Commercial Development Loans

Investing or purchasing a commercial real estate property that is already built and ready to use is expensive as it is. However, developing it can require even more funds, which leads 90% of the business and companies to request commercial development loans instead of financing the project themselves. A development loan is quite similar to construction ones since it is all about financing the entire project: purchasing the land, preparing infrastructure, and all the steps required to finally have the premise.

However, the loans available for the project are not only available for companies working on the development but also real estate investors that want to help businesses to fund part of the development. In other words, both investors and companies can rely on the credits for the same purpose.

Now, if they are similar or almost the same as construction loans, wouldn’t it be a good idea to just request them instead of going all the way to development credits? Not quite. Each type of loan brings more benefits depending on the use you will give it. The most common example of this is how residential real estate loans are not the same as commercial ones due to the property you want to purchase or renovate.

For one, you not only need more funds—in most cases—but also different terms and conditions apply when it comes to interest rates, the period of time for repayment, and other factors. As a result, you better choose the loan that suits your needs and goals the most to get the best out of the simple fact of applying for one in the first place. That being said, how do you know if commercial development loans are what you need in your case?

Simple, if your project involves purchasing or preparing the land, infrastructure, the entire construction process, and even equipping the building or commercial property, you will find these loans more useful. However, keep in mind that traditional lenders like banks or financial groups will be a little tighter with the LVR (Loan to Value Ratio). When you choose private lending companies instead, you obtain better opportunities and your loan is quite likely to be approved under the best terms and conditions when compared to banks.