If you are looking for a commercial real estate loan in Las Vegas, it’s a good idea to go into the process with your eyes open. In doing so, you’ll not only have a better chance of getting approved but also a better chance of finding a good rate and saving money in the long term.
In this article, we’ll explore how you can get a commercial real estate loan, the benefits of using this type of finance and the different funding options available to you.
Your Finance Partners specializes in helping you understand all of the finance options for your business, and sharing our professional opinion of what would be best.
What is a Commercial Real Estate Loan?
Commercial real estate loans work in the same way as residential real estate loans except they are tailored towards commercial property transactions. These loans can be used to purchase or renovate commercial properties, including:
- Retail properties
- Office buildings
- Apartment buildings
- Industrial buildings
Commercial loans can typically be broken down into 3 categories: loans for businesses, loans for investment, and loans for development.
What Are the Benefits of a Commercial Real Estate Loan in Las Vegas?
When it comes to benefits, commercial real estate loans offer a number of advantages. They enable business owners to access critical funding when they need it and offer the lowest interest rates out of all loan options. These loans are arranged over a long term, allowing the debt to be repaired slowly while owners focus on growing the business and increasing profits. There is a wide selection of options available to commercial property investors allowing them to choose the financing product that best suits their needs.
What Types of Commercial Real Estate Loans Are Available?
When looking for a commercial real estate loan in Las Vegas, you have a number of options open to you. Which you choose will depend on your individual circumstances, the purpose of the loan and specific terms relating to the loan. Let’s take a look at the different types of commercial real estate loans available.
Conventional Commercial Mortgage Loans
Conventional commercial mortgage loans are similar to a traditional residential mortgage but come with shorter terms. Where the duration of a home loan is typically 20-30 years, a conventional commercial mortgage loan typically has a much shorter duration of 5-10 years.
These loans are more frequently taken out by investors buying existing occupied properties that have a positive cash flow. Conventional commercial mortgages are offered by most of the big American banks.
Commercial Bridge Loans
Commercial bridge loans offer a means of short-term capital that can be used until the borrower refinances, sells or leases or otherwise completes a transaction on a property. For example, if an investor has a balloon payment due to be paid imminently, they can use a commercial bridge loan to find this payment. Because of their short-term nature, commercial bridge loans command a higher rate of interest than a permanent commercial mortgage loan. Most commercial bridge loans offer 6-12 months’ of financing before they need to be repaid.
Finding a lender that offers commercial bridge loans may not be as easy as finding a lender of conventional loans. Most loans of this nature are offered by lenders with robust capital behind them.
Commercial Hard Money Loans
When you need to move quickly on a real estate purchase, renovation or refinance, but traditional financing is not an option, a commercial hard money loan may be the answer. However, this type of loan should be considered as a last resort. They provide a short-term source of capital but have one of the highest interest rates of all commercial real estate loans. Interests typically range between 10 and 20 percent.
However, when you need to move quickly on a deal, hard money loans offer fast access to cash and a lot of flexibility. For example, a bank may take 30 to 60 days to green light and fund a traditional commercial real estate loan whereas commercial hard money loan funds are often released within a week. Lenders who offer commercial bridge loans will often offer commercial hard money loans, too.
SBA 7(a) Loans and SBA 504 Loans
SBA 7(a) and SBA 504 loans are backed by the Small Business Administration (SBA) and are designed to help businesses looking to buy or refinance owner-occupied commercial real estate.
To qualify for an SBA 7(a) loan, you will usually need to put down at least 10% of the property purchase price. The property in question will also need to be 51% owner-occupied. Investors can use their property for business purposes as well as tenant-occupied property so long as their space accounts for over half of the total square footage.
SBA 504 products are similar to SBA 7(a) loans. The only difference is that SBA 504 loans do not have a maximum loan amount. This type of loan can be used for up to 90% of the property purchase price regardless of the amount required.
Commercial Mezzanine Loans
Commercial mezzanine loans are designed to help investors in commercial real estate to bridge the gap between the senior debt a lender will provide them and the amount of equity that can be raised. It also provides the opportunity to earn a higher return rate on their property investment. This return can be as high as 20%.
Mezzanine financing is not without its risks. High interest rates and fees will increase the total of capital per transaction. This means that the property will need to perform sufficiently to cover both the senior and mezzanine debts.
How to Apply for a Commercial Real Estate Loan in Las Vegas
At Your Finance Partners, we specialize in helping our clients to connect with leading financial lending institutions and to find the commercial funding solution that best suits their needs. Our easy-to-use application process, dedicated client support team and access to some of the market’s most competitive commercial funding products help to ensure a smooth and hassle-free process for you and your business.
Speak to our experts today about finding the right commercial real estate loan in Las Vegas. We are standing by to assist.