Interim loan is a short term financing option for your business.
Interim loan financing is an excellent option for your business if you are seeking to purchase commercial real estate, or if you are in the construction phase of building new property. These loans allow you to remain in your current location while the new facility is being built.
An interim loan is also great for businesses that want to sell their current property to upgrade, but they can’t afford to miss a good real estate price because they have to wait for their business to sell. The interim loan would give the business the money it needs to acquire the new property, while still maintaining and operating it’s business at the present location. This means that a business is not forced to have any downtime during the close and moving process.
There is a little flexibility when it comes to the term of these loans. They range from 6 months to 5 years, and the most typical is 3 years. The interest rates most often float over a defined loan index for the term of the loan and adjust or reset at maturity. In some instances the rate can be fixed.
The loans are also beneficial to businesses because the monthly payment is very low since they are interest only loans that do not amortize. The lender knows that at the end of the loan term they will get their full money back when a new loan is taken back. There are prepayment penalties involved with an interim loan, but some programs waive the fees if the business getting the loan decides to stick with the same lender on the much larger loan.