround time but comes with a high interest rate. The property is also the collateral for these commercial loans. Often times a hard money loan is used as a last resort to try to save a property from foreclosure. Due to the high risk involved, the lenders can justify the very high interest rates and the borrowers are willing to pay them in an effort to save their property from foreclosure.

Determine Your Needs

Before you set out to get a commercial loan, you need to have a well-defined purpose for the funds as well as a financial plan to repay the loan. Having that information will help you to determine which type of loan will best suit your needs at the present and in the future. This information along with your credit history will also help you determine who will be your best candidates for lenders. Conventional lenders such as banks and mortgage companies are the option which would normally be the most cost effective if you have the necessary level of credit rating. If creditworthiness or length of credit history is an issue then a private lender might be your only option. If that is the cast, you should expect a higher than average interest rate. This is the price that you must incur to get a lender to take a greater risk on you as a borrower.

Invest Time First, Then Money

When you are preparing to make an important financial decision such as getting a commercial loan, it is critical to invest your time in research long before you invest your money in loan application fees and appraisals. Take the time to learn about all of your options and then shop for a lender who offers you the best rate and terms to meet your needs.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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