When does a developer/business need a commercial real estate loan versus a business loan for project financing?
A commercial real estate loan is appropriate for large projects, generally $5 million or more, which usually involve more complex requirements. Smaller transactions are often handled through a business-banking lender. As far as commercial real estate/construction loans, those are used to build shopping centers, office buildings or residential developments. Commercial real estate lending requires unique underwriting, structure, approval and administrative processes as it relates to acquisition, construction and development loans. How do the three types of commercial real estate loans differ? Acquisition loans include the purchase of raw land or owner-occupied and investment properties with existing improvements. They also may include funds identified for renovation. It is advisable to have a building condition analysis completed prior to closing an acquisition loan. This analysis is separate from the property appraisal and environmental Phase 1 study and describes building conditions, i
