Commercial Real Estate Loans

Bluestar Mortgage of Schaumburg, is the trusted choice for Commercial Real Estate Loans. Give us a call at 847-230-4030 to speak with a Commercial Real Estate loan expert who can assist you in determining if a Commercial Real Estate loan is the right option for you. You can also click on the schedule a free consultation button above.

Commercial Real Estate Loans are intended for people searching to acquire revenue-generating properties. The commercial property loans are given, as the name denotes, for a commercial asset instead of residential. The funding likewise consists of the development, acquisition, and construction expenditures.

Commercial Real Estate Loans Qualifications

To be eligible for a commercial property loan, the following are considerations from the lenders:

  • The collateral loans, i.e., the worth of the commercial assets
  • The business entity’s creditworthiness
  • The tax returns and financial reports for the last 3 to 5 years
  • The loan-to-value (LTV) ratio of the property
  • The debt-service analysis ratio

What is considered Commercial Real Estate?

Commercial real estate is aimed exclusively for business purposes that produce revenues such as:

  • Apartments
  • Hotels
  • Land for Home or Business Development
  • Office Complexes
  • Retail Centers

Who is eligible for Commercial Property Loans?

Usually, investors acquire commercial property and have the space be rented, collecting the rental fee from other entities operating in the acquired commercial property.
Business entities include:

  • Partnerships
  • Funds
  • LLCs
  • Corporations
  • Real Estate Investment Trusts (REITs)
  • Developers
  • Trusts

Kinds of Commercial Real Estate Loans

1. SBA Loans
Same as the Federal Housing Administration guarantees FHA loans, the United States Small Business Administration (SBA) likewise offers guarantees for commercial property loans. There is two loan schemes for commercial real estate loans.

1.1. SBA 7(a) Loans
This is SBA’s most popular loan scheme, which is excellent for procuring real estate properties because there is versatility in utilizing funds. There are specific conditions on the SBA website to be met for your business to qualify for this loan. Approval considerations comprise your credit history, location, and income of your business.

1.2. SBA 504 Loans
This loan provides fixed-rate funding for main fixed assets, including current buildings or land. Like SBA 7(a) Loans, there are procedures for the 504-loan admissibility scheme. Some of these include meeting a small business requirement, a reasonable business plan, and management knowledge.
But compared to SBA 7(a) loan, the 504 loan is not financed entirely by a private lender. Instead, the 504 loans can be obtained through Certified Development Companies (CDCs), establishments that are not for profit and stimulate economic growth in the communities. Usually, 50% of the project is financed by a private lender, while a CDC finances up to 40%.

2. Permanent Loans
This is the first loan on a portion of a commercial property, your primary, fixed-rate, or variable rate loan from most commercial lenders. Usually, the amortization schedule is longer than other business loans and can be suited to fit your needs.

3. Hard Money Loans
This kind of loan normally does not entail evidence that you can pay off the loan. It is offered by private entities that focus more on the worth of the property. In cases of non-payment of your loan, they will take and sell your property to make more money out of it. This process sets the approval simple, but the interest rate is much greater compared to a permanent loan. Furthermore, you have to pay off the loan in a short period of time, typically between 1 to 5 years.

4. Bridge Loans
Like hard money, bridge loans offer a short-term option (usually one year or less) with the same high-interest rate. The aim is to offer capital and keep up the cash flow even though you are refinancing, leasing, or improving commercial property. The bridge loan can also be utilized while anticipating secure long-term financing.

5. Blanket Loan
This kind of loan can be convenient if you have decided to procure numerous properties. With this kind of loan, you can have an all-in-one lender, payment, and loan terms for several properties. However, there are disadvantages, such as it will be difficult to market individual properties since they are all tied together. And since all the properties are guaranteed for the others, when one property jeopardizes the expected money, it is supposed to bring in, all of your investments could likewise be in danger.

Connect with a Bluestar Mortgage Commercial Real Estate Loan Expert

If you are interested in a Commercial Real Estate loan, call us at: 847-230-4030 to speak with a Commercial Real estate loan expert who can assist you in determining if a Commercial Real Estate loan is the right option for you.

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