Best Real Estate Business Loans Explained
Real estate business loans can come to the rescue when your business needs a kick-start in order to soar to success. Let's dive into each of the loan types outlined above to better understand their use cases.
This loan type is one of the toughest to qualify for. This is because the federal agency guarantees SBA 7(a) loans. The terms of these loans are more than flexible and the interest rates are below average.
An SBA 7(a) loan can help you to fund the office rent or lease, renovate, and cover current expenses.
StreetShares is a certified SBA lender that also specializes in lines of credit and term loans. To apply for credit with this lender, you need to show credibility by providing the bank statements from the past three months and tax returns from the previous year.
One of its positives is that the company doesn't require personal guarantees for businesses with bad credit history.
This loan is most useful if you need to buy real estate and long-term machines. The CDC stands for the Certified Development Company program. The CDC pays for half of the loan, letting the bank take responsibility for the other half. You will need to make a down payment of 10-20% and the loan will take a few weeks before it is approved.
This loan is ideal for real estate companies that boast a good credit standing and substantial tax return. These funds can help you boost your business, acquire new properties, and help with expansion.
With no monthly fees, minimums, and collateral, Fundbox is a friendly option for your SBA loan needs. Fundbox offers short-term loans (12 and 24 weeks) ranging between $1,000 and $100,000. Visit the lender's website to ensure that you meet their requirements.
Microloans are good for smaller and newer businesses with little-to-no history. The interest rates are pretty high for these loans; however, if used carefully, they can pave your way to success. Plus, once you do manage to pay off your microloan you can better your credit score and then be more likely to qualify for larger loans.
Keep in mind that the average microloan amount is around $13,000 (it's rare that small businesses manage to qualify for higher amounts).
If you're a new real estate brokerage struggling with day-to-day expenses or property renovation, microloans may be the answer you are looking for.
Square Capital is excellent for unsecured and small business loan types, including microloans. Square Capital offers a range of loans ($500 to $100,000) making the company a logical choice for your microloan needs. Its terms go up to 18 months, giving your business enough time to flourish even if you've just started out.
Bridge loans are short-term, small loans used to cover your expenses before you receive your principal loan. These are popular with larger purchases like hotels and buildings. As easy as they're to get, they do come with relatively high interest rates.
Real estate bridge loans can be useful if you want to renovate a property and aren’t able to qualify for a mortgage. The down payment is around 10-20%, compared to the higher, 20-35%, that come with traditional commercial loans.
If you need to invest some money in the property you are working on before you sell, a bridge loan may work for you. A bridge loan is also useful if you are waiting for longer-term financing to arrive.
BlueVine is one of our recommended options for bridge loans and short-term small business funding agreements in general. They review your application online and take you through the process as soon as you're approved. You need a credit score of 600 and a turnover of at least $10,000 a month to qualify for a loan with BlueVine.