Purchasing real estate, renovating your current property or refinancing real estate debt can be a smart way to grow your small business. Online lenders offer solid alternatives to traditional banks for commercial real estate loans due to looser requirements and faster time to funding. You may, however, pay a bit more for that speed and convenience.
Before shopping for loans, it’s a good idea to estimate the profit from your real estate purchase or renovation or the savings from a refinance to ensure it’s more than than the cost of the loan. Always weigh the terms, interest, fees and speed of funding carefully before making a decision.
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Commercial real estate loans for purchases or refinancing
Commercial real estate loans for renovations
Commercial real estate loans: Compare options
Real estate loans for purchases or refinancing: SmartBiz
- Loan amount: $500,000 to $5 million
- APR: 6.36% to 6.41%
- Loan term: 25 years
- Funding time: Within 45 days
- Read our SmartBiz review
- 675+ personal credit score
- 3+ years in business
- $250,000+ in annual revenue
- 10 percent down and collateral required
- Minimum 51% of the property you purchase must be occupied by and used by your business
SmartBiz is your best bet if you’re an established and profitable business looking for the lowest borrowing costs.
The company provides Small Business Administration 7(a) commercial real estate loans ranging from $500,000 to $5 million. You can use the proceeds to purchase real estate or refinance existing real estate debt.
With a 25-year repayment term and low APRs from 6.36% to 6.41%, you’ll have a lower monthly payment than with regular business loans.
To qualify, you need a personal credit score starting at 675, at least three years in business and $250,000 or more in annual revenue. In addition, a minimum 51% of the property you purchase must be occupied by and used by your business. You also need to meet the SBA’s eligibility requirements.
A first lien on the real estate is required. Based on its appraised value, you must have at least 10% to 20% equity in the real estate for a refinance or put down 10% to 20% for a real estate purchase. For SmartBiz’s no down-payment plan (called rent replacement option), the monthly loan payment cannot exceed your current monthly lease expense.
Real estate loans for renovations: Funding Circle
- Loan amount: $25,000 to $500,000
- APR: 7.4% to 36%
- Loan term: Six months to 5 years
- Funding time: Average of 10 days
- Read our Funding Circle review
- 620+ personal credit score
- 2+ years in business
- No minimum annual revenue required
- No bankruptcy in the last seven years
- Personal guarantee required
Funding Circle provides loans up to $500,000, repaid over a period of six months to five years. You need at least two years of business history to qualify, as well as a minimum 620 credit score. There are no minimum revenue requirements, although typical borrowers have annual revenue of about $2 million.
Commercial real estate loans: Compare your options
| Funding options | Good option for: | Do you qualify? | Loan amount & APR | |||
|---|---|---|---|---|---|---|
| • Real estate purchase or debt refinancing | • 675+ personal credit score • 3+ years in business • $250,000+ annual revenue | • $350,000 to $5 million • 6.36% to 6.41% |
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| • Real estate renovation | • 620+ personal credit score • 2+ years in business • No minimum annual revenue required | • $25,000 to $500,000 • 7.4% to 36% |
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Want to compare more small-business loan options?
If you’re looking for other financing, NerdWallet has created a comparison tool featuring the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, along with other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.
Updated Oct. 4, 2017.
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