Other  Lenders


Banks are generally the best option for construction loans. They require full recourse and usually do not lend longer than five years. This is true for national, regional and local banks. Government regulation generally can make the loan process burdensome.


Cooperatives are member-owned organizations throughout the country. They are similar to banks but do not have the same government regulations. They generally offer fixed rate loans with five to seven year terms. Amortization periods can extend up to 30 years.


A Credit Tenant Lease (CTL) loan is primarily based on the credit of the tenant. Fundamental real estate analysis is consider secondary to a CTL lender. While the real estate is pledged as security, the loan is viewed as a bond rather than a real estate loan. Any property type can qualify for a CTL loan including drug stores, grocers, retailers, healthcare, office and industrial.


Similar to pension funds, Real Estate Investment Trusts (REITs) generally only lend on Class A properties. REITs can also be an excellent source for equity on large development projects.


Most pension funds have an advisor. It is estimated that they own about 5% of the commercial real estate mortgage market. Generally, they loan only on Class A properties.


Bridge lenders use private capital to fund loans. They are not subject to the same restrictive requirements as banks and Federal Agencies. They have much higher interest rates and shorter terms (three to five years). These lenders will consider almost any property. If a borrower needs to get the deal done quickly, this is generally their best option. Before considering a private lender it’s important to have a detailed exit plan for the loan.