Golf Course Financing Options and Small Business Loans

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If you dream of opening a golf course or improving one you already own but don’t know how to make it work financially, consider golf course financing. You may be able to secure small business loans and other types of financing to make your ideal golf business a reality. In this article, we help you understand what a golf course loan is, what your options are, and how to qualify for golf course financing.

What is a golf loan?

Many lenders offer financing to buy an existing golf course, buy land to build a new course, or make improvements to a golf course you already own. There are financing options available for all types of golf courses – public, private, mini-golf and practice courses.

Financing a golf course is relatively risky for lenders since your golf course business must be or become profitable. It can therefore be difficult to find traditional financing unless you can prove that the company is already profitable. (And this is especially true if you’ve never owned a golf course before).

However, lenders offer a variety of financing options for small businesses. So you may be able to qualify for a less traditional type of financing even if you can’t get something like a commercial real estate loan. The type of financing available to you depends on your credit score, your needs and your business details.

How Financing Can Help Your Golf Course Business

Financing golf courses can give your business a tremendous boost. For anyone looking to purchase a golf course, you will likely need financing to manage the costs. A commercial mortgage or a loan from the Small Business Association (SBA) can open the possibility of owning a golf course. Or you can look into construction loans if you’re hoping to create a whole new course.

If you already own a golf course, you can use the funding for renovations and improvements — like landscaping, remodeling, or building a new clubhouse — that will attract more golfers and boost your bottom line. Plus, you can refinance your mortgage for a lower interest rate.

Types of financing for golf courses

SBA loan by SmartBiz

With an SBA loan, the money you borrow is guaranteed by the federal government. Your interest rates are likely to be lower with an SBA loan, so the loan would be cheaper than options from banks and other lenders. SmartBiz’s SBA loan has an interest rate of between 8.27% and 9.57% APR, and you’ll pay monthly over 10 years.

SBA 7(a) loans and SBA 504 loans are the two most popular SBA options. Both of these loans allow you to use the money for equipment or working capital, which traditional loans may not. These loans could be attractive for public golf courses that are already bringing in money.

Qualifying for SBA loans is often more difficult. There are higher credit requirements and less flexibility in terms of the finances of the golf course itself – you usually have to prove that it is already profitable. But when you apply through Nav, you are 3.5 times more likely to be approved.

Commercial real estate loan by SmartBiz

The process for obtaining a commercial real estate loan is similar to a standard mortgage, such as an appraisal and a title search. However, you may be able to borrow significantly more money than for a residential mortgage if you qualify. A commercial real estate loan from SmartBiz allows you to borrow up to $5 million to purchase a new golf course or refinance your existing one.

Payments with SmartBiz are over a loan term of 25 years on an amortization schedule and it comes with a good APR of 6.36% to 6.41%. You will need at least 10% down payment and a credit score of 660 to get this loan. In addition, your business must have been in operation for at least two years and already be profitable. So a commercial real estate loan will likely need to be used for a second golf course or an expansion of your original business.

Line of credit by Fundbox

A commercial line of credit provides borrowers with a cash reserve from which to borrow as needed. So if you need to improve your golf course, a line of credit might be perfect for you. You repay it at your own pace and pay interest like on a credit card. Fundbox requires a minimum credit score of 600 – lower than most lenders – and you can borrow up to $150,000. In addition, you will not fill out any documents, which will greatly simplify your task. There are no set-up fees or application fees. The APR you get depends on several factors and can range from 10.1% to 68.7%, so it can be higher than other options.

Equipment Financing by LendSpark

No more dealing with broken lawnmowers. If your golf course business needs new equipment like mowers or utility vehicles, it may be time to consider equipment financing. You can use this type of golf course financing to pay for new business equipment or heavy machinery that you need to operate and expand.

LendSpark offers large loans up to $2 million and can get the money to your bank within two weeks. It could therefore be a fantastic option if you need large sums quickly. You will make monthly payments for up to 60 months and pay an APR between 6% and 35%, depending on your qualifications.

Commercial bridge loans

The name says it all – a bridge loan is like a financial bridge that bridges a funding gap. You can use a bridge loan as an interim solution if you can’t get permanent financing in time to seize an opportunity. You are expected to repay the loan quickly, within months or years, and you will need to provide collateral to obtain the loan. After assessing the value of the property using the loan-to-value (LTV) ratio, a lender may decide to offer you up to 80% of the price. You will need to secure the rest.

For anyone looking to buy a golf course, a bridge loan may be an option to consider if you have enough down payment to make the higher interest rates manageable. Or if you need to rehabilitate a golf course quickly before selling it, a bridging loan might be right for you.

Business credit cards

A business credit card may not be the first thing that comes to mind when you think of financing a golf course, but it can help solve immediate cash flow problems. You can use it as a buffer for short term trading needs. There are business credit cards available to cardholders with all credit rating ranges — and some can even help boost your business credit.

How to Qualify for Golf Course Financing

Qualifications vary from loan to loan. Some of them, like SBA loans and commercial real estate loans, generally require higher credit scores and proof of profitability. Others, like lines of credit and equipment financing, generally have easier requirements. Be sure to read the application carefully before submitting it to ensure that you are likely to qualify. Our customer support team at Nav is also here to guide you through any questions that arise in your application process.

Pro tip: Try to ensure that you will not be charged a prepayment penalty if you are able to repay the loan early. You don’t want to be punished for moving forward with paying off your debt.

What you need to apply for golf course financing

Before applying for golf course financing, you should review the requirements of each lender. These may include:

  • A deposit
  • A number of months or years in business
  • A minimum personal credit score
  • Proof of the profitability of your business

Ask the lender for the necessary documents before applying to ensure you have time to gather everything.

How to finance the purchase of a golf course?

Financing a golf course is all about choosing the type of loan program that will meet your needs, choosing the right loan amount, and applying for the loan. Doing your research in advance will increase your chances of being approved. And Nav is always there to help. Working with us can help you find the right loan options. We’re here to help reduce confusion and increase your chances of being approved for the financing you need to take your golf business to the next level.

This article was originally written on May 9, 2022.

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