Finding the working capital to make bold moves can be challenging, but ultimately it is the only way to get ahead in a competitive space. Unless your company fulfills a niche that makes it easy to pick and choose your clientele by your obscurity and rarity, it takes a competitive posture to compete. Successful small business owners understand how to call on that capital as needed without compromising the cash reserves that are meant to see them through demand downturns or emergencies, and that often means financing.
Equity in Commercial Real Estate Assets
Many businesses own some form of real estate, even if it is just the building that houses the operation. Owners also frequently have property holdings beyond the business and its investments, and those can be used as collateral just as easily, which means if you finance using your real estate equity, you can get lower rates and more favorable repayment terms. You can also pretty much choose your financing structure since real estate is a strong form of collateral.
Secured Credit Lines
If you have some equity in a building but do not own it outright, this is probably the easiest option to access. Credit lines based on commercial real estate assets work a lot like home equity credit lines, they just have different LTV limits and interest rates. You can count on revolving capital access with an account in good standing, grace periods before initial interest calculations, and a limit that reflects the equity available in the asset the line is based on.
Refinancing Real Estate Assets for Capital
Credit lines are far from the only option. There are various loan types to choose from if you need working capital and have a building that is owned outright. Some of these options will also work as a second loan against a building with a commercial mortgage, others will not. The most common loans like this are asset capital loans or operational capital asset loans. Both are roughly the same thing, but the preferred language changes from lender to lender.
Those loans allow you to refinance the value of the building for up to five years, making interest-only payments until a final balance payoff. There are also cash-out building refinancing options like commercial mortgages, but they tend to have long approval wait times by comparison. Bridge loans are also an option if you do not need payment terms longer than three years. Keep this in mind as you weigh your options for working capital against your commercial real estate investments.
Are you looking for financing options for your business? If so, Synergy Commercial Funding is ready to help. We offer a wide range of commercial finance services to help businesses of all sizes achieve their objectives, whether it’s purchasing new equipment or purchasing a new commercial property.
Interested in creating a second line of income just by talking with your existing network? Want to help the economy grow by helping businesses around you grow? Think about becoming a Synergy Commercial Funding Partner. Visit our "Referral & Broker Program" to learn more.