There are as many as 32 million small businesses in the U.S. However, for many of these small businesses (63 percent), securing a commercial loan remains to be a challenge. For some businesses, the high-interest rates are hard to sustain, while for others, the lengthy underwriting process keeps them at bay.
As a small business owner looking to secure a commercial property loan, you may be overwhelmed. While your hesitance is natural and backed by past experiences, things can change for good now. Here are some tips to get your loans pre-approved if you’re keen to expand your business by investing in a commercial property.
Determine the Type of Loan You Need
There are a number of commercial loans that you can apply for. However, as a small business, your best bet is to opt for an asset-based loan or hard money loan. This is because, in contrast to the traditional bank loans, hard money loans and asset-based loans are easier to get approved from a private lender.
Choose a Property
The next step is to choose a property to set up or expand your business. Most commercial hard money loan lenders prefer offices, commercial properties, development lands, vacant lands, hotels, or multifamily buildings from which you run your business.
Find a Lender
If you want to go through the traditional loan process, you will need to find a lender such as a bank, a commercial private money lender, or a hard money lender.
The downside to choosing banks is that you will be required to prove a 1.25 percent profitability of your business, reflect a good credit score, and prove your business’s strong financial health. This process is painstakingly long and involves a lot of documentation.
Or Choose a Private Hard Money Lender
You can skip the hassle by opting for a hard money lender. A private money lender for a commercial loan will offer you a hard money loan, i.e., against the property you’re acquiring a loan for. Or you can apply for an asset-based loan where you can put down an asset as collateral. Private money lenders offer loans at a loan-to-value (LTV) ratio of 60 percent.
Fast, Easy, and Simplified Commercial Loans
If you’re a small business holding back on your dreams due to complicated commercial lending processes, reach out to us at Commercial Private Equity. We are private money lenders for commercial real estate and offer commercial hard money loans nationwide with fast processing.