What type of loan allows a lender to take a 2% interest in a commercial property's ownership?

A participation loan is a unique type of financing where the lender not only provides the funds needed for a project but also receives a share of the profits generated from that investment, which can include an ownership interest in the property. In this case, a lender taking a 2% interest in a commercial property’s ownership suggests that they are participating in a portion of the property's financial performance, aligning their interests with the borrower.

This arrangement allows the lender to potentially benefit from the property's appreciation and income generation, which is different from traditional lending methods where lenders typically earn only through interest payments. Participation loans are often structured to foster a partnership-like relationship between the borrower and the lender, providing an incentive for both parties to ensure the success of the property.

Other types of loans, such as conventional loans, fixed-rate mortgages, and adjustable-rate mortgages, do not involve sharing ownership or profits in this manner. Instead, they focus on specifying repayment terms and interest rates without providing the lender with any ownership stake in the financed property.