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Commercial Loans Arizona

Commercial Loan Types

Everything You Need to Know About Commercial Loans in Arizona

A commercial loan is normally defined as a debt-based loan or funding plan between a financial institution and a business. This is normally used to fund mega capital expenditures or cover operational costs that a business cannot be able to afford. The real estate aspects should not all be qualified as commercial despite earning money from the property.

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Another essential factor is that real estate bridge loans were not designed particularly for a road extension. Instead, the real estate bridge loans were intended for a physical bridge which can be included to a construction loan. To learn more about commercial loans, speak with an Arizona commercial loan specialist immediately. This is because there are many commercial real estate loans, which can lead to confusion. The Arizona Mortgage Pros will guide you through these different types of commercial real estate loans and offer advice on the do’s and don’ts to qualify as a valuable property to banks and lenders. 

Types of Commercial Real Estate Loans

  1.   Fixed-Interest Long-Term Commercial Loan

A standard Arizona commercial real estate mortgage is offered by banks or lenders and works just like the conventional home mortgage. However, it can be used for wider uses and with short terms. The real estate loan often surpasses the reimbursement plan of 20 years instead of offering the 30-year loan repayment plan. This is unlike most loans which normally give a repayment loan of 5-10 years. This loan also has other requirements; one year in business, a personal FICO assessment of 700 or higher, 51% plus inhabitance of the property by the organization of the proprietor’s. This loan requires a financing cost in the range of 4.75-6.75% with a flexible selection. This means that the fee of the loan can raise or lower depending on the patterns of the real estate market. By using this type of loan, the financing cost, and the installment plan stay stable. 

  1.   The Interest-Only Payment Loan

The interest-only payment loan is outstanding as a balloon loan because it is typically used by organizations that are expecting huge payouts in the forthcoming dates. The agendas of the payment are made by using smaller interest sums with the bigger balloon installment that are booked for payment toward the end of the agreed term, which is normally somewhere between 3-7 years. This loan type is usually used by organizations that are building up or constructing a business property which is essential for renegotiation as a final term single amount. 

  1.   The Commercial Refinance Loan

This loan is ideal for paying off an existing mortgage on the commercial property for a longer term of a lower rate. It is also great for paying off a maturing loan private party or leveraging equity for business expenses of property improvements. It also has lower financing costs hence a popular choice for organization proprietors. Although there are further charges and expenses included when renegotiating a loan, these costs are insignificant when compared to the savings through a low monthly payment. Therefore, renegotiating helps in boosting the flow benefits for an organization either through the renovation of properties or the increase of commercial real estate. 

  1.   Hard Money Loans

Hard money loans are guaranteed by private investors, unlike other loans which come from financial institutions such as banks. With hard money loans, investors do not focus so much on the credit score of the borrower. They take the funding risk based on the commercial worth of the property. These loans have a high rate of interest fee since they have a short-term and also demand fast payment. These loans are, however, attractive to company investors who specialize in house flipping. 

  1.   Bridge Loans

Bridge loans are similar to the hard loans in several ways, with the main differences being the lower financing costs and longer terms. Regularly, the financing costs range between 6-9% with a term of up to three years. The borrowers are required to hold up for their loan to be endorsed before getting the money, and this period may last for up to 45 years. In most cases, to qualify for this loan type, borrowers need to have a base credit score of 65- and down payment funds of around 10-20%. This loan type is most popular with short-term investors who are looking to remodel their expenses or construction work before refinancing. 

  1.   Construction Loans

The construction loans, just as the name suggests, are used to handle expenses that are related to the construction of commercial structures such as retail shops, office buildings, rental units, and mechanical structures. The funds from the loan will be used to take care of the expenses of construction as well as materials. They can also be used for insurance in the case where investors have already bought the undeveloped land to construct on. Another alternative is using building materials as loan insurance. The loan term normally runs from 18 months up to 3 years. The borrower will mostly move into a home loan that has longer terms once the loan is completed.

The World of Commercial Real Estate

The expression ‘commercial real estate’ can be used to depict any type of structure, land, or building that is used as an income source. Generally, structures where the proprietor’s business 50% and above inhabitance rate stands a higher chance of meeting all the loan requirements. This is because lenders will be sure the borrower has a concrete investment in the property. Below is a list of properties that qualify as commercial real estates:

Apartment Buildings

Properties with more than five living units are considered as commercial real estate. Property with four units or less will not be considered, and an individual loan will be most applicable.

Office Buildings

Office buildings in or near urban centers have higher demand as it is a bit expensive. As you move far from the urban centers, the costs reduce, and sometimes businesses go for these to save cash.

Retail Structures

These include strip shopping centers, which in most cases house several private companies, regional malls, and independent shops.

Medical Buildings

These include clinics, doctor’s office, surgical centers, and critical care centers, among others.

Warehouse and Industrial Buildings

These building types are normally found in the outer skirts of essential cities where it is easier to access and carry materials and products. These include services such as light assembly, storing assets, heavy production, and more. 

Resorts and Hotels

This is one of the main categories and includes casinos, motels, hotels, luxury resorts, inns, major chains, and so on. These types of structures need a lot of administrative work, and there are several guidelines required to comply. This makes them perfect for borrowers new to commercial property ventures. 

Land Developments

Land development includes taking an undeveloped land and changing it into a space that can be used for development in the future. This property type requires little initial investment and hence has huge potential returns. 

Other Commercial Loans

Some people are looking for loans as working capital while others are looking for physical property. There are different qualifications for different loan types. Below are other types of commercial loans. 

Term Loans

Term loans are a popular choice when it comes to business loans. When you apply for a business loan, you’re looking forward to receiving cash which you will pay back at some point later. The term of the loan can be different. There are some loans which are short term lasting for a minimum of three years. There are also those with longer durations which can extend to over 20 years. Regardless of the loan terms, one will have a foreordained plan where he or she will make monthly payments. Although it is not easy to meet all loan requirements for a standard term loan from a financial institution, especially with credit issues, there are online money lenders and commercial centers with loosened up requirements. 

Business Credit Lines

Business credit line works the same way as a credit card. The funds that will be required for a business venture can be drawn freely if the credit capital if the borrower is still available. These funds can be used to make installment, take care of emergency expenses, and get supplies. The most significant fact is that you can acquire these funds without going through the loan process again. A business credit line is ideal for any business that has constant needs.

Government Business Loans

The United States government, through the Small Business Administration, can give a small business loan. There is an array of SBA loans with lower financing costs compared to other lenders. SBAs can give loans through banks by ensuring the loan will be repaid. 


There are loans for virtually any form of commercial real estate venture. With increased internet access and online loan specialists, modern borrowers now have unlimited choices to acquire business capital. The financing charges for most of these loans are normally low since the owner-occupied commercial property can be used to fill in as security. Commercial loans in Arizona are an ideal alternative for most businesses. To learn more, our team of qualified agents at The Arizona Mortgage Pros will assist you with the loan type that best fits you.