The real estate industry has been on the rise for almost a decade now, and it continues to grow thanks to the booming economy. But analysts claim that this rise is going to plateau so commercial real estate investors are now shifting their capabilities to loans.
What are Non-bank Commercial Lenders?
During the rise of real estate, a group of people and companies were able to become commercial real estate investors. Just by its name, these people are able to give financing in the form of equity to commercial real estate projects. But this trend is slowly shifting towards a different kind of financing – the non-bank commercial loans.
Non-bank commercial loans can come from individuals or corporations who have enough assets and flexibility to offer loans. They can be in the form of private equities, insurance companies, REITs, and hedge funds. This is why there is a chance for high-risk real estate deals to push through as compared to traditional bank loans. This is because the latter always focuses on loans from low-risk projects that come from the major industries. To add to that, non-bank commercial loans have fewer requirements and shorter processing time.
The Advantage of Non-bank Commercial Lenders
There are times when a corporation has enough money sitting around for investment. This means that they have a lot of money at their disposal which can fuel their appetite for projects that have higher risks. This is the major advantage anyone can get over traditional loans.
If you are a real estate company that is in dire need of funding, then looking into non-bank commercial loans can help you get the money without waiting for a long application process. On the other hand, high-risk and high-return projects can be an advantage to lenders because the yield can surpass the risk they were willing to take. And since a lot of companies are looking for ways to earn and increase their revenue, getting into non-bank commercial loans can help them get sustainable income.
The Risk for Non-bank Commercial Lenders
Nonetheless, corporations also face a risk when they get into non-bank commercial loans. For one thing, they will need the expertise for calculating risk and yield over a number of applications. This implies that companies will need to have the manpower and software that will help them make better decisions in granting loans. Although this will be an additional cost to the company, they should be able to calculate the return on their investments.
And it’s not just that. Non-bank commercial lenders should also be able to give flexible loan options for their clients. As it veers away from traditional bank loans, it should be able to provide certain flexibility in payments and collaterals.
The trend today is that non-bank commercial lenders are encouraged to continue their funding because of the increase in STEM businesses. STEM refers to the Science, Technology, Engineering, and Medicine industries that are now increasing value because of the advancement of technology and the increase in healthcare concerns of the bigger population.
Contact Gelt Financial for all your non-bank commercial loans. Since 1989 we have been a leader in private funding. We are here to help you.