Blog10 February 2022

Alternative financing for business real estate: Advantages and disadvantages

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At Briqwise, we’re firmly committed to financing business real estate for entrepreneurs directly by investors. We do this without the involvement of a bank (non-bank). Despite the significant growth in popularity of this form of financing over the past five years, not everyone is familiar with it yet. This is unfortunate because, for many entrepreneurs, alternative financing is the most attractive option for purchasing commercial real estate such as business premises. 

This article examines the advantages and disadvantages of alternative financing for commercial real estate.  

What is alternative financing?

Alternative financing is financing that is not provided by a bank. For this reason, this form of financing is also called non-bank financing. This funding may be completely separate from bank financing, but it may also supplement it.

There are many types of alternative financing available for entrepreneurs on the market. Some examples of non-bank financing are crowdfunding, IPOs, private equity, and factoring. 

The benefits of alternative financing for business real estate

Alternative financing has numerous advantages. For entrepreneurs, in particular, this form of funding is an attractive way to borrow money to purchase the corporate real estate. After all, entrepreneurs often get no response when they approach the bank to apply for financing.

Fast turnaround on financing 

Most business owners know it all too well: if you wait too long to take action, you miss opportunities. If you have your sights set on commercial property and don’t want to go through time-consuming procedures at the bank only to hear ‘no,’ alternative financing is a suitable solution.

Alternative financing platforms such as Briqwise rely on IT to work quickly and efficiently. This enables you to obtain a business mortgage to finance your business property much quicker than at the bank.

Customization is central to alternative financing

As a rule, alternative financing is very flexible. The wishes and needs of the entrepreneur are paramount. Unlike bank financing, you are not continually confronted with administrative processes.

Most alternative financiers are more than happy to think along with you about what the best solution is for your situation. Such flexibility is advantageous when your business suddenly has more resources or needs more funding.

For example, at Briqwise, you can pay off your business mortgage without limitation on penalties. However, with bank financing, there are extra costs associated with early repayment.

Favorable conditions – also for starting entrepreneurs

It is not feasible to go to the bank for a business mortgage as a (starting) entrepreneur in many cases. 

In most cases, alternative financiers can offer entrepreneurs more favorable conditions concerning loan-to-value and repayment pressure. Particularly when entrepreneurs demonstrate a good repayment capacity and have good collateral. 

Have you got solid collateral, a good history, and a low Loan-to-Value? Then you generally get favorable terms for your business mortgage through Briqwise, even if you have just started your business.

Alternative financing is simple

Non-bank financing is simple to apply for. For example, a bank will often ask for whole piles of documents to prove whether you can get a business mortgage from them.

Alternative lenders, of course, will also ask for several documents from you. However, you can be told in just a few simple steps whether you can obtain financing for your business property.

To get a good estimate for the purchase of your commercial property, all you have to do at Briqwise is fill out a short form to get a no-obligation financing proposal by email. So you can calculate interest rates and monthly fees for your business mortgage through Briqwise in just a few minutes.

The disadvantages of alternative financing for business real estate

No financing form has only upsides. Alternative financing is no different. However, the disadvantages of alternative funding for business real estate are limited for entrepreneurs. Especially when you compare these disadvantages to the advantages of alternative financing on the one hand and the disadvantages of bank financing on the other.

More openness to the outside world

Basically, a bank business mortgage to buy commercial real estate is only between you and the bank. The situation is different when you want to seek alternative financing to purchase commercial real estate through crowdfunding or a peer-to-peer platform. In that case, you let the affiliated investors of the platform know.

Particularly with a Crowdfunding platform, you’re going to be on the internet in regard to your assets. Often this is not desirable for entrepreneurs! Via a platform with investors, as with Briqwise, only investors who have been accepted as clients will be made aware of your request, and your information will not be spread online.

No one-stop shop 

Alternative financiers usually specialize in only one part of the balance sheet. For example, real estate accounts receivable or machinery. Each alternative lender has a good solution for the particular niche. For instance, at a bank, when they finance you, you can be financed for your entire asset side of the balance sheet at a single point of contact.

Apply for financing business real estate via Briqwise 

Would you like to know how we can help your business purchase business real estate inexpensively and without hassle? If so, be sure to check out our page about applying for a business mortgage through Briqwise.

Do you still have questions about how Briqwise can help your business purchase commercial real estate? Feel free to contact us without obligation, and we will be happy to help you.