4 Ways To Get the Commercial Real Estate Financing You Need
Whether you are looking to expand your business or you just want to buy the building housing your company, you need access to capital. In the past, commercial real estate loans were the primary way businesses raised capital, but times have changed. There exist an exciting array of new options available to you and your business that did not exist even twenty years ago. Here are four ways you can raise the financing you need for commercial real estate projects.
While loans have been around for a long time, the variety of loan products available to your company has grown in recent years. Once, your bank would have been the only source for a commercial loan, but other institutions have begun offering commercial real estate loans as a way to increase their bottom line. Institutions offering these new products include private equity firms, insurance companies and financial service firms to name a few.
The rise of crowdfunding has led to a new type of commercial financing where you take your request for money straight to the general public via an online platform. With this kind of service, your request is vetted by the crowdfunding site, and financing requests that meet the site’s requirements are listed for potential investors to consider. The funding platform generally takes a percentage your proceeds as a fee for their service, but allow you a greater degree of flexibility regarding size and repayment term.
Joint Venture Partnerships
If you need capital for a project and don’t mind taking on a partner, then a joint venture partnership can be a viable option for you. With this option, your new partner brings in the financing you need, and you pay them a share of the profits from the company. If you feel this is an option for your business, be sure to spell out in the partnership agreement the exact limits of your new partner’s responsibilities and obligations, including when and what can trigger the partnership’s dissolution.
Real estate syndicates are like joint venture partnerships on steroids. Instead of going into a partnership with just one investor, you receive your commercial loan from a group of investors and repay them with your business’ profits. The benefit of this scenario is that you don’t cede any control of your company to a new partner.
In today’s commercial lending landscape, new and exciting options are available that go beyond the commercial real estate loans of yesteryear. As commercial banks tighten their lending practices, it’s important to consider other financing options for your business needs. Successful businesses make good investments, and there exist investors who want to help you.