Using Commercial Real Estate to Get Working Capital

From time to time, all businesses could use an injection of capital to help with the costs that are associated with running a small business. Besides the regular business costs that you have planned and budgeted for, there are constantly situations that occur during the course of business that requires more money to be spent.

The best option would be to stop by the local bank and receive bank-rate financing. However, that’s virtually never the case. Lenders are less aggressive in offering financing for small businesses than they have been in the past – especially in cases where the borrower has subpar credit or is considered a high-risk to the lender. A better option for some would be to find an alternative source of funding.

Alternative Funding Options 

Alternative lending is typically based on your existing cash-flow, recent revenues, and other financial aspects of your business. However, if your business hasn’t experienced strong sales lately, it may not be a good fit. You may wonder, what other options are available for your small business if you need working capital but have limited options? If you own commercial real estate, you can use the property’s equity obtain business financing at an affordable rate.

How to Use Working Capital 

There are several ways you can put the working capital loan you received against your commercial real estate to use. For example, you can use it for build-outs, tenant improvements, emergency needs, to fix equipment, for advertising, payroll, or for more operating capital. The most important thing that you can do is to use the capital you receive on what you need it for.

Types of Real Estate Working Capital Loans

If you have decided that a real estate working capital loan is right for you, you need to know the types that are available for you to choose from. One is a second mortgage, which is a good option is you already have a 1st mortgage lien. Another option is a cash-out refinance. It’s a good choice to make if you have a significant amount of equity in your personal property or commercial real estate.

If you need capital to grow your business and ensure success, there are more than a few things to keep in mind. The information here gives you a basic overview of what to expect. Being informed is the best way to know if a working capital loan is the right source of funding for you.

SHARE IT: LinkedIn