Compare commercial loans for real estate | finder.com

Compare commercial loans

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Give your business the competitive edge by upgrading your equipment, services or operations with a commercial loan.

Commercial loans are meant to help you business grow. No matter what you’re looking to finance — from real estate to equipment — a commercial loan may benefit your business. There are a number of lenders out there, so determine the type of loan you need and compare loan offers with a critical eye.
LoanBuilder, A PayPal Service Business Loans

Our top pick: LoanBuilder, A PayPal Service

Customizable business loans with no hidden fees.

  • Min. Amount: $5,000
  • Max. Amount: $500,000
  • One-time fixed fee charged over the life of the loan
  • Acclaimed customer service
  • Requirements: $100,000+ annual revenue, 1+ years in business, 600+ personal credit score

    What are commercial loans?

    Commercial loans are taken out by an individual, partnership and other groups on behalf of a business or company. They are used to fund commercial activities that can help grow and develop a business, though most are usually taken out for real estate purchases.

    Because the loan amount is intended for growing the business, a lender will consider your business financials when deciding whether to approve the loan. Loan amounts vary based on your business and what you need to fund, but repayment options are flexible to support fluctuations in cash flow.

    In addition to going through a traditional bank, you can apply online for a commercial loan.

    Top business lenders offering online commercial loans

    Rates last updated December 15th, 2018
    Unfortunately, none of the business loan providers currently offer loans for these criteria.
    Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
    LoanBuilder, A PayPal Service Business Loans
    Customizable loans with no origination fee for business owners in a hurry.
    $5,000
    $500,000
    Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
    LendingTree Business Loans
    Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    Credibly Business Loans
    Funding to cover business expenses with daily or weekly repayments.
    $5,000
    $250,000
    500+ personal credit score, 6+ months in business, $15,000+ average monthly deposits
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    $500
    $5,000,000
    Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
    National Funding Small Business Loans
    Working capital loans and equipment financing, some high-risk industries may be eligible.
    $5,000
    $500,000
    Be in business at least one year and make at least $100,000 in annual sales. Other loan types have additional requirements.
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    $5,000
    $300,000
    12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    $5,000
    $500,000
    500+ personal credit score, 1+ years in business, $100,000+ annual revenue
    Fora Financial Business Loans
    No minimum credit score requirement and early repayment discounts for qualifying borrowers.
    $5,000
    $500,000
    Business age 6+ months. Monthly revenue $12,000+. No open bankruptcies.

    Compare up to 4 providers

    As an alternative to commercial loans, business credit cards can help fund ongoing and one-off purchases.

    Benefits of commercial loans

    • Range of options. A variety of lenders offer a diverse products to suit most companies, budgets and needs.
    • Flexible repayments. Commercial loans consider a business’s cash flow to avoid issues when paying the loan back over time.
    • Improve your credit rating. Timely repayments can positively affect your business’s overall credit report.

    Drawbacks of commercial loans

    • Can be difficult to qualify for. If you’re new to business, it can be hard to have the credit required for approval. In this case, you may want to consider a startup loan instead.
    • May consider your personal credit. You’ll typically need to provide your personal financial details, including your credit report, annual income and open debts. This information can affect eligibility.
    • Long application process. Given the risk for potential commercial lenders, you’ll need to provide a thorough picture of your business’s financial health — cash flow reports, projected revenues and any other risks.

    Important note about repayments

    When taking on a commercial loan, consider that any defaults or late payments could be listed on your business’s credit report, seriously affecting the future borrowing power of your business. Avoid applying for a loan that your business won’t be able to pay back and have a solid financial plan of how you’ll incorporate the added expense of loan repayments into your business budget.

    how do commercial loans work

    How to compare commercial loans

    • Loan terms. Loan terms vary by lender but generally last between 5 to 20 years. Variable-rate commercial loans are more common than fixed-rate loans.
    • Loan amount. Commercial loan amounts are usually larger than you’ll find with other loans. The amount you’re ultimately approved for will depend on what the lender thinks your business can afford to pay back.
    • Fees. As with other forms of financing, you’ll need to consider any fees or charges when comparing your options. Look at upfront fees — including application and origination fees — as well as any ongoing fees to maintain your account.
    • Repayments. Most commercial lenders offer flexible repayment solutions so that the loan doesn’t interfere too heavily with cash flow. Take a look at your repayment options, such as whether the lender allows for interest-only repayments during seasonal lows.

    Commercial loans for real estate

    If you’re looking to invest in a commercial property, you’ll generally look at real estate designed for use as an office, retail or industrial space. Unlike residential property, which has relatively low risks but offers lower returns, commercial property has the chance of a bigger return on investment — but at a higher risk.

    Buying commercial property is also more expensive, and maintaining or upgrading it can potentially cost you tens of thousands of dollars. In addition, commercial properties typically experience higher vacancy rates, representing a higher risk over residential properties. Because of this, you may face a higher interest rate when you look to buy property with a commercial loan.

    And unlike residential mortgages, commercial property loans last for 5 to 20 years. This is often accompanied by balloon payments, meaning you make small monthly payments for a set number of years before paying off the principal in one lump sum.

    What’s the difference between purchasing commercial and residential properties?

    Purchasing a residential property is a more familiar process, so it’s useful to know the key differences you’ll encounter when purchasing commercial real estate.

    • Longer property leases. Residential leases are typically by year, while commercial property leases can run anywhere from 5 to 10 years.
    • Owner isn’t responsible for maintenance. Commercial properties feature longer vacancy periods, and the lessee bears the costs of maintenance, rates and repairs — which means you get to pocket more of the rent as profit. In residential properties, the property owner is responsible for these expenses.
    • Capital gains come into play. Commercial properties used for running a business are subject to capital gains tax when sold. To determine your capital gain (or loss), you’ll need to possess clear records and costs for purchasing the property.

    5 tips for making your commercial property purchase

    While every situation is different, you can smooth the process of purchasing commercial properties with a few general tips:

    1. Evaluate the risks and the benefits before proceeding with the transaction.
    2. Rely on the advice of experts such as lawyers, accountants, commercial realtors and mortgage brokers.
    3. After confirming applicable zoning laws and development plans, pick a suitable property with a clear title.
    4. Confirm that your funds are sufficient for covering the deposit and that you can provide proof of a regular income or revenue stream that can meet potential monthly payments.
    5. Carefully read through every detail of the sales agreement to understand your rights and obligations.

    What other types of loans are available to purchase commercial property?

    Investing in commercial real estate has several benefits, but it involves a significant investment of time and money. Here are the types of loans available if you’re looking for financing.

    • Property development and construction loans. Useful for constructing commercial properties, residences and subdivisions. You could use it for completing a development project, and then sell the assets to repay your loan.
    • Subdivision financing. Subdividing land can help you increase the value of your property without constructing anything on it, but these loans can also be used for construction purposes.
    • Loans for buying a business. Use these business loans to purchase an existing business or a successful franchise, consider the business’s history, the value of its tangible assets, the estimated value of its intangible assets and the ability to yield good returns on your investment.
    • Factory financing. Useful for keeping organizations in business by helping them purchase equipment and technology. From production equipment to packaging materials, this loan can help you use your capital to meet other expenses while funding your working capital requirements.
    • Land bank financing. If you see abandoned properties and vacant lots as assets, these loans could be ideal. They can let you create, hold and develop vacant properties and then convert them into marketable assets that can double or triple your investment.
    • Rural property loans. Designed to purchase property in a rural region, these loans allow you to purchase a property or to consolidate your debts.

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