Golf Course Financing Options & Small Business Loans

If you’re dreaming of opening a golf course or improving one you already own but aren’t sure how to make it work financially, consider golf course financing. You may be able to get small business loans and other types of financing to make your ideal golf course 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 course loan?

Many lenders offer financing to buy an existing golf course, to buy land to build a new course, or to make improvements on a golf course you already own. There are financing options available for all kinds of golf courses — public, private, mini golf and driving ranges. 

Golf course financing is relatively risky for lenders since your golf course business needs to be or become profitable. So it may be difficult to find traditional funding unless you can prove that the business is already profitable. (And this is especially true if you haven’t owned a golf course before).

However, lenders offer a variety of small business funding options. 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

Golf course financing can provide a fantastic boost to your business. For anyone hoping to purchase a golf course, you will likely need funding to manage the costs. A commercial mortgage or loan from the Small Business Association (SBA) can open up the opportunity to become a golf course owner. Or you can look into construction loans if you’re hoping to create a brand new course.

If you already own a golf course, you can use financing for renovations and improvements — like landscaping, remodeling, or the construction of a new clubhouse — that will draw in more golfers and increase your bottom line. Also, you can refinance your mortgage loan to nab a lower interest rate. 

Types of financing for golf courses

SBA Loan by SmartBiz

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

The SBA 7(a) loans and the SBA 504 loans are the two most popular options from the SBA. Both of these loans let you use the money toward equipment or working capital, which traditional loans may not. These loans could be great for public golf courses that are already making money.

Qualifying for SBA loans is often more challenging. There are higher credit requirements and less flexibility in terms of the finances of the golf course itself — you usually need to prove it’s already profitable. But when you apply through Nav, you’re 3.5x more likely to get approved.

Commercial Real Estate Loan by SmartBiz

The process to get a commercial real estate loan is similar to a standard mortgage, like an appraisal and 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 course.

Payments with SmartBiz are on a 25-year loan term on an amortization schedule and it comes with a good APR of 6.36% to 6.41%. You’ll need at least a 10% down payment and a 660 credit score to get this loan. Additionally, your business has to have been running for at least two years, and also already be profitable. So a commercial real estate loan would likely need to be used for a second golf course or an expansion of your original business.

Line of Credit by Fundbox

A business line of credit gives borrowers a pool of cash they can borrow from as needed. So if you need to upgrade your golf course, a line of credit might be perfect for you. You pay it back 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. Also, you’ll fill out no paperwork, which makes it much simpler for you to apply. There are no origination fees or application fees. The APR you get depends on several factors and can fall between 10.1% and 68.7%, so it might be higher than other options.

Equipment Financing by LendSpark

No more dealing with broken lawn mowers. 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 funding to pay for new business equipment or heavy machinery you need to operate and expand. 

LendSpark offers large loans up to $2 million and can get the money in your bank within two weeks, so this might be a fantastic option if you need large sums quickly. You’ll make monthly payments for up to a 60-month term and pay an APR between 6% and 35%, depending on your qualifications.

Commercial Bridge Loans

The name gives it away — a bridge loan is like a financial bridge that spans a gap in funding. You can use a bridge loan as an in-between solution if you can’t get permanent financing in time to jump on an opportunity. You’re expected to repay the loan quickly, within a few months or years, and you’ll need to put down collateral to get the loan. After assessing the value of the property by using the loan-to-value (LTV) ratio, a lender may decide to offer you up to 80% of the price. You’ll have 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 of a down payment to make the higher interest rates manageable. Or if you need to complete a quick rehab of a golf course before you sell it, a bridge loan could be right for you.

Business Credit Cards

A business credit card may not be the first idea that comes to mind when you think of golf course financing, but it can help with immediate cash flow issues. You can use it as a buffer for shorter-term business needs. There are business credit cards offered to cardholders with every range of credit scores — and some may even help build your business credit. 

How to qualify for golf course financing

The qualifications vary from loan to loan. Some of them, like the SBA loans and commercial real estate loans, typically require higher credit scores and proof of profitability. Others, like lines of credit and equipment financing, usually have easier requirements. Be sure to read through the application before sending it in to make sure you are likely to qualify. Our customer support team at Nav is here to guide you through any questions that come up in your application process, as well.

Pro tip: Try to make sure you won’t be charged any prepayment penalties if you are able to pay the loan back early. You don’t want to be punished for getting ahead in your debt repayment.

What you need to apply for golf course financing

Before applying for golf course financing, you should look at each lender’s requirements. These may include:

  • A down payment
  • A certain number of months or years in business
  • A minimum personal credit score
  • Proof of your business’s profitability

Ask the lender for the necessary documents before you apply to make sure you have time to gather everything together.

How do you finance a golf course purchase?

Golf course financing is about choosing the type of loan program that will work for your needs, picking the right loan size, and putting in a loan request. Doing your research ahead of time will increase your chances of getting approved. And Nav is always here to help. Working with us can help you find the right loan options. We are here to help decrease confusion and increase your chances of being approved for the funding you need to take your golf course business to the next level.

This article was originally written on May 9, 2022.

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