Archives for 2022

How SBA 7(a) Loans Help Small Businesses During a Recession

December 1, 2022 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

If you’re like most small business owners, you’re probably keeping a close eye on expert predictions about whether a recession is coming.

Maybe you’re worried about how it will impact sales, or maybe you’re already looking for sources of capital to get you through uncertain times.

The majority of small businesses are aware of the PPP (Paycheck Protection Program) loans that were offered during the COVID-19 crisis. However, businesses may not be aware of the 7(a) SBA loans: another SBA loan program designed to help small businesses access financial assistance.

During this article, we’ll walk through the historical context for SBA 7(a) loans during recessions and 4 ways the program can help small businesses during difficult economic times & high inflation cost hitting your business.

How a 7(a) Loan can Benefit Your Business During A Recession!

Let’s discuss how 7a SBA loans can benefit small business owners specifically during an economic downturn and higher inflation costs to their business.

First, 7(a) loans are proven to be helpful and impactful during a recession and economically challenging times. A paper in the Oxford Academic Journal Review of Finance titled Small Business Lending in Financial Crises: The Role of Government-Guaranteed Loans found that during the 2007-2009 financial crisis, areas with more SBA 7(a) lenders experienced:

2.2% increase in small business loan volume
3.7% increase in small firm employment
3.5% increase in establishments
Lower loan default rates

The conclusion of the paper was that “targeted government support can play a beneficial role in the presence of private credit market frictions, especially when bank capital is limited and small business financial constraints are severe.”

If another recession should come, or if one is already underway, we have solid evidence that 7(a) loans are helpful to small businesses, communities, and the economy at large.

For small & medium business owners specifically, we would like to discuss these 4 key benefits of the SBA 7(a) loans:

1. SBA loan guaranty percentages.

Currently, there is a guaranteed percentage of 85% by the SBA for working capital loans up to $25,000. This means that the federal government backs the 7(a) loan, creating less risk for the lender. With this additional protection, an SBA loan application is more likely to be approved than a private bank loan.

Guaranty percentages have also been raised in previous years and recessions, so we could see this rate increase if a downturn should accelerate.

2. Favorable terms.

The 7(a) SBA loan program is the most popular choice and the US government’s primary offering for business financing. This isn’t surprising, as the program offers very favorable terms for businesses that may have had difficulty obtaining funding from other sources.

At Vertex our lending partners offer loans up to $350,000, or less for working capital loans the 7(a) loan terms are as follows:

Term: 10 years
Interest Rate: WSJ Prime + 2.75%
Approximate Monthly Payment: $300 for $25,000
No SBA Guaranty Fee
Allowable Uses: Working Capital

3. SBA fee waivers

The SBA generally charges a guarantee fee of 2% to 3.75% of the guaranteed amount of the loan. However, as we saw during the COVID-19 crisis, the SBA fees can be subsidized (i.e. borrowers receive a “fee waiver”) when Congress decides to provide for it through legislation like the CARES Act of March 2020.

In these cases, the cost of securing SBA loans is reduced, making the option even more attractive to small business owners. (For $25k or less working capital loans, there is currently no SBA guarantee fee).

4. Steady supply despite fluctuations in demand.

During a downturn, there is typically a lower supply of business loans available for small businesses by traditional banks as they tighten their credit and underwriting standards.

At the same time, there can be low demand for business loans among small businesses because they worry about their ability to repay.

During uncertain times as we are currently experiencing, SBA 7(a) loans stay consistent because the eligibility and documentation requirements remain the same. That continuity is a lifesaver when things get volatile. Even when small businesses feel the effects of a recession, they can obtain financing through an SBA lender vs. traditional banks as long as they meet those eligibility criteria.

At Vertex we can easily start the application process for a 7(a) loan today. Even during a recession, the SBA and Vertex are here to help you navigate the complicated lending process and connect you with the correct SBA lender to meet your needs.

179D Expanded Commercial Buildings Energy-Efficiency Tax Deductions.

November 28, 2022 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

Author: Benjamin Kluwgant – Leyton USA

Will They Help The Sagging Commercial Real Estate Market.

What the expanded §179D Incentive means for Commercial Real Estate Developers

There are a number of valuable tax incentives for the developers of commercial and residential real estate properties which were extended and expanded as part of the Federal Government’s Inflation Reduction Act of 2022 (IRA). Here is an overview of one of those key incentives and how to access it.

Carbon footprint, sustainability, and energy efficiency are all topics that are front of mind for different stakeholders in the Real Estate industry. Governments want to see energy consumption reduced, builders and investors are looking for more sustainable solutions, and buyers/renters are prioritizing environmental impact when choosing where to live and work.

Given that sustainability is such a high priority, it is no surprise that the US Government has put in place extensive measures to reward those who are adopting greener practices, and many of those rewards take the form of tax incentives.

Of the various incentives available, one that has risen to the top of the agenda for many building owners has been the §179D Commercial Building Energy Efficiency Tax Deduction (179D). This incentive was updated in legislation that recently passed as well, making it particularly topical for those working within the Real Estate development industry.

179D Commercial Building Energy Efficiency Tax Deduction

This incentive targets developers that have invested in energy-efficient building systems when either building or retrofitting a commercial or residential building. Assuming the building meets certain energy efficiency requirements, once it has been placed into service, the owner can receive a tax deduction on a per-square-foot basis – making the incentive particularly interesting for larger energy-efficient structures.

In 2019, the 179D became a permanent part of the tax code, meaning that building owners are now able to start relying on this incentive in advance without having to worry about it being discontinued.

The Benefit of 179D – Pre-IRA Legislative Updates

In its current form, the 179D offers a deduction of up to $1.88 per square foot of the subject building. The $1.88 is split between three building system categories, including HVAC, Lighting, and Envelope. If each of these systems meets the energy benchmark requirements set out by ASHRAE 90.1 and the IRS, then they can qualify individually or collectively.

The deduction is taken on the company’s income statement and subsequently reduces the assessable income.

The Benefit of 179D – Post-IRA Legislative Updates

As of 2023, the 179D will be administered under a new set of rules, as per the updates included in the Inflation Reduction Act of 2022.

The good news is that the deduction will be increased from $1.88 to a sliding scale of between $2.50 and $5.00 per square foot, depending on the level of energy efficiency achieved. The new process will eliminate the division between the three systems and will instead measure efficiency across the entire building.

Additionally, the incentive will change from being something that can be claimed on a once-per-building basis to once every three years, assuming the building has kept up with the relevant energy requirements.

However, additional requirements pertaining to prevailing wage payments to those contracted to build the building, as well as the use of apprentices will need to be met in order to access this expanded version of the deduction.

If these additional requirements are not met, the 179D will still be claimable, but the value of the benefit will drop to $1.00 per square foot.

Other Tax Ramifications

When considering claiming this incentive, it is important to be aware of the other implications that claiming it has on the building owners’ tax affairs.

For one, upon claiming the deduction, the business owner is required to reduce the basis of the building by the amount of the deduction. Additionally, given that the nature of this incentive is a ‘deduction’ as opposed to a ‘credit’, the company needs to apply its prevailing tax rate to the deduction to calculate the net benefit – which can vary significantly depending on the corporate structure and income bracket.

Most of the time, it is still very beneficial to claim this incentive, as it can unlock cash flow during a critical phase of business growth. However, it would be advisable to speak to an expert to determine the extent of how the incentive benefits your business.

Claiming Process

To claim the 179D, the building owner needs to go through the following steps:

Develop an energy model of the building using an approved IRS software system
Engage a third-party Professional Engineer licensed in the state where the building is located to undertake a site inspection to validate the energy model
Have the Engineer prepare a letter certifying model
Prepare the relevant tax documents so they are ready for filing

Look Back Period

179D deductions can only be taken in the tax year that the building was placed into service. However, businesses are able to go back and amend returns from up to three tax years prior, which means that this incentive effectively has a lookback period of three years.

Once 2023 begins and the rules of the new legislation come into play, the look-back period will still fall under the original version of the incentive, while new claims will fall under the updated version – making it more important than ever to seek professional guidance on how to navigate that complex set of circumstances.

The net benefit of the deduction can be carried forward for 20 years after being claimed.

179D for Contractors

There are certain instances where general contractors, including those working in the Architecture, Engineering, and Construction verticals (AEC) can access the 179D Tax Incentive too. Pre-IRA, these instances were limited to when those AEC businesses were working on publicly owned buildings, where the government body contracting them could allocate the deduction to the contractor.

However, in some welcome news to the AEC industry, the IRA will see these criteria expanded, allowing all non-taxpaying entities to allocate this deduction to their main contractor, greatly incentivizing these contractors to build energy-efficient structures for these organizations.

It is worth noting that AEC companies working on these building types are not the owners and are therefore not subject to the tax ramifications outlined earlier, this deduction has no strings attached, making it particularly beneficial to the contractors who access it.

All told, there is a lot to be benefited from for those looking to claim the 179D Tax Deduction. However, seeking advice on how to claim it, and ensuring it is done with the utmost diligence is crucial. For those who have built buildings with energy efficiency in mind over the last few years, it would be advisable to reach out to an expert to assess your property portfolio to assess its eligibility.

For those who are in the design or planning phase of new development projects, consulting with a professional who has an understanding of the changes introduced through the IRA and planning with those in mind can make a significant difference in your ability to claim this incentive when the time comes.

The newly enacted changes to the 179D deduction include:

An increase in the deduction amount to $5.00 per square foot (from $1.88 per square foot previously).
Expanded eligibility including building projects completed for non-for-profit entities, instrumentalities, and Tribal governments (all previously ineligible).
Relaxation of the qualifications for retrofits, including a decrease in “Energy Use Intensity” to 25% (previously 50%) and the removal of the requirement for an energy simulation model.
The deduction can now be taken on a specific commercial building every 3 years (previously, the deduction was permitted once over the life of the building).

Changes to 179D accelerate the efficiency deduction for the costs of a building and improvements made. Historically, these costs were written off over a 39-year period. 179D now allows a large portion of energy efficiency costs to be written off in the first year, providing immediate cash flow relief. For non-tax-paying entities, the deduction may be gifted to the architect or designer as an incentive to focus on energy efficiency and conservation in public spaces.

Receive Cash For Your Business Through The Employee Retention Credit.

November 18, 2022 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

Receive Up To $26,000 Per Employee!

Time Is Running Out to File For this Cash Refund, Don’t Miss Out!!

As a result of the pandemic and forced business shut downs. There were various federal programs created to help small and medium businesses. While many of the COVID-19 aid has come to an end, the (ERC) Employee Retention Credit is still available and delivering funds to business owners.

In the following article we’ll review the answers to frequently asked questions about the Employee Retention Credit, address the ERC myths, and address how you can claim ERC funds for your business.

What is the Employee Retention Credit?

The Employee Retention Credit, (ERC), and the PPP were created by the same CARES Act. ERC is a tax credit that provides businesses up to $26,000, subject to certain qualifications, cashback per employee. For businesses that were impacted by COVID-19. This program’s goal is to provide economic relief for businesses that retained employees during the pandemic.

Do I qualify?

If your business experienced disruptions due to shutdowns related to COVID-19 and you retained employees, your business will likely qualify — even if you received PPP loans. If you were previously told you did not qualify, it’s worth rechecking as legislation has changed.

This tax credit received through the Employee Retention Credit program allows employers to receive cash back from the IRS. Business owners who do not owe back taxes and qualify for ERC can expect to receive a check from the IRS.

What is the definition of “Retaining Employees”?

For businesses started prior to February 15th, 2020, a retained employee is defined as:

Someone who has continuously been employed by you from January 1st, 2020, through December 31st, 2020.

AND/OR

Someone who has continuously been employed by you from January 1st, 2021, through September 30th, 2021.

Please note: if your business was started after February 15th, 2020, you may still qualify, please skip to the “Recovery Startup Business ERC Eligibility” section.

Eligibility Changes and Constants

There have been changes to the ERC eligibility since its inception in the CARES Act.

Currently:

Businesses that received one or two PPP loans qualify for ERC
h\Hospitals, colleges, universities, and 501(c) organizations qualify for ERC.

Prior to these changes, earlier versions of ERC limited businesses with a PPP loan(s) from applying. Today, businesses that received a PPP loan(s) can still claim ERC. .

ERC qualification is still determined by quarters each year, as outlined below. Businesses that meet the retained employee status can claim ERC for 2020, 2021, or both.

2020 ERC Eligibility

Other than meeting the retained employee status. To Qualify for the 2020 ERC, you must meet at least one of the following requirements:

Your business experienced a full or partial suspension of operations as a result of a governmental order.

Your business’s gross receipts in any quarter after March 13, 2020, declined 50% or more compared to the same quarter of 2019.

Please note: This means that a business that retained employees and saw an increase in gross revenue still qualifies as long as the business was impacted by lockdowns and/or other governmental restrictions.

2021 ERC Eligibility

Beyond meeting the retained employee status, to qualify for the 2021 ERC, you must meet at least one of the following requirements:

Your business experienced a full or partial suspension of operations due to a governmental order

During the first 3 quarters of 2021, your business had a decline of at least 20% in gross receipts compared to the same quarter in 2019 (or, if you weren’t in business in 2019, gross receipts can be compared to 2020).

Maximum Credits Available:

Each year has a maximum credit amount a business is eligible for. The total maximum credit per employee is $26,000, comprised of $5,000 per employee in 2020 and $21,000 per employee in 2021.

2020 ERC Maximums:

For 2020, ERC can be claimed as a refundable tax credit on wages that were paid between March 13, 2020, and December 31, 2020.

ERC for 2020 is 50% of total wages paid, up to $10,000 per employee, resulting in a $5,000 maximum tax credit per employee.

2021 ERC Maximums :

For 2021, the maximum ERC amount was increased to $7,000 per employee per quarter from Q1 through Q3 2021. Thus, the maximum credit for the full year is $21,000 per employee.

Recovery startup businesses can extend the $7,000 per employee amount through Q4 2021, which brings recovery startups’ maximum credit for the full year to $28,000 per employee.

ERC and PPP

Based on these qualifications, if you think that your business is eligible for ERC in 2020 and/or 2021 and you haven’t claimed the credit yet, it’s not too late, but the clock is ticking.

Vertex has partnered with Leyton. Leyton is an international consulting firm that helps businesses leverage financial incentives. They can help determine your eligibility and calculate your maximum refund. Please click below to schedule a free consultation to determine how much of a refund you may be eligible for. The consultation is free but the refund can be considerable. You don’t pay anything unless you receive a refund.

Don’t Wait to Find Out Your Business Valuation

April 27, 2022 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

I’ll figure it out when I’m ready to retire, which is the day after never …. That is the response we get from small business owners when we ask how much their business is worth.The wealth of nearly two-thirds (70%) of all small business owners is tied up in their business. For many of those individuals, the business becomes the personal retirement savings vehicle. Those individuals, however, could be driving blind. Without knowing the value of the business, how will they know when they can stop working or the lifestyle to expect in retirement?

Having the information needed to prepare adequately for retirement is just one of the many benefits to a business valuation. Here are several others:• Increase value. What is measured improves, and valuation is no different than establishing and overseeing a sales quota. A comprehensive business valuation will provide owners with a clear explanation of the value of the business along with evidence to support the result. It can tell an owner if efforts need refocusing, or … even better .. if the company is headed in the right direction. The data helps guide strategic decisions and business development plans and can even help an owner determine whether the right people are in place to support long-term goals.• Capital infusion. Outside investors and lending institutions will evaluate the business plan, shareholders’ agreement, investment memorandum, and valuation before investing or loaning capital.• Mergers, acquisitions or share-swaps. A business valuation facilitates a negotiation between entities entertaining a possible merger, acquisition or share swap. • Dissolution of partnership or partial exit by an owner. When a business partnership goes bad or partners agree to part ways, the parties have to find a fair and equitable split of interests. Whether the weighting shares changes, one partner buys the other out, or the partnership gets dissolved, a business valuation will facilitate the process.• Divorce. Business interests represent marital assets and could become part of an owner, partner, or shareholder’s divorce settlement. Both spouses may approach the settlement proceedings with independent business valuation reports, so historical valuations could provide valuable insights.• Tax strategies. A valuation report can lead to tax benefits an owner might not otherwise claim. A current valuation is also required for estate tax settlements, to calculate capital gains tax liabilities, and for income or property tax disputes.• Employee incentive programs. A company must disclose its value to employees to satisfy annual requirements for Employee Stock Ownership Plans.• Insurance planning. Nearly three-quarters (70%) of small businesses do not have adequate insurance coverage. When an owner doesn’t know the value of his/her business, it is challenging to determine how much insurance is needed. Also, if an owner is injured or wrongfully distracted from business, a historical valuation could help recover losses.The real reason most business owners put off knowing the value of their business could have less to do with timing than an error in perception. Traditional business valuations involved an extensive, expensive, and seemingly invasive process. Thanks to innovative technology, however, those barriers no longer exist. An online valuation costs a fraction of what traditional business valuation specialists charge, and can be completed in minutes, not weeks.While business owners are often stretched for time, when it comes to discovering how much the business is worth, there’s no time like the present.Our firm specializes in meeting the financial needs of small business owners, and business valuations are a critical step in our process. To get started on your business valuation, simply go to https://abbelamarco.bizequity.com/As a small business owner, it is important to recognize the vital role your business plays in achieving both your personal and professional goals. At Abbe LaMarco Inc. we can help remove some of the mystery about your future by arming you with the data you need to make the best financial decisions possible. We specialize in working with small business owners and can help you gain a deeper appreciation for your business’s true value. Our confidential business valuation tool will provide you with an accurate business valuation you can rely upon as you plan for the future.Simply go to https://abbelamarco.bizequity.com/ and start your business valuation today. There is no charge and no obligation, however, we hope you find value in this service and would be open to discussing how we can use the valuation report to help you achieve your goal

Some Types of Commercial Real Estate To Invest In

April 27, 2022 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

Commercial real estate (CRE) is potentially one of the more profitable investments which can be made. There are many advantages created by these income-producing investments over residential investments, they can not only generate monthly income through reoccurring rental cash flow, but they are also a great way for building wealth.

Types Of Commercial Real Estate

There are various types of commercial real estate, many used for business purposes, with owners leasing the occupied space for monthly rent. Commercial real estate normally consists of the following property types:

Multifamily

These commercial properties consist of the apartment “four-plexus,” high-rise condominium units, and smaller multi-family units, which can range from four to 100 units. Unlike other forms of commercial real estate, the lease terms on multi-family buildings are typically shorter than office and retail properties.

Office

Office space is the most popular type of commercial real estate is office space. They range from single-tenant offices to skyscrapers are broken down into one of three categories: Class A, Class B, or Class C.

Class A commercial real estate properties are typically newly built or extensively renovated buildings in excellent areas with easy access to major amenities, typically professionally managed.
Class B commercial real estate properties are frequently older buildings requiring capital investment, to upgrade the building and property. These are usually a popular target for investors.
Class C commercial real estate properties are typically used for redevelopment opportunities. They are generally poorly located, require major capital investments to improve out-of-date infrastructure, and their high vacancy rates are much higher than higher-classed buildings.

Retail

Also popular, retail buildings are properties, ranging from strip centers, malls, community retail centers, banks, and restaurants, which are often located in urban areas. These properties may range in size from 5,000 square feet to 350,000 square feet.

Industrial

From warehouses to large manufacturing sites, and industrial parks, industrial buildings are typically manufacturing industries, warehouses as they offer spaces with height specifications and docking availability. Also, these commercial properties generally lend themselves more to investment opportunities.

Special-Purpose

Unlike the properties mentioned above, special purpose commercial real estate properties are constructed by the investor. They typically consist of car washes, self-storage facilities, and even churches.

Because the best commercial real estate properties are in high demand, investors must focus on location, future development, and improvements. Resulting in these properties increasing in value and a greater return on investment.

Commercial Real Estate Interest Rates & Fees

Unlike residential loans, the interest rates on commercial real estate loans are normally a little higher. Several fees attribute to the overall cost of commercial real estate loans, including appraisal, legal, environmental studies, application, origination, potential zoning changes, and survey, or engineering fees. While some of these are subject to the particular deal, some fees apply annually, others must be paid upfront even before the loan is approved.

Commercial Real Estate Loan Prepayment

Sometimes, a commercial real estate loan may have prepayment restrictions. These restrictions are designed to preserve the lender’s anticipated yield. Investors can settle the debt even before the commercial property investment loan’s maturity date. If they do so, there may be prepayment penalties.

How To Get Commercial Investment Property Loan

The idea of obtaining commercial real estate financing may seem intimidating at first. Investors who educate themselves about the process and the various types of commercial real estate loans discover they are very attainable. The following are the key steps involved in obtaining a commercial investment property loan:

Determine whether you will file as an individual or an entity.
Evaluate mortgage options and determine which loans will work best for your specific property and exit strategy.
Calculate LTV to measure the value of the loan to the value of the property.
Determine the ability of the project to service the debt by using the debt service coverage ratio.

Types Of Commercial Real Estate Loans

There are many types of commercial investment, and the investor and their advisors determine which financing option best fits their needs and strategy. Each loan type will have its unique eligibility requirements, down payment necessary, minimum credit score, and experience level. These loans also have varying terms to focus your attention on, including the loan term, interest rate, and loan-to-value (LTV) ratio.

The following are some of the commercial real estate loans which may meet your specific goals:

Small Business Administration (SBA) 7(a) Loans

The U.S. Small Business Administration offers several loans under the 7(a) umbrella, each of which is designed to provide financial assistance for small businesses. Investors looking for commercial real estate loans should carefully consider which of the following 7(a) Loans will work best for their next project:

Certified Development Company (CDC) / SBA 504 Loan

The 504 Loan Program is another SBA product made available through Certified Development Companies (CDC). These loans are specifically intended to stimulate business growth and job creation by offering small businesses yet another financing avenue. More specifically, however, the “504 Loan Program provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization,” according to the SBA.

Conventional Loan

Also known as traditional loans, conventional commercial real estate loans are issued by banks or lending institutions. Consequently, conventional commercial real estate loans are not backed by the federal government. Often used to purchase and finance assets like owner-occupied office buildings, retail centers, shopping centers, and industrial warehouses, conventional loans have developed a reputation for some of today’s most widely used commercial real estate loans.

A traditional commercial property loan typically finances anywhere from 65% — 85% of an asset’s loan-to-value ratio. As a result, borrowers will often be expected to cover anywhere from 15% — 35% of the property’s fair market value/purchase price. That said, there is usually no loan maximum. Borrowers can, however, expect commercial real estate loan terms to last anywhere from 5 — 20 years, with payments fully amortized over the loan’s duration. While conventional loans tend to come with lower fees, they are often harder to receive approval for.

Commercial Bridge Loan

As their names suggest, commercial bridge loans represent a temporary loan option for investors to exercise—one that bridges the gap—until refinancing becomes available to make the switch to a longer-term loan. Typically offered by institutionalized lenders, commercial bridge loans award many borrowers the ability to compete with all-cash buyers. Since commercial bridge loans usually finance up to 90% of a property’s LTV, those who can’t use cash should find it easier to get their foot in the commercial real estate sector. Since bridge loans are short-term, they don’t tend to last longer than three years. Therefore, borrowers should expect to refinance to a long-term loan sometime shortly.

Hard Money Loan

A hard money loan is made available to commercial investors by organized semi-institutionalized lenders. More importantly, however, hard money lenders are typically licensed to lend to real estate investors and specialize in short-term high-rate loans with fees that award many investors the chance to buy commercial real estate that they wouldn’t be able to otherwise.

In return for roughly 60% — 75% of the asset’s after repair value (ARV), hard money lenders will require interest fees upwards of 15%, in addition to about four points (another upfront percentage fee based on the loan amount). While hard money lender fees are sometimes as much as four times that of traditional lenders, they may be well worth the cost of admission for short-term loans. Not only is funding granted within a few days (as opposed to months with traditional lenders), but it can be a lot easier to receive approval for. If, for nothing else, hard money loans are asset-based, meaning the lender makes a decision based on the subject property and not entirely on the borrower.

Conduit Loan

Otherwise known as commercial mortgage-backed securities (CMBS), conduit loans are commercial real estate loans secured by a first-position mortgage on a commercial property. Conduit loans are traditionally offered to borrowers through commercial banks; conduit loans offer borrowers a fixed interest rate over 25 — 30 years. However, it is important to note that conduit loans will require a balloon payment at the end of the term. Thanks primarily to their relative flexibility, conduit loans allow many commercial real estate investors to qualify for a loan that typically wouldn’t.

Insurance Loans

Life insurance providers, or conglomerate companies, offer commercial real estate loans where the borrower’s line of credit is secured with a first lien position on the property. These loans are typically only used by strong borrowers who have an excellent credit history. Further, they are best used on newer properties, or those deemed less risky for the borrower. Most providers will favor industrial, office, retail and apartments though investors may still find success funding a mixed-use property with an insurance loan.

Summary

To truly understand how to invest in commercial real estate, investors need to fully comprehend the financial components that go along with it. Commercial investment property loans are nothing short of instrumental in the success or failure of a particular exit strategy. Therefore, take the time to review the commercial real estate financing process or consult an expert before getting involved in the process, including the various loans made available to you and everything else that will affect the success of the project.