AVANA CUSO Offers Professional Guidance on Applying for Commercial Real Estate Loans
Securing a commercial real estate (CRE) loan can be a transformative step for business owners and investors looking to grow their portfolios or expand their operations. However, the process can seem complex without a clear roadmap. At AVANA CUSO, we specialize in guiding borrowers through this journey. Here’s a step-by-step guide to help you understand how to secure a commercial real estate loan. Experienced commercial lenders carefully guide brokers, credit unions, and their borrowers through the commercial real estate loan process. Whether it’s finding the best rates and terms or simply understanding what a property is worth, AVANA CUSO has all the know-how for those looking to secure a commercial real estate loan.
The Most Important Step: Choosing the Right Lender for Commercial Real Estate Loans
Choosing the right lender for a commercial real estate loan is crucial because the terms, rates, and guidance provided can significantly impact the success of your investment. A reliable lender understands your business goals, offers flexible and competitive financing options, and provides personalized support throughout the process. They can streamline complex procedures, help mitigate risks, and ensure the loan aligns with your financial strategy. Working with an experienced lender like AVANA CUSO can make all the difference in securing the capital you need while fostering long-term financial stability.
What are Commercial Real Estate Loan Rates & Terms?
Commercial real estate loan rates can range from 2.2% to 18%, depending on the type of loan and the lender. AVANA CUSO offers competitive interest rates starting at 3.5%.
Commercial real estate loan terms generally start at 12 months and can run up to 10 years. AVANA CUSO provides loan terms ranging from five to 10 years, with amortization of up to 30 years.
Commercial real estate loan sizes can vary anywhere from $500,000 to north of $25 million depending on the asset. AVANA CUSO generally funds loans around $2.5-$5 million but has the network to facilitate a larger loan, around $25 million. The average loan-to-value (LTV) ratio spans 60% to 85%, with AVANA CUSO’s maximum LTV at 75%.
6 Steps to Securing a Commercial Property Loan with AVANA CUSO
To get a commercial property loan, take these six steps:
- Provide all necessary information including business history, cash flow, personal and business tax returns, financial statements, assets and liabilities, credit history, and collateral information to your credit union or broker.
- The credit union or broker then shares this information with AVANA CUSO, which reviews the data to determine if the borrower and property qualify. During this analysis, loan terms are set.
- An appraisal, environmental inspection, and commercial property inspection are conducted to value the property.
- The loan goes through the underwriting and credit approval process before it is sent to credit unions for review.
- The credit union reviews all documents. If approved, loan documents are drafted.
- Finally, AVANA CUSO closes the loan,n and the credit union funds it.
What SBA Real Estate Loans Are Available?
There are two Small Business Administration (SBA) real estate loans available: SBA 504 loan and SBA 7(a) loan.
Small business owners interested in long-term, fixed-rate financing of up to $5 million should apply for SBA 504 loans. To be eligible for this loan, a business must be a for-profit institution within the United States, have a net worth of less than $15 million, and have an average net income of less than $5 million after federal income taxes two years before submitting an application.
The SBA 7(a) loan is the most common of the two loan programs and is used to assist small businesses with special requirements. The 7(a) loan can be used when real estate is part of a business purchase, as long- and short-term working capital, to refinance current business debt or purchase furniture, fixtures, and supplies.
To be eligible for this type of commercial loan, businesses must be for-profit, considered a small business, operate in the United States, have invested equity, use personal assets before seeking finance, demonstrate a need, and more.
About AVANA CUSO
Established in 1998, AVANA CUSO is one of the most seasoned credit union service organizations (CUSO) with a focus on commercial real estate lending. Driving excellence through end-to-end customer service and our investments in technology, AVANA CUSO connects credit unions with commercial real estate entrepreneurs, brokers, and small business owners through participation lending.
Our mission is to help credit unions diversify their lending portfolios by expanding their lending programs beyond local communities, mitigating concentration risk while enhancing loan-to-share ratios.
Part of the AVANA Family of Companies, AVANA CUSO is an ESG lending organization that strives to improve communities by funding socially responsible projects that boost economic growth and foster job creation. AVANA CUSO is headquartered in Glendale, Arizona.
We refreshed the content of this blog in December 2024 to make it more suitable for our readers.