Are you choosing the right loan right now? If you are ready to secure funding for your business, you know there are many types of loans in the marketplace. What’s the best method for choosing the right loan, the one that most closely matches your business needs?
Choosing the Right Loan for You:
• What is the Purpose of Your Loan? Are you purchasing a new business or property? Refinancing? Constructing a new property? Buying out a partner? Renovating or converting a property? You can utilize different loans for different purposes; they are not interchangeable.
• How long do you want to need to pay back this loan? How long do you intend to keep this property? How long will you need funding for? The longer the loan, the smaller your monthly payments. However, you will also have debt on your books for longer, which can affect future borrowing. Sometimes, there is a business opportunity that requires immediate action, which would necessitate using a loan that can close quickly.
• How much cash on hand do you have to fund this project? With the exception of refinances, most loans require an equity injection. Figure out exactly how much you are willing and able to contribute, along with your partners.
Types of Loans:
• Conventional Loans: Conventional loans are traditional mortgages. These loans are secured by a first lien position on the real estate or business. This means that the collateral of the real estate and business “guarantee” the loan, along with any necessary personal guarantees of the borrower. Banks, credit unions and other financial institutions offer a variety of conventional loans.
• SBA (Small Business Administration) loans: SBA loans can be used for a variety of financing needs associated with being a small business owner, including purchasing a business, refinancing an existing mortgage and expanding and renovating existing businesses. Their rates tend to be competitive. GRP Capital partners with a number of preferred lender partners (PLP) of the SBA in order to streamline the process of closing these loans.
• Bridge Loans: Bridge loans serve as a short-term solution when borrowers needs immediate funds. Bridge loans allow a borrower to make quick and strategic business decisions, without having to worry about securing long term financing and waiting for those loans to close. This solution allows a client time to then secure permanent funding down the road. GRP Capital can help secure quick turnaround bridge loans. We also have access to our GRP Capital Debt Fund. We are proud of our reputation of being reliable, flexible and fair in utilizing this debt fund.
• USDA Business and Industry Guaranteed Loans (USDA B&I): These specialized loans are designed for projects in agricultural and rural settings. These loans support local employment and economic health in rural communities.
If you are considering a loan for purchase or refinance and would like to discuss choosing the right loan for you, feel free to contact our team.