bank business commercial real estate loans.

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Commercial real estate loans from banks provide businesses with funding to purchase, refinance, develop, or renovate commercial properties. Here’s an overview of common types and features of these loans:

Types of Commercial Real Estate Loans

1. Term Loans:

   • Traditional commercial real estate loans, with fixed or variable interest rates.

   • Typically have terms of 5, 10, or 15 years, with amortizations up to 25 years.

   • Suitable for purchasing established properties like office buildings, warehouses, or retail spaces.

2. Construction Loans:

   • Short-term loans specifically for building new properties or making significant renovations.

   • Often interest-only during construction, then converting to a permanent loan.

3. SBA 7(a) and 504 Loans:

   • SBA 504 Loans: Geared toward purchasing owner-occupied real estate or large equipment, offering fixed rates with long-term financing.

   • SBA 7(a) Loans: Can be used for a broader range of purposes, including real estate, with more flexible loan limits and terms.

4. Bridge Loans:

   • Short-term loans for temporary financing needs, commonly used to secure property while waiting for longer-term financing.

   • Can close faster than traditional loans but usually have higher interest rates.

5. Hard Money Loans:

   • Asset-based financing, often used for real estate investments, quick purchases, or properties that don't qualify for traditional lending.

   • Offered at higher interest rates and shorter terms, ideal for quick renovations or short-term flips.

6. Lines of Credit Secured by Real Estate:

   • Flexible financing, allowing businesses to draw as needed, backed by real estate collateral.

   • Often used for working capital or minor property improvements.

7. Permanent Loans for Stabilized Properties:

   • For established properties with predictable cash flows, these loans are longer-term, stable financing options with competitive rates.

   • Used for stabilized properties like multi-family units, office buildings, and retail centers.

Key Considerations

When applying for a commercial real estate loan, banks will assess:

• Creditworthiness and financial health of the business.

• Property Appraisal to determine the property’s market value.

• Loan-to-Value (LTV) Ratio, generally capped between 65%-85%.

• Debt Service Coverage Ratio (DSCR), typically requiring at least 1.2 to 1.5.

Texas and national banks offer a range of commercial real estate loan products that can be tailored to meet various business needs, but eligibility requirements, rates, and terms will vary by lender.