How to Finance Commercial Real Estate Investments

Jaspan Schlesinger, LLP is a New York law firm operating from offices in Garden City and Suffern. Working closely with clients throughout the real estate sector, Jaspan Schlesinger, LLP provides legal counsel during the purchase and sale of commercial properties.

When it comes to financing commercial real estate, most investors begin with traditional financing such as bank loans. Bank loans for commercial real estate often feature a down payment of 20 to 25 percent and a term of three to five years. However, bank loans can vary widely based on region and area of interest.

If buyers plan to conduct business in their properties, they may qualify for a Small Business Association (SBA) loan. SBA loans come in two forms: the 504 loan and the 7A loan. The 504 loan consists of a 50 percent first loan from a bank and a 40 percent second loan from the government, while the 7A loan consists of a 90 percent government loan.

If traditional financing and SBA loans are not feasible, investors may pursue permanent loans from pension funds or insurance companies. Otherwise, seeking loans via third-party sources such as family members or friends may be the best option.

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