Exploring 4 Key Alternative Lending Solutions in the Commercial Real Estate Market

Commercial real estate investments can bring you a lot of benefits. It is one of those investments that is secured and guarantees you get long-term results. However, for such investments, you will require a great amount of financing, and in most cases, the borrowers aren’t qualified enough for the traditional means. So here are four alternative lending solutions that you can rely on to get the money you need for your investment goals.

Alternative financing sources

Alternative financing in terms of CRE is a nontraditional funding source available outside conventional bank loans, such as private lenders, credit unions, crowdfunding platforms, and even sale-leaseback. It provides developers and investors access to capital for developing, purchasing or refinancing commercial properties when traditional financing is not available to them. So, let us check out four common alternative financing options there.

Credit unions

Credit unions are now playing more than ever in the pre-market. They have an aggressive role in providing financing to eligible borrowers. Most credit unions are grouped together to create an underwriting and loan-serving organization that serves multiple credit unions. As a result of credit unions, lenders now have access to the same professional skills that were difficult to obtain because of their size. In addition to becoming more active in the CRE lending process, credit unions are also expanding their roles as SBA lenders. So, if you are someone who is deeply associated with the real estate industry, then you need to look out for this trend.

Private capital (Non-bank lenders)

Private capital lenders are the non-bank players in the CRE market. Their numbers have been increasing in groups filling the niche created by banks' dysfunctional lending abilities, meaning it was forced on them by the Federal Reserve regulators.

Private money lenders or commercial real estate hard money lenders, both locally and nationally, are now making a strong comeback. Some private money lenders even operate off-line credit from large banks, while others collect money from private individuals through the creation of limited partnerships. It is important that you research well about the lender well before trusting anyone. No doubt, alternative lending solutions are a great means. In fact, hard money lending is one of the most reliable, as the money can be received within a few days, but choosing the right lender requires time. So be patient and do your research.

Crowdfunding

Sometimes known as peer-to-peer financing, this approach for raising capital has been used in the high-tech world. Getting small amounts of money from individuals has also become common in funding movies or Broadway shows. In fact, you must have seen startups getting money for innovative ideas. However, there is a new twist to this concept, which is now just beginning to be used to find CRE deals. There are a lot of platforms out there that allow investors to pool together and fund a nontraditional real estate loan.

Sale-leaseback

This type of financing option was once quite common. Now, it has made a comeback into play as an alternative method for different types of properties such as industrial, warehouses, manufacturing properties and even single-tenant retail properties. This type of financing allows the tenants to either develop a new facility or raise capital by selling the existing facility to investors and then signing a long-term lease, giving investors control of the property for a 20 to 25-year time frame.

Finding alternative lending solutions is not tough, but choosing the right one based on your needs is difficult. You need to assess the eligibility criteria rates and other things about each of them before you decide. This way, you can make a good decision and guarantee the financing options fit your requirements and goals well.

Conclusion

Alternative lending options are quite wide, but they also come with higher commercial real estate loan rates in some cases. This is why navigating the process with expert help will make things easy. Private Capital Investors has the knowledge and skills to help you secure a loan that fits your requirements and also ensures you do not end up paying a huge sum. No matter your investment goals or financing needs, their experts will guide you right and help complete the process as soon as possible.