Are you searching for capital to renovate or purchase commercial real estate? If so, you need to narrow your search to just business loans. By securing a commercial real estate loan, you can get the financing needed for your project and the property you buy or improve will serve as collateral for the funds received. However, if you are confused by all the options available, it may be time to learn more about the most common loan products used for this purchase.

Traditional Bank Loan

A bank loan is the most popular financing option for purchasing commercial real estate. The benefit of these loans is the ability of banks to provide you the most money at the lowest cost. Also, banks typically offer the longest terms for the loans they give. The main drawback of bank loans is how difficult it is to qualify for them. If you have subpar credit or other financial missteps in your background, this loan may not be an option.

SBA Loans

Another option for funding a commercial property project is an SBA loan. These are easier to qualify than bank loans but still have stringent requirements. Currently, there are two loan programs to use for real estate purchases including the 54/CDC program and the 7(a) program.

The 7(a) loan is a general-purpose program, providing loans for an array of purposes, including repairing and buying commercial property. The loans can provide up to $5 million in funding with terms of up to 25 years. The SBA 504/CC loan helps small businesses upgrade and purchase capital-heavy assets, like equipment or commercial real estate.

Bridge Loan

Commercial bridge loans provide short-term financing that lets you purchase property or take advantage of an opportunity. Upon maturity, you must pay off the loan or refinance it into a long-term financing option. The bridge loan is designed to “bridge the gap” that exists between finding a property to purchase and renovating it or fining long-term financing.

Hard Money Loans

Another short-term loan option, a hard money loan is provided by private investors and lenders who are backed by a tangible asset. Usually, this asset is property or real estate. Compared to the bank, a hard money lender usually offers smaller loan amounts and their interest rates are typically higher.

Each of these options provides a viable option for financing commercial real estate. It’s up to you to figure out which one best suits your needs and your commercial property purchase plans. Working with a professional in the financing industry may help you make the right decision.