Commercial Real Estate Bridge Loans And The Benefits That It Can Give You
Many of you might think that a commercial real estate bridge loan is hard to comprehend but it is actually not as hard to understand as it may sound like. 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.
Depending on the agreement of the lender and the borrower, there are cases when the term of the loan can be allowed to extend up to another six months to one year. If the loan will be extended, there will usually be one to two points involved in it depending on the agreement between the lender and the borrower. 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. There are guidelines that lenders follow when granting a small business administrator a loan that is why it is usually up to one year only provided that the business is a successful one. These loans are intended for the borrower to purchase a commercial real estate and the seller should be able to return to the borrower a good thirty percent of the total price 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. Nevertheless, always remember that the small business administrator loan is only applicable to businesses that are successful.