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Why Real Estate May Not Be Ideal for Securing a Business Loan

Thinking about using real estate as collateral for a business loan? Biz2Credit explores why real estate might not always be the ideal asset and provides insights into alternative financing solutions for small businesses.<br>Visit now: https://www.biz2credit.com/commercial-real-estate-loans/real-estate-not-best-asset-for-business-loan<br>

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Why Real Estate May Not Be Ideal for Securing a Business Loan

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  1. Why Real Estate May Not Be Ideal for Securing a Business Loan Commercial Real Estate Loans

  2. Why Real Estate May Not Be Ideal for Securing a Business Loan Trying to secure a small business real estate loan? If so, taking inventory of your assets is a vital part of the process. Personal finances, debts, income, and expenses will all be considered, but what about your property? Prior to the housing crisis in America, asset-based loans using real estate as collateral (including a primary residence) were a popular option, but things have changed. Lenders no longer look at real estate more favorably than other collateral.

  3. Understanding asset-based real estate loans Before we get into why real estate might not be your best asset (and considering other lending streams), you first need to understand how a lender views your assets. Asset-based lenders look to secure their commercial loans using tangible or non-tangible assets owned by the applicant. These might include your house, business premises, land, or even other asset classes like stock market equities or mutual funds. These assets aren’t just proof of your financial health; you’re essentially putting your investments, savings, and even your home on the line to get capital for your business now. This is often referred to as a “secured” loan.

  4. What is collateral in real estate loans? If you opt for an asset-based real estate loan, whether purchasing inventory, expanding your business, or some other business purpose, any property in your investment portfolio that you or your business own and have equity in can be used as collateral. Real estate essentially provides lenders with the additional security they need. But remember, any ownership you have in your property will be in jeopardy if you default on the loan. Often, real estate asset-based loans are used by businesses with poor credit or no other capital. Funding can sometimes be approved for up to 90% of the property’s value. Unlike more traditional real estate loans, the money can be used for a variety of business needs or to smooth over any short-term cash flow issues.

  5. Eligibility Criteria

  6. Why Choose Biz2Credit? • Trusted partner for franchise funding • Biz2Credit was founded in 2007 and has provided more than $10 billion in loans. • Dedicated support team • Tailored financing solutions

  7. Thank You

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