Commercial Loan Options
Explore Your Real Estate Financing Options
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Bridge Loans
Get short-term financing for seamless transitions between loans. Cover the gap between loan termination and the start of a new one, ideal for property purchases or long-term loan fulfillment. Also known as bridge finance or gap financing.
Short-term (usually one to three months) loan advanced to cover the period between the termination of one loan and the start of another. It is arranged generally to complete a purchase (such as a new house) before the borrower receives payment from a sale (of the old house), or before a long-term loan is made available upon fulfillment of its requirements (such as commissioning of a facility or a plant). Also called bridge finance, bridging loan, or gap financing.
Commercial Purchase
Secure your commercial property aspirations with collateral-based commercial mortgages. Similar to residential mortgages, but with a focus on business real estate. Ideal for businesses, partnerships, or limited companies seeking creditworthy funding solutions.
A commercial mortgage is a loan made using real estate as collateral to secure repayment.
A commercial mortgage is similar to a residential mortgage, except the collateral is a commercial building or other business real estate, not residential property.
In addition, commercial mortgages are typically taken on by businesses instead of individual borrowers. The borrower may be a partnership, incorporated business, or limited company, so assessment of the creditworthiness of the business can be more complicated than is the case with residential mortgages.
Some commercial mortgages are nonrecourse, that is, that in the event of default in repayment, the creditor can only seize the collateral, but has no further claim against the borrower for any remaining deficiency. The general reason for this is twofold: many laws significantly prevent the creditor from going after the borrower for any deficiency, and mortgages structured for sale as bonds give a higher priority to constantly receiving some sort of income and therefore require a clause which allows the lender to take the property immediately, regardless of bankruptcy proceedings that the borrower might be going through.
Frequently, the mortgage is supplemented by a general obligation of the borrower or a personal guarantee from the owner(s), which makes the debt payable in full even if foreclosure on the mortgaged collateral does not satisfy the outstanding balance.
Commercial Refinance
Upgrade your debt obligations with tailored refinancing solutions. Reduce interest costs, extend repayment periods, and manage risk while freeing up capital for investment or consumption. Improve cash flow and optimize your financial structure.
Refinancing refers to the replacement of an existing debt obligation with a debt obligation bearing different terms.
Refinancing may be undertaken to reduce interest costs (by refinancing at a lower rate), to extend the repayment time, to pay off other debts, to reduce one’s periodic payment obligations (sometimes by taking a longer-term loan), to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), and/or to raise cash for investment, consumption, or the payment of a dividend.
In essence, refinancing can alter the monthly payments owed on the loan either by changing the loan’s interest rate, or by altering the term to maturity of the loan. More favourable lending conditions may reduce overall borrowing costs. Refinancing is used in most cases to improve overall cash flow. Therefore making your bills/payments lower than before.
Another use of refinancing is to reduce the risk associated with an existing loan. Interest rates on adjustable-rate loans and mortgages shift up and down based on the movements of the various indices used to calculate them. By refinancing an adjustable-rate mortgage into a fixed-rate one, the risk of interest rates increasing dramatically is removed, thus ensuring a steady interest rate over time. This flexibility comes at a price as lenders typically charge a risk premium for fixed rate loans.
Construction Loans
Embark on real estate projects with short-term property financing. Cover land development and construction costs with disbursements based on project stages, schedule, or conditions. Transition to permanent financing with the completed building’s cash flow.
Short-term (usually 3 years) real estate financing secured by a mortgage on the property being financed. This loan is meant to cover the cost of land development and building construction, and is disbursed (1) as needed, (2) as each stage is completed, (3) according to a prearranged schedule, or (4) when some condition is met. Construction loans are paid off from the proceeds of permanent financing (usually for 20 to 30 years), which in turn is repaid from the cash flow generated by the completed building, and is arranged before the construction loan is disbursed. Also called building loan, construction mortgage, or development loan.
Hard Money Loans
Leverage asset-based hard money loans for real estate funding. Secure financing against property value, even with high-interest rates. Perfect for transitional properties or distressed financial situations, where credit score is less relevant.
A hard money loan is a specific type of asset-based loan financing in which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers.
The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and does not yet qualify for traditional financing, whereas hard money often refers to not only an asset-based loan with a high interest rate, but possibly a distressed financial situation, such as arrears on the existing mortgage, or where bankruptcy and foreclosure proceedings are occurring.
Many hard money mortgages are made by private investors, generally in their local areas. Usually the credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Typically, the maximum loan to value ratio is 65-70%. That is, if the property is worth $100,000, the lender would advance $65,000-70,000 against it. This low LTV provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property.
Non Recourse Loans
Discover secured loans without personal liability. Collateral-based lending with limited borrower responsibility. Depend on accurate credit assessment and domain expertise for favorable lending. Overcollateralization ensures safety.
A Non Recourse Loan, or non-recourse debt is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference. Thus, non-recourse debt is typically limited to 80% or 90% loan-to-value ratios, so that the property itself provides “overcollateralization” of the loan.
A lender of non-recourse debt depends crucially on an accurate assessment of the credit of the borrower, and a sound knowledge of the underlying technical domain as well as financial modeling skills.
SBA 504 Loans
Unlock Small Business Administration (SBA) 504 loans for hassle-free commercial property acquisition. Qualify by occupying over 51% of the property within a year of ownership. Leverage options like forming a holding company for eligibility. Explore flexible criteria for successful funding.
Ready to make your real estate dreams a reality? Texas American Funding’s diverse range of financing solutions has you covered, whether you’re looking for bridge loans, commercial funding, construction financing, or more. Let’s discuss your unique needs and create a customized plan to propel your property ventures forward. Reach out to our expert team today and start building your path to success in the real estate market.
The Small Business Administration (SBA) 504 loan program was created to help small to mid-sized business owners acquire commercial property without the financial hassles. While this program is less-used and very little understood, in order to qualify, over half (51%) of the property must be occupied by the borrowers within one year of ownership. Another option is forming a holding company from two operating companies. This company can then take the title to the commercial property. To qualify for this program, U.S. citizens or permanent residents must hold a majority of the ownership of the operating companies and the holding company. The 504 Loan does not contain any restrictions or ceilings; however, there are three criteria for eligibility:
The company’s average net income cannot surpass $2.5 million.
The anticipated project size must be greater than the personal, non-retirement, unencumbered liquid assets of the guarantors/principals.
Net worth of the operating companies must be $7.5 million or less.
