Small Business Loans Philadelphia

The Best Way To Address Your Credit Crunch

A List Of Different Alternative Loans Available In The Market.

The funding options for real estate business especially after the housing market collapse in 2010 have become very tedious. Although the economy has recovered considerably since the meltdown many venture capitalists and banks are still wary of investing in commercial real estate development. But the good news is there are number of small business loans programs that can help you to address the pressing need to maintain the cash flow.


That said, the popularity of alternative funding in real estate sector is going up and why not, since it offers customized and quicker credit solutions compared with any conventional funding. Below is a list of different alternative loans available in the market.


1. SBA Loans


The SBA 504 loan (Small Business Administration) or certified development company loan is specifically designed to purchase, develop, construct and sell commercial real estate property. It is available with fixed or variable interest rates as per individual cases, but generally the rates are lower than current market rates. Mostly 10% down payment is required by the applicant and rest of the loan is funded jointly by SBA and a private or conventional investor. Manufacturers are also eligible for SBA 504 loans but the loan is meant to only buy heavy machinery required for the said business. Generally,the project assets being financed are used as collateral. The maximum amount of loan is $5 million.


2. Hard Money Loans


Hard money loans are great for those real estate developers who have a bad credit history. These loans are based on the value of the real estate they are developing hence investment risk is higher. Being short term loans and because of the higher risk involved, interest rates may seem prohibitive but it will provide you with the necessary capital in time. Sometimes the interest rates can be higher than conventional subprime loans.


3. Fix And Flip Loans


You must have heard the term flipping houses, when an investor buys a house renovates it and sells for at profit that’s called flipping a house. This loan is meant for those entrepreneurs who dream of purchasing a piece of real estate property renovate it and then sell it for profit. A person constructing some sort of real estate on land he owns is also eligible to get a Fix and flip loan. Interest rates, terms and amount of loan vary from investor to investor however on an average you can get the loan processed within a week, i.e. seven working days. The only cliche is the property must be clear titled and fully owned by the applicant.


4. Bridge Loans


Bridge loan is also a short term loan with minimum term of two to three weeks and maximum up to 3 years. It is secured by any company pending arrangement of long term finance. Naturally the interest rate is higher; however funding is made available in shorter duration. The loan is meant to meet your current obligations that you cannot fulfill for the lack of cash flow. Bridge loans are also offered by conventional lenders however the current trend shows that businesses are shifting towards private sector lenders offering quicker bridge loans Philadelphia.


5. Commercial Real Estate Loans


The federal government as well as private sector is trying very hard to revive the real estate sector in the country. The housing market is also gaining back its momentum making it possible to access various types of commercial real estate loans without any hassle or delay. These loans also provide small real estate developers with level playing field since they usually lack the resources compared to bigger real estate firms. Whatever is the case, alternative finance provides best financial solutions to all real types of businesses during the time of crisis. It is without doubt the best way to address the pressing credit crunch.