Can You Get a Commercial Building Loan through a Private Lender?

Getting a commercial building loan is part of the business process for many new businesses to get started. Even if you are an established business, sometimes a new building is required. The traditional way to get a loan is to go to a commercial lender and apply for it. Sometimes, for a number of reasons, this is just not possible. You may not be able to get approved by a traditional lender due to credit or lack of business history. Most traditional lenders like to see a successful business track record for a few years before they will consider lending. Although you may not be able to get a regular loan from a traditional lender, that does not mean that you have to give up on your search for funds. Private lenders offer another alternative to the regular route. Here are a few things to consider about getting commercial loans from private lenders. 

Private Lenders

Private funding is one option that many business owners never really consider. Once the traditional sector rejects them, they tend to give up or go another way with the project. However, private lenders can be a viable option for many business owners that want to go ahead and buy a commercial building anyway. 

Private lenders are usually wealthy individuals that have extra money they are willing to lend. They want to get a better return on their investment than they can get from other means and private lending is a way to do that. It will usually be at a higher interest rate than you could get from a regular lender. However, when you have limited options, this could still be the way to go. 

Getting Approved

The approval process for a private loan is usually a little bit different than with a regular lender. You will not have all of the complex approval measures that a regular bank goes through. They will look at your business credit history and they will look at your revenue. They will want to get involved in the details of your business plan and make sure that it is a sound investment for them. 

Many private lenders will put an emphasis on the quality of the property that they will be investing in with you. They will examine the subject property closely and make sure that it is a high quality building. They know that there is a chance of default with these loans and they want to make sure that they can get their investment back if things go sour. This means that they will like good commercial buildings in high-traffic locations. If this is some obscure building that they do not think they can sell again, there is a good chance that they will not approve the loan regardless of other factors. 

The Verdict

It is possible to get a quality loan for a commercial building through a private lender. It may not be your most ideal option but if you are left with no other choices, it is still better than not going through with your project. 

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