5 Types of Commercial Real Estate Loans in Arizona You'll See in 2019

Many types of Commercial Real Estate Loans in Arizona will be in play this year. Become familiar with the most prominent, so you can pick the right type of funding for your needs.

1. SBA 7(a)- Backed by the Small Business Administration, the SBA 7(a) can work for people with good credit, that have been in business for at least a couple years, and who want to pay off their balances over an extended period of time, similar to what one might do with a mortgage on a home. There is a requirement that the business owner must occupy the business more than half the time. These are capped off at $5,000,000 and are only available to specific business types which fall below certain income limits. It typically takes 60-90 days to get funded if you make it through the approval process.

2. SBA 504- Divided into two separate loans, with the SBA providing 40% and a Certified Development Company (CDC) contributing 50%, there is no maximum funding limit. However, they do work similarly to the SBA 7(a) in that you’ll need a good credit score, will have to have had years in business, and it can take three months to get funded if you’re approved. There is an owner-occupied requirement for SBA 504 options too.

3. Traditional Mortgage- Offered by lending institutions like banks and not backed by the government, traditional mortgages tend to offer better terms than the SBA options, but also have more stringent requirements for credit. They can work well for those who are well-established, will occupy the business more than half the time, and plan to repay their debt over a period of 5-30 years. It usually takes 30-45 days for those who get approved to be funded.

4. Bridge- Designed to help businesses compete with cash buyers, bridges are special Commercial Real Estate Loans in Arizona that fund quickly, usually within 15-45 days, and are short in duration. A typical term could be anywhere from 6-36 months. That said, these are typically only available to those who have completed at least one other similar project and good credit is required for those applying with traditional lending institutions, but you can get them through alternative lenders too.

5. Hard Money- Similar to a bridge, hard money terms usually last a matter of months or a few years, and it’s generally awarded to those with at least some experience. However, a key difference is that it’s offered by alternative lenders, and as such, people can get funded in a matter of days, and most of the time, there is no owner-occupied requirement.

Learn the Differences to Decide What Form of Lending is Right for You

If you’ve got good credit and plan to pay off your balance over a period of many years, going with a traditional mortgage or an SBA option is likely to be the most affordable way to borrow. That being said, many people don’t meet the criteria for these Commercial Real Estate Loans in Arizona and sometimes they’re not suited to the purpose.

Hard money or a bridge may be best if you have rotten credit or need to purchase quickly.

If the banks say, “No,” because you’ve got rotten credit, won’t primarily occupy the space, or for other reasons, bridges and hard money are probably your best bet. They’re also the ideal Commercial Real Estate Loans in Arizona if you need to act quickly to grab your property before someone else does or in order to negotiate better pricing.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.