As a business owner or investor, it is crucial to understand the ins and outs of commercial real estate financing. Accessing capital through proper financial services can give you the flexibility needed to grow your business or venture into new markets – but without sufficient knowledge about this complex field, it’s easy to be overwhelmed by choices or unsure where to start. That’s where Cornerstone Capital comes in. Put your money to work so you can focus on the important things, like operating your business–and experience the confidence that comes with a top-rated qualified lender.

What Is Commercial Real Estate Owner Financing?

Commercial real estate financing is a complex and intricate process. Also referred to as “CRE” (short for “Commercial Real Estate”), this type of financing involves placing a mortgage lien on a commercial property as opposed to a residential or industrial property. These can be everything from shopping centers to hotels and apartments.

 

Whether you’re looking to purchase, refinance, or renovate a commercial property, there are several financing options available to you. By understanding the differences between these financing options, you can make an informed decision that best suits your needs. As an investor, it’s important to consider which loan type is most conducive to your circumstances and will be the easiest for you to manage, maneuver, and address. 

What Types of Commercial Real Estate Loans Does Cornerstone Offer?

Fortunately for the savvy investor, there are several ways to go about achieving lending for a CRE property. Cornerstone Capital offers a variety of different loan types so that you can select a plan that matches your needs and leaves you feeling confident and prepared for the future. There four primary CRE loans Cornerstone Capital has mastered. They are as follows:

Senior Loans

A senior loan is a first-lien loan that is secured by a commercial property’s real estate. These loans typically have lower interest rates than other financing options and are offered by traditional banks and lenders. Senior loans are an excellent option for borrowers with good credit and a solid financial history. However, securing a senior loan can be a lengthy process, and lenders may require extensive financial documentation, including tax returns, financial statements, and appraisals.

Bridge Loans

A bridge loan is a short-term loan used to bridge the gap between financing opportunities. For example, if you’re in the process of selling a property and are waiting for the sale to close, a bridge loan can help you purchase a new property in the meantime. Bridge loans have higher interest rates and are typically offered by alternative lenders. These loans are an excellent option for borrowers with unique financing needs but should be used sparingly due to their high cost.

Preferred Equity Loans

A preferred equity loan is a hybrid of debt and equity financing. Rather than borrowing money, borrowers receive a percentage of ownership in the property. These loans typically have higher interest rates than senior loans, but they’re an excellent option for borrowers with weaker credit profiles or those who don’t meet traditional lending requirements. Preferred equity lenders may also be more lenient in their documentation requirements.

SBA Loans

SBA loans are guaranteed by the U.S. Small Business Administration and are an excellent option for small business owners looking to finance a commercial property. These loans have favorable interest rates and repayment terms but can be challenging to qualify for. SBA loans have strict documentation requirements, and borrowers may need to provide a business plan, financial statements, and tax returns.

Why Opt for Commercial Real Estate Financing?

Commercial real estate financing is a type of financing that is used to purchase, renovate, or refinance commercial real estate properties. While it may sound intimidating, it can actually be a smart financial move for those looking to invest in commercial real estate. Leveraging financing options can provide many benefits, from added security to peace of mind in your investment.

Increased Cash Flow

When you finance your commercial real estate investment, you’re not putting down all the cash upfront. This means you’re able to keep more liquid for other investments or as your own cushion. With lower out-of-pocket expenses, you’ll have more cash flow to pay for expenses and earn profits.

 

Diversification

One of the most significant benefits of commercial real estate financing is the ability to diversify your investment portfolio. By spreading your capital across different investments, you can minimize your risk of losing money if one investment fails. Commercial real estate financing allows you to diversify because it gives you the ability to invest in different properties, locations, and industries.

 

Security

When you finance a commercial property, you have the ability to leverage its value and secure your investment with collateral (i.e., the property itself). In the event that you default on the loan, you can lose the property, but not your entire investment. Plus, commercial real estate typically has a higher value than residential real estate, meaning you’ll have a valuable asset to fall back on if needed.

 

Tax Benefits

Commercial real estate financing comes with a number of tax benefits that can help investors save money. Interest paid on commercial loans is tax-deductible, as is depreciation on the property. Additionally, if you own multiple commercial properties, you can take advantage of deductions such as property management fees, utilities, and insurance.

 

Control

With commercial real estate financing, you have control over your investment property. You can make improvements, hire property managers, and set terms with tenants. This can lead to increased profits and more control over your investment.

Why Cornerstone?

Finding the right commercial real estate financing option can be a daunting task. However, by understanding the differences between senior loans, bridge loans, preferred equity loans, and SBA loans, you can make an informed decision that best suits your needs. Remember to do your research, gather all required documentation, and work with a trusted financing partner to ensure a smooth and successful financing process. With the right financing, you can unlock the full potential of your commercial property investment.

 

Are you ready to take control of your financial future? Our expert team works with your assets to find a custom plan that best suits you. Establish your peace of mind today!