Real Estate Finance Key Terms

Learn terms used in financing real estate to make good business choices

Real estate finance terms can be confusing. There are many types of loans available, all with different qualifications and situations. The Small Business Administration is one of the best sources of loans for smaller businesses or start-ups. They offer the 7(a) loan program and the SBA 504 loan program. It is also important for business owners to understand how their business credit profile plays a role in their ability to obtain financing for their real estate purchases.

 

Commercial construction loans

Commercial construction loans help businesses to finance the cost of building a commercial, or income producing, property. These loans may be ideal for apartment building construction, retail development or rental houses.
Try: C-Loans provides an overview of commercial construction loans.

7(a) Loan Program

The 7(a) loan program is a guarantee program from the Small Business Administration. This loan enables businesses who have areas of weakness in their application to gain more reassurance for lenders.
Try: The Small Business Administration outlines this type of real estate loan in detail.

Mezzanine financing

In some cases, a business may need a unique type of loan. The mezzanine financing option is available for those properties that exceed the traditional 75% loan-to-value limit that most lenders have in place. This type of loan is not available to all borrowers or from all lenders.
Try: Steelhead Capital provides more information on mezzanine financing.

SBA 504 loan program

The SBA 504 loan program gives businesses financing for the purchase of land or buildings and for some construction projects. This type of loan is given to those using a certified development company guaranteed by the Small Business Administration.
Try: Matsco provides more information about the SBA 504 loan program.

Business credit profile

A business credit profile may become important to a business applying for real estate financing. It is the report developed to show the creditworthiness of a business. It may contain or affect business credit scores or a business' ability to obtain a loan.
Try: Dun & Bradstreet provides a description of what a business credit profile includes.

Conduit loans

Some businesses may want to consider conduit loans for real estate purchases. These are helpful on properties such as office buildings, industrial structures and hotels. One of the best features about them is their low interest rates for the lives of the loans.
Try: CommercialBanc offers these loans and a description of how they are used.

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