Commercial Real Estate Bridge Loans And Everything You Need To Know About It
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. When a person is thinking about purchasing a commercial real estate, there are other things that need to be taken cared of such as the selling of the property, search for potential tenants, property improvement and a lot more that is why one needs to have a commercial real estate bridge loan which will be able to offer a lot of benefits including helping the new businessman with all of these tasks to be accomplished immediately.
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. In most cases, this loan is considered a financing bridge because two things happen at the same time like for example the acquisition and the development of the property, and the time when the loan is being processed and released for use.
The commercial real estate bridge loan is also applicable if the borrower is thinking about purchasing a commercial building and has already 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 total price of the purchased property should be given by the seller to the borrower so that the borrower can now be able to push through with the commercial real estate bridge loan that will continue to finance the project. Bridge loans are typically for short term only that is why the borrower should make sure that this loan will make the business successful so that he or she can be granted with a permanent financing loan that will be able to secure the future of the business. Be that as it may, you may want to take note of the fact that small business administrators’ loan is only given to businessmen whose business became successful.