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Types of Commercial Real Estate Financing
Several financing options are available for commercial real estate, each with distinct benefits and requirements:
1. **Traditional Bank Loans**: These are often the first option for many investors due to their relatively low interest rates and favorable terms. However, they typically require a substantial down payment and a strong credit history.
2. **Small Business Administration (SBA) Loans**: SBA 7(a) and 504 loans are popular among small business owners looking to purchase or refinance commercial properties. These loans offer competitive rates and longer repayment terms, making them an attractive option for small enterprises1.
3. **Commercial Mortgage-Backed Securities (CMBS)**: These loans are pooled together and sold as securities to investors. They offer flexibility and can be a viable option for those seeking non-recourse loans2.
4. **Bridge Loans**: Short-term loans designed to bridge the gap until long-term financing can be secured. They are ideal for properties that require significant renovation or stabilization before qualifying for permanent financing3.