Commercial Real Estate Bridge Loans And The Benefits That It Can Give You
A lot of people find understanding what commercial real estate bridge loans a bit complicated and intricate but it is actually not the case at all. There are times when a person is interested in doing business on a commercial real estate but he or she is too busy to address to it on his or her own since there are a lot of things that needs to be done as well such as property improvement, selling of property, looking for potential tenants, and a lot more that is why a commercial real estate bridge loan will come in handy since it is capable to do all of these things for you.
If you are planning to get a commercial real estate bridge loan, you should be aware that this is usually given to you with the term of six months to one year.
Although there are times when the lender will allow the borrower to extend the term of the loan and add another six months to one year depending on the agreement that will go on between them. There is one point to two points that usually goes along with the extension of the loan. Most of the time, this type of loan is considered as a financing bridge because it happens during the time when there are an acquisition and a development of a certain property as well as the time when there is enactment of the permanent and traditional taking out of the loan.
Commercial real estate bridge loans are loans that are being granted to commercial properties that need to be renovated and upgraded which can be used by borrowers who are not yet granted with permanent financing however, this can be very useful in situations where you already acquired the loan and have been approved with an SBA loan. The term for an SBA loan is granted up to a year provided that the business is successful. The borrower will look for ways to have money to finance for a project and as soon as he gets the money, he needs to find a way to arrange with the seller thirty percent of the total price of purchase of the property. The commercial real estate bridge loan can only be pursued after the lender will be able to provide the borrower with the thirty percent that was taken out from the total price of the purchase of the property. What the borrower needs to do is to make sure that the loan will make the business successful so that he or she will be granted with a permanent financing that will secure the future of his or her business. Small business administrator loans are only granted to businesses that have become successful and you need to take note of this fact if you are considering in getting one for your business.