With Covid-19 quickly receding into the rearview, the economy is bouncing back. Many industries are thriving as we enter into 2023. One of the most robust industries to succeed in real estate, with commercial and industrial real estate doing better than ever. As the real estate market becomes more favorable, many startup businesses are looking to take advantage of this opportunity to grow. However, the most potent limiting factor for startups seeking new real estate is access to suitable business loans.
Startup real estate business loans are a solution for new businesses seeking funds to grow. They are loan options that give the best funding with the most favorable interest rates to startups that lack the time in business to have an established credit score. While in a perfect world, every startup could get the funding they need to succeed, the truth is that banks are highly reluctant to assist startups due to the risk associated with them.
On the other hand, small business lenders know what it takes to succeed and can get your startup the business loans it needs. Read on to find out more about real estate business loans, startup options, and how you can apply today for that much-needed funding.
What Are Real Estate Loans, and How Do They Work?
Whether you’re looking for agricultural land, manufacturing space, office headquarters, or just establishing a brick-and-mortar, you require real estate. Real estate loans offer a lump sum to purchase a piece of real estate. In most cases, these loans are secured, offering the real estate as collateral for the loan. While most of us have mortgage loans, much larger commercial and industrial loans are available depending on your need.
Despite the market being rocky in the past, 2022-3 is trending favorably for real estate. Through the spearheading of manufacturers by Walmart and Amazon, industrial real estate is doing better than ever. Further, commercial real estate is set to bounce back from COVID-19 and exceed expectations.
Market conditions are favorable for businesses looking to purchase real estate in the next year. However, purchasing real estate is always a significant investment, and startup options are limited. Fortunately, several real estate loan options are available for promising startups.
Can I Get Real Estate Loans as a Startup?
While getting startup funding from banks and other traditional lenders is difficult, it’s not impossible. In fact, depending on your personal credit score and business plan, a wealth of options are available. All it takes is knowing your loan options and the right loan lender to give your business the boost it needs.
The most significant limiting factor for startups acquiring loans is their time in business. Not only do you lack the business income to offer against your loans, but your business credit score also hasn’t had the time to establish itself. Banks consider startups and businesses without an established credit score too unreliable to lend money to. At BitX, we understand the trials of starting a new business and offer several startup real estate loan options to assist small business owners.
Startup Real Estate Loan Options
There are many startup real estate loan options for small businesses seeking growth in the coming years. Regardless of a business’ time in operation, business owners can still qualify for real estate lending, depending on their individual credit score and verifiable personal income. In fact, one of the best lending strategies for startup business owners is to leverage their credit towards personal loans or lines of credit, which they can put towards business expenses. Another tangible option is to fix and flip real estate loans for startups seeking quick cash turnover for their business.
To be clear, the loan amounts and terms will not be as favorable as larger loans for more established businesses. However, these lending solutions provide quick and collateralized funds for real estate acquisition. Below, I will outline three lending options for startup real estate.
Personal Term Loan Stacking
Applying for business loans on day one can be frustrating and timely. Banks and other lenders will see the lack of business history and credit score as a significant risk. One of the best ways to obtain instant funding for your startup is through personal loans for your business. These loans require at least a 700 personal credit score and 50k yearly personal income.
The terms for personal loans are typically 10 to 15% APR on a 1-7 year loan with a small closing fee. The best advantage of these loans is their flexibility. As a personal loan, you have the freedom to spend that money on most business expenses. These expenses include payroll, maintenance, equipment purchases, and even paying off other loans to build credit.
These loans are usually unsecured, meaning they don’t require collateral and can stack for larger amounts. Be cautious when taking out multiple personal loans, and ensure you can pay each back on time if you choose this route.
0% Interest Business Credit Cards
Another lending solution that leverages the business owner’s personal credit is 0% interest credit card stacking. Essentially, you take out multiple credit cards at 0% interest and stack them. With several credit cards to utilize, you have a working line of credit (LOC) for your business. While not the same as a business line of credit, and while the funds won’t be as significant, you still have immediate funds you can put toward your business.
Similarly to personal term loans, there are almost no restrictions on what you can spend money on. You can put the money towards real estate purchases just as easily as payroll or maintenance, and you can also use these funds to pay the interest off other loans.
As this isn’t a business loan, you can avoid the paperwork and terms associated with business loans or LoCs. Further, 0% interest is difficult to beat. Just ensure you pay off the balance of your cards before the 0% interest period expires to maximize your return on investment.
Fix and Flip Real Estate Loans
Fix and flip real estate loans are a premium option for the acquisition of real estate with the intent of selling it within 1-2 years. These loans have a term rate of 12-36 months and interest rates of up to 12%. While these terms aren’t as favorable as longer-term commercial loans, they provide quick and accessible funds to purchase and renovate real estate. Similar to other real estate loans, the property in question is used as collateral for the loan, lowering the risk to the lender.
Fix, and flip loans are the best option for startups looking to renovate and resell a property. When business owners take out a loan, they receive up to 80% of the loan’s value and must provide the remaining balance upfront. Personal term loans or credit card stacking may be better options for businesses seeking a more permanent brick-and-mortar establishment.
Get Real Estate Startup Loans Today with BitX Funding
The startup phase of any business is often tricky, but it doesn’t have to be with suitable lending options. While banks are reluctant to loan to new businesses without a reliable credit history, online loan lenders like BitX Funding have you covered. We know how difficult it can be to get funding, so we’re here to assist you.
Whether leveraging personal credit to secure loans for your business or applying for a fix-and-flip loan to invest in your next real estate project, the options are out there. We’re here to ensure you have the best resources available with the fastest turnaround time. If you’re interested in real estate startup loans today, contact BitX Funding.