Business Financing for Real Estate Investors and Small Business Owners
Learn about how the right business financing can get you one step closer to reaching yours and your client’s business goals. Obtain the necessary financing for your business or refer your real estate investors to our reputable lender today.
What is Business Financing?
Business financing refers to the process of obtaining funds or capital to support the operations, growth, or investment needs of a business. It involves acquiring the necessary financial resources to start, operate, or expand a business venture. Business financing can come from various sources, and the choice of financing options depends on factors such as the size and nature of the business, its stage of development, creditworthiness, and the specific funding requirements. Business owners can obtain the following types of financing:
Business Financing through Loanspark
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Ways Real Estate Investors Secure Financing for their Investments
Real estate investors and small business owners have access to a range of options to acquire capital for their business objectives. Here are the most common ones:
Hard Money/Private Money Lender – Hard money lenders are a financing tactic often used by real estate investors. Rather than coming from a bank, the funds for these investments come from a private individual or group. Because these loans do not need to go through any corporate procedures, they often have looser qualifying requirements and can be secured faster. Additionally, private lenders may be more open to backing risky projects.
Microloans – Microloans are typically geared toward newer businesses or startups that need capital to generate further growth. As the name suggests, these loans are smaller than what’s usually offered with traditional bank financing. Lower balances mean that microloan programs are less strict in terms of their qualifying requirements like credit score, which can be a comfort to those concerned about borrowing above their means.
Real Estate Crowdfunding – In the past, investing in real estate was limited to those with deep pockets, but since the passage of the 2012 JOBS Act, crowdfunding has become a way for investors to diversify their portfolios at a much lower cost. Rather than having to search out and restore properties on their own, investors can browse crowdfunding platforms to select from a list of available investment projects in which to participate. They then have the opportunity to finance shares of the property at a low cost—sometimes as low as $1,000—and collect a portion of the profits or rent payments once the project has been completed.
SBA Loans – SBA loans are so-named because the Small Business Association offers a guarantee of repayment to banks that are willing to underwrite loans for new entrepreneurs. The guarantee lets banks become more willing to take risks. While the affordability of a loan will depend on an investor’s unique situation, generally these loans have higher borrowing limits—up to $2,000,000. SBA loans also come with longer terms, lower down payments, and protection against balloon payments, which can help businesses maintain a stable cash flow.
ROBS – If applying for a loan is not for you, a rollover as business startup (ROBS) provider may be the best choice. This method of financing allows small business owners to draw funds from existing retirement accounts without incurring tax or withdrawal penalties. Because the money is their own, there are no debt payments, leaving them free to invest the full amount into business growth. Also, in the event that the business should fail, this leaves no negative impact on their credit score or other assets.