Commercial money lending is a broad term describing the practice of loaning money to use that money to purchase or finance commercial real estate. Commercial lenders come in all shapes and sizes, each with special terms, conditions, and requirements.
There are many different types of commercial real estate lenders in Houston. Here are four of the most common types of commercial real estate lenders:
1) Banks and Credit Unions
Banks and credit unions are the common lenders for commercial real estate loans. It is because they typically offer the lowest interest rates and best terms.
If you want loans for commercial purposes from banks or credit unions, you should have a strong credit score and a good relationship with the bank.
2) Life Insurance Companies
You'll likely need to go through a life insurance company if you want a large loan. These companies are some of the biggest lenders in the commercial real estate market.
Life insurance companies tend to lend money for longer terms, usually around 15-20 years. As a result, they often have low-interest rates, but their loans can be more challenging to qualify for.
These companies are a good option if you have strong credit and can provide collateral.
3) Commercial Banks
Commercial banks are another common type of lender in the commercial real estate market. These banks usually lend money for around five to ten years for shorter terms.
Interest rates from commercial banks tend to be higher than life insurance companies. However, their loans are often easier to qualify for.
If you need money for a smaller project, a commercial bank may be the best type of lender for you.
4) Private Lenders
If you have problems qualifying for a loan from a bank, you may consider going to a private lender. It is because private lenders are usually more lenient when approving loans.
Commercial real estate lenders in Houston can offer you longer terms and lower interest rates than banks. You will need to give a larger down payment.
Commercial real estate bridge loan lenders can be a great option if you need money for a short-term project. A bridge loan helps property owners fill the gap between the time they need financing and the time they can get long-term financing.
Bridge loans are typically short-term, lasting around one to two years. They usually have a higher interest rate.
Final Thoughts
Whether you're a first-time commercial real estate borrower or a seasoned pro, knowing your lending options is essential. Private lenders are typically your best bet when you have a low credit score and need urgent money.
