What is an Alternative Commercial Real Estate Loan?

What is an Alternative Commercial Real Estate Loan?

An alternative commercial real estate loan is a type of financing that is provided by non-bank lenders, such as private equity firms, hedge funds, or specialty finance companies. These lenders typically offer loans that are outside the traditional lending criteria of banks and other financial institutions, and they may offer more flexibility and faster access to funding.

Alternative commercial real estate loans can take a variety of forms, such as:

  1. Bridge Loans: These short-term loans are designed to provide temporary financing for a commercial property until permanent financing can be obtained. They can be used for a variety of purposes, such as acquiring a property, renovating a property, or refinancing existing debt.
  2. Hard Money Loans: These are typically short-term loans that are secured by the property itself. They are often used by real estate investors who need funding quickly or who may not qualify for traditional financing due to credit issues or other factors.
  3. Mezzanine Loans: These loans are a form of subordinated debt that is used to fill the gap between the senior debt and the equity in a commercial real estate transaction. They are often used in conjunction with a first mortgage loan and can provide additional funding for a project.
  4. Preferred Equity: This is a form of equity financing that is used to provide capital to a real estate project in exchange for a preferred return on investment. It is often used in conjunction with other forms of financing, such as senior debt or mezzanine financing.

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