Getting a commercial real estate loan can be challenging for any type of business. Even the most mundane businesses have to provide piles of paperwork and demonstrate the financial health of the company. If you need a loan for a religious organization or a business that conventional banks find potentially risky, you might have to seek alternative financing.
The good news? Hard money lenders that provide commercial real estate loans only care about getting paid back—not about how you generate income. As long as your organization is successful enough to pay off its debt, you can get an equity-backed real estate loan.
So-Called Sinners and Saints: Equal Players as Real Estate Borrowers
If you need to borrow money to purchase real estate for your organization, it shouldn’t matter what your moral beliefs are. Unfortunately, most conventional lenders don’t share this attitude.
Church Real Estate Loans
Churches often need to raise or borrow money to purchase land or property, complete maintenance and repairs, improve infrastructure, expand spaces to accommodate a growing congregation, or refinance an existing loan. Conventional banks do lend to religious organizations that are designated nonprofits, but having official nonprofit status is mandatory, and not all churches have taken this step.
Because churches don’t typically generate a steady income, the bank approval process is more stringent. In many cases, the process can take several months to gather and process all of the required paperwork, including financial and bank statements, budgets, donation information, bylaws, and more. If you’re purchasing real estate, you can also expect to provide a survey, appraisal, and other required documentation.
If you’re working with a conventional lender to get a church loan, there is no way to speed up the process, so if time is of the essence, you may need to seek alternative financing options.
Morally Questionable (Depending on Who You Ask) Business Real Estate Loans
Businesses such as strip clubs, marijuana dispensaries, adult stores, casinos, and other types that are perceived by some to be morally questionable sometimes have a hard time securing real estate loans. These types of properties are notoriously difficult to finance through conventional banks simply because of the optics. Neighborhood banks don’t want to be seen funding special-purpose businesses or activities.
In the case of cannabis loans, federal legal issues are another factor at play. Because of these challenges, it’s not uncommon for these types of businesses to work with private lenders that make lending decisions based on the likelihood of a return—not on the moral fortitude of the company.
Alternatives to Conventional Commercial Real Estate Loans
Private lenders have more freedom to choose what types of real estate loans they will finance. Churches don’t have to be official nonprofit organizations to work with a private lender. Cannabis companies that operate in states where medical and recreational growing operations and dispensaries are legal can turn to a private lender for commercial real estate loans. Properties that are perceived to be politically incorrect, but have tons of equity are still eligible for private financing.
If you have been turned down for a conventional loan, or if you’re finding the application process overwhelming, explore your options with a hard money lender.
Benefits of Private Lending
In addition to being more open to lending to different types of businesses and religious organizations, private lenders offer several other benefits over conventional banks. Speed is the No. 1 benefit, with approvals in a matter of hours and turbo closings in five days or less. If you’re purchasing property in a competitive real estate market, you need this type of speed to get the ideal space for your business.
Private lenders can also be more flexible with their terms. Come to the table with a deal in mind, and a private lender may be able to help.
Socotra Commercial Real Estate Loans
Socotra offers commercial real estate loans to perceived sinners and saints alike, including religious organizations, gentlemen’s clubs, adult stores, cannabis businesses, and more. When making lending decisions, we look at the deal in front of us, regardless of use. With the ability to close in five days or less, you can get the funding you need to start a new business or take your existing one to the next level.
Running a business isn’t the only way to generate income. If you’re interested in learning more about making money with real estate investment, read our free guide, How to Grow a Passive Income Portfolio in Today's Market.