Commercial Real Estate Loans: Best Lenders, Rates & How to Apply

Commercial real estate loans are financing solutions designed to help businesses, investors, and developers purchase, build, or refinance income-generating properties. Unlike residential mortgages, these loans are structured to support offices, retail spaces, warehouses, multifamily buildings, and other commercial projects.

If you’re looking to expand your business, acquire a new property, or unlock cash flow from your existing real estate, a commercial loan may be the right fit.

To save you time, we’ve researched and compared the best commercial real estate loans. Below, you’ll find a side-by-side comparison table with loan amounts, rates, terms, and easy Apply Now options so you can get started without the stress.

Best Commercial Real Estate Loans

Note: Rates below are indicative as of this year. Your actual rate will depend on your credit, property type, loan size, and underwriting.

Context & Market Benchmarks

• According to SelectCommercial, commercial mortgage rates in late September this year start around 5.07% for favorable deals.

• CommLoan’s daily update shows bank commercial loans around 6.22% (5-year), 6.41% (7-year), 6.65% (10-year) in some cases.

• More broadly, NerdWallet’s data puts conventional commercial loan rates generally in the 6%–10% range, with some programs (like SBA, bridge) having wider spreads.

Types of Commercial Real Estate Loans

Commercial real estate financing isn’t one-size-fits-all. Depending on your project, credit profile, and goals, you may qualify for several loan types. Here are the most common options:

1. Conventional Commercial Mortgage

• Loan Size: Typically $500,000 – $25M+

• Rates: ~5% – 8% (fixed or variable)

• Best For: Strong borrowers purchasing or refinancing stabilized properties

• Pros: Competitive rates, long terms (up to 25 years)

• Cons: Requires strong credit, down payment of 20–30%

2. SBA 7(a) Loan

• Loan Size: Up to $5M

• Rates: ~8% – 11% (variable)

• Best For: Small businesses buying or expanding commercial property

• Pros: Lower down payment (10–15%), flexible use of funds

• Cons: Lengthy approval, personal guarantee required

3. SBA 504 Loan

• Loan Size: Up to $5.5M per project

• Rates: Fixed, often 5% – 7%

• Best For: Owner-occupied real estate, equipment, or large expansions

• Pros: Low down payment (10%), long repayment terms (20–25 years)

• Cons: Strict eligibility (must use at least 51% of the property for business)

4. Bridge Loan

• Loan Size: $500,000 – $50M+

• Rates: 8% – 12% (short-term, higher risk)

• Best For: Transitional properties, projects awaiting permanent financing

• Pros: Fast approval, flexible terms

• Cons: High interest, short maturity (6–36 months)

5. Hard Money Loan

• Loan Size: Based on property value (typically 60%–70% LTV)

• Rates: 10% – 18%

• Best For: Fix-and-flip, distressed properties, borrowers with weaker credit

• Pros: Easy qualification, quick funding

• Cons: Expensive, short-term only

6. Construction Loan

• Loan Size: Varies widely ($1M – $100M+)

• Rates: Prime + 1%–3% (variable)

• Best For: New developments, ground-up construction, major renovations

• Pros: Funds disbursed in stages, interest-only during build phase

• Cons: Requires detailed plans, a strong track record, and more oversight

7. Portfolio Loan

• Loan Size: Flexible, usually $1M+

• Rates: 6% – 10%

• Best For: Investors holding multiple properties

• Pros: One loan for many properties, flexible underwriting

• Cons: Higher rates, larger down payment

How Commercial Real Estate Loans Work

Commercial real estate (CRE) loans function differently from residential mortgages. Understanding the structure, repayment terms, and lender requirements will help you prepare for approval and choose the right financing option.

1. Loan-to-Value Ratio (LTV)

• Definition: Compares the loan amount to the property’s value.

• Typical Range: 65% – 80% for CRE loans.

• Example: If a property is worth $1,000,000 and the lender allows 75% LTV, the maximum loan is $750,000.

• Why It Matters: Lower LTV = lower risk for lenders, better rates for you.

2. Debt Service Coverage Ratio (DSCR)

• Definition: Measures the property’s cash flow vs. debt payments.

• Formula:

The Debt Service Coverage Ratio (DSCR) is calculated by dividing the property’s Net Operating Income (NOI) by its annual debt payments. Lenders typically require a DSCR of 1.20x to 1.40x, meaning the property generates 20%–40% more income than the debt it must cover.

Example: If a property produces $180,000 in annual NOI and the annual loan payments are $150,000, the DSCR would be 180,000 ÷ 150,000 = 1.2. ✅ This indicates that the property generates enough cash flow to cover its debt with a small cushion.

3. Loan Terms & Amortization

• Length: Typically 5–25 years.

• Amortization: Many CRE loans have longer amortization schedules (20–25 years) but shorter actual terms (5–10 years). At maturity, you may face a balloon payment (lump sum of remaining balance).

• Implication: Be prepared to refinance or pay off the balloon when the term ends.

4. Interest Rates

• Fixed Rates: Lock in for stability (common in SBA 504, some bank loans).

• Variable Rates: Move with market indexes (like Prime or SOFR), common in bridge and construction loans.

• Range: ~5% – 10% for conventional/SBA loans; 8%+ for short-term or higher-risk loans.

5. Fees & Closing Costs

• Origination fees (0.5% – 2% of loan amount)

• Appraisal & underwriting fees

• Legal fees and closing costs

• Prepayment penalties (sometimes applied if the loan is paid early)

6. Collateral & Guarantees

• The property itself serves as collateral.

• Some lenders require personal guarantees (especially SBA loans).

• Strong collateral + solid cash flow = better approval chances.

Takeaway:
Commercial real estate loans are cash flow-driven. Lenders focus less on your personal credit (though it matters) and more on whether the property can pay for itself. Mastering LTV, DSCR, and amortization is key to understanding how lenders think.

Qualifications & Requirements for a Commercial Real Estate Loan

Getting approved for a commercial real estate loan is more demanding than applying for a residential mortgage. Lenders want assurance that both you and the property are financially strong enough to support the loan. Here are the common requirements:

1. Credit Score

• Typical Requirement: 660+ for banks; 680+ for SBA loans.

• Alternative lenders may accept lower scores (600–640), but rates will be higher.

2. Down Payment

• Expect to put down 20%–30% of the property’s purchase price.

• SBA loans can reduce this to 10%–15%, making them attractive for small businesses.

3. Debt Service Coverage Ratio (DSCR)

• Most lenders want 1.20x or higher.

• Example: If your annual loan payments are $100,000, the property must produce at least $120,000 in net operating income (NOI).

4. Loan-to-Value Ratio (LTV)

• Most CRE lenders cap LTV between 65%–80%.

• Higher equity (lower LTV) means stronger approval odds and better rates.

5. Property Cash Flow & Stability

• Lenders want properties that generate consistent rental income or strong business revenue.

• Vacancy rates, tenant quality, and lease agreements all matter.

6. Business Financials

• Tax returns (2–3 years)

• Profit & loss statements

• Balance sheets

• Business plan (especially if the property is for expansion or a new project)

7. Collateral & Guarantees

• The property serves as collateral.

• Many lenders (especially SBA) require a personal guarantee, meaning your personal assets back the loan.

8. Other Documents Needed

• Property appraisal

• Rent roll (if investment property)

• Environmental reports (Phase I, sometimes Phase II)

• Title documents

Quick Approval Tip:

• Keep your financials clean and organized.

• If your DSCR or credit is weak, consider bringing in a co-borrower or putting more money down.

• SBA loans are often the best route for borrowers who need lower down payments and flexible underwriting.

Best Lenders for Commercial Real Estate Loans

Choosing the right lender can make or break your commercial property investment. Below are some of the top providers offering competitive commercial real estate loans in 2025, along with their strengths and drawbacks.

1. Lendio (Marketplace Lender)

Lendio isn’t a direct lender — it’s a marketplace that connects you to more than 75 lenders across the U.S. This makes it a great starting point if you want to compare multiple loan offers quickly.

• Loan Range: $50,000 – $5M+

• Rates: 4.5% – 13% (depending on product)

• Best For: Small to mid-sized businesses wanting options in one place.

• ✅ Pros: Wide lender network, one application = multiple offers, fast funding.

• ❌ Cons: Fees and rates depend on matched lenders, not always the cheapest.

2. U.S. Bank (Traditional Bank)

U.S. Bank offers conventional commercial real estate loans, particularly strong for owner-occupied properties.

• Loan Range: Varies; typically $250k+

• Rates: ~5% – 10% (depending on credit & term)

• Best For: Businesses with strong credit and established banking relationships.

• ✅ Pros: Trusted bank, competitive long-term financing, nationwide availability.

• ❌ Cons: Stricter requirements, longer approval process than alternative lenders.

3. Bank of America (Traditional Bank + SBA)

Bank of America provides both conventional CRE loans and SBA options (7a & 504). They also offer rate discounts for Preferred Rewards members.

• Loan Range: $250k – $5.5M+

• Rates: Discounted ~0.25%–0.50% for eligible customers

• Best For: Businesses needing flexible SBA financing with a top-tier bank.

• ✅ Pros: Access to SBA loans, rewards discounts, and strong support.

• ❌ Cons: Application process can be lengthy, strict documentation.

4. Kiavi (Alternative Lender)

Kiavi specializes in bridge loans, fix-and-flip financing, and DSCR rental loans, making it a favorite among real estate investors.

• Loan Range: $100k – $5M+

• Rates: 6.75% – 9.45%

• Best For: Real estate investors needing speed and flexibility.

• ✅ Pros: Quick approval, tailored to investors, flexible underwriting.

• ❌ Cons: Higher rates than banks, best suited for short-term projects.

5. Lima One Capital (Specialty Lender)

Lima One focuses on short-term commercial, fix-and-flip, and rental loans, often for transitional properties.

• Loan Range: $250k – $10M+

• Rates: 8.45% – 10.2%

• Best For: Developers and investors tackling renovations or non-stabilized properties.

• ✅ Pros: Investor-friendly, quick funding for transitional deals.

• ❌ Cons: Higher rates, not ideal for long-term holds.

6. RCN Capital (Investor-Focused Lender)

RCN Capital works primarily with experienced real estate investors. They’re known for flexible solutions in niche scenarios like multi-property portfolios or distressed assets.

• Loan Range: $250k – $10M+

• Rates: Varies by deal; generally mid to high range

• Best For: Seasoned investors needing unique deal structures.

• ✅ Pros: Experienced with complex deals, investor-focused products.

• ❌ Cons: Not beginner-friendly, rates often higher than banks.

Note: If you’re an established business with strong financials, start with a bank (Bank of America, U.S. Bank). If you’re an investor or need fast funding, consider Kiavi, Lima One, or RCN Capital. For broad shopping, Lendio is your best bet.

Commercial Real Estate Loan Rates — Trends & Benchmarks

Understanding current market rates is crucial for both negotiating and evaluating offers. Below are recent data points, rate trends, and what they mean for borrowers in 2025.

Current Rate Benchmarks (as of this year)

These are starting or average ranges — your actual rate will depend heavily on property type, borrower strength, market conditions, and loan structure.

What’s Driving These Rates (Key Influencers)

Understanding the levers that determine rate differences helps your readers see why “the rate I got” might differ.

• Benchmark Indexes & Yield Curves
  Many commercial loans are priced as a spread over treasury yields (5-, 7-, or 10-year treasuries) or over SOFR / other reference rates. As treasury yields climb, your spread is applied above a higher base, pushing your rate higher.
  SelectCommercial cites that rates are influenced by 5-year and 10-year Treasury yields.

• Risk / Credit & Loan Metrics

  • Lower LTV (Loan-to-Value) → lower rate

  • Higher DSCR (Debt Service Coverage Ratio) → better pricing

  • Credit history, liquidity, experience → strong borrowers command better rates
    NerdWallet also calls out that rates “depend on the loan type, property, and your creditworthiness.”
    Lendio notes that “rates that range from about 5.15% to 15%, depending on the asset type and specific circumstances.”

• Loan Term & Amortization
  Longer fixed-rate periods or full amortization tend to bring higher rates (to compensate for interest rate risk). Shorter / adjustable / interest-only terms give lenders more flexibility.

• Property Class & Location
  Prime, well-located, stabilized properties (e.g., office, multifamily in strong markets) tend to get more favorable rates vs. secondary markets, retail, hospitality, or distressed assets.

• Market Conditions & Capital Supply
  Demand, interest rate policy, the amount of capital chasing CRE lending, and macroeconomic risk all play a role. The MBA forecasts increased CRE borrowing in 2025 (indicating capital is still active).

Rate Trends / Forecasts & What to Expect

• Tight Range, But Some Room for Movement
  Although rates have climbed in recent years, lenders expect them to remain in a trading range rather than spiking wildly. The MBA expects commercial and multifamily borrowing to rise in 2025.

• Selective Rate Cuts Possible
  Some projections suggest that the Fed may ease rates further through 2025 (or early 2026), which could gently lower long-term borrowing costs.
  But the transmission to CRE loans is slower because commercial lenders tend to price off longer-term yields, not just short-term rate moves.

• Spread Compression / Competition Pressure
  With more lenders and capital entering CRE financing, borrowers with strong credentials may see tighter spreads and more aggressive offers.

How to Use These Benchmarks (Advice for Your Readers)

• Use the “starting rate” as your reference baseline — anything significantly below it likely signals a favorable deal or aggressive underwriting (but verify terms).

• Ask lenders for “all-in APR / effective rate” (fees, compounding, closing costs) — the headline rate can hide lots of extra costs.

• Lock vs float strategy — if lenders allow a rate lock, weigh current yield curves vs how much you believe rates will drop.

• Negotiate spreads and terms — particularly if you’re a strong borrower or multiple lenders are bidding.

SBA vs Conventional Commercial Real Estate Loans

When financing a commercial property, two of the most common options are SBA loans (government-backed) and conventional bank loans. Both can be effective — but they serve very different borrower profiles.

SBA 7(a) Loans

• Loan Amounts: Up to $5 million

• Rates: Variable, ~8%–12% (Prime + margin)

• Terms: Up to 25 years for real estate

• Best For: Small businesses buying property for their operations

• ✅ Pros: Lower down payment (10–15%), flexible use of funds, easier qualification for smaller businesses.

• ❌ Cons: Longer approval process, personal guarantee required, fees can be higher.

SBA 504 Loans

• Loan Amounts: Up to $5.5 million (sometimes more with multiple projects)

• Rates: Fixed, ~5%–7%

• Terms: 20–25 years

• Best For: Owner-occupied real estate, long-term expansions

• ✅ Pros: Low down payment (10%), long fixed-rate terms, excellent for stability.

• ❌ Cons: Must occupy at least 51% of the property, not for pure investors.

Conventional Commercial Real Estate Loans

• Loan Amounts: $500,000 to $25M+

• Rates: Typically ~5%–10%

• Terms: 5–10 year terms, 20–25 year amortization (balloon structure common)

• Best For: Strong borrowers with established credit and financials

• ✅ Pros: Larger loan amounts, faster closing (for strong applicants), no SBA paperwork.

• ❌ Cons: Higher down payments (20–30%), stricter credit/cash flow requirements, and balloon payments create refinancing risk.

Side-by-Side Comparison Table

Quick Decision Guide:

• If you’re a small business owner who will occupy the property → SBA 504 is often best (low down, long term).

• If you want flexibility of funds (working capital + property) → SBA 7(a) may fit.

• If you’re a large investor/developer with strong financials → Conventional loans are the standard choice.

How to Apply for a Commercial Real Estate Loan

Applying for a commercial real estate loan can seem complex, but breaking it into clear steps makes it manageable. Here’s a step-by-step guide to help you navigate the process:

Step 1: Assess Your Financing Needs

• Determine loan amount, purpose, and property type.

• Decide whether you need short-term bridge financing, a long-term conventional loan, or an SBA-backed loan.

• Calculate preliminary down payment, closing costs, and projected cash flow.

Step 2: Gather Your Documentation

Prepare the necessary paperwork to speed up the lender evaluation:

• Personal and business tax returns (2–3 years)

• Profit & loss statements and balance sheets

• Business plan (if buying for business expansion)

• Property details, including appraisal, rent roll, and environmental reports

• Identification and credit history

Step 3: Compare Lenders

• Use comparison platforms (like Lendio) or research banks and alternative lenders.

• Evaluate: rates, terms, approval speed, fees, and flexibility.

• Consider whether you qualify for SBA or conventional financing.

Step 4: Submit Your Application

• Complete the lender’s application form, providing all required documentation.

• Be transparent about property income, business financials, and any outstanding obligations.

Step 5: Underwriting & Approval

• Lender reviews your application, performs credit analysis, evaluates DSCR, LTV, and property value, and may request additional documents.

• Approval time varies:

  • SBA: 4–8 weeks

  • Conventional: 2–6 weeks

  • Alternative lenders: 1–2 weeks

Step 6: Close the Loan

• Review final terms, interest rates, fees, and repayment schedule.

• Sign loan documents and complete funding procedures.

• Funds are typically disbursed directly to the escrow or property seller.

Step 7: Manage Your Loan

• Make monthly payments on time.

• Keep property records and financial statements updated.

• Refinance or pay off the loan when appropriate to optimize interest costs.

Pro Tips for a Smooth Application

• Pre-qualify with multiple lenders to compare offers.

• Maintain a clean personal and business credit profile.

• Use the comparison table above to click “Apply Now” for faster approvals.

• Consider partnering with an experienced mortgage broker if this is your first CRE loan.

Frequently Asked Questions (FAQs) About Commercial Real Estate Loans

What is the average term for a commercial real estate loan?

Most commercial loans have terms between 5 and 10 years, though amortization schedules may extend up to 20–25 years, often resulting in a balloon payment at the end of the term.

Can I get a commercial real estate loan with bad credit?

Yes, but options are limited. Alternative lenders like Kiavi or hard money lenders may approve loans for credit scores in the 600–640 range, though rates will be higher. Traditional banks and SBA loans typically require scores above 660–680.

How much down payment is required for a commercial real estate loan?

• Conventional loans: 20–30% of the property price

• SBA loans: 10–15%

• Hard money/bridge loans: can vary based on LTV, often 25–35%

What is the difference between a commercial mortgage and a business loan?

• Commercial mortgage: Secured by property, used to purchase or refinance real estate.

• Business loan: Can be unsecured or secured by business assets, used for working capital, equipment, or expansion.

Are commercial real estate loan rates fixed or variable?

• Fixed rates: Common in SBA 504 and some conventional loans; rates remain the same over the term.

• Variable rates: Adjust based on market indices like SOFR or Prime; common in bridge and construction loans.

Can I use a commercial loan to buy multiple properties?

Yes, but lenders typically require a portfolio loan or separate financing for each property. DSCR and LTV will be calculated per property or for the portfolio as a whole.

What is DSCR, and why is it important?

DSCR (Debt Service Coverage Ratio) measures a property’s cash flow relative to its debt payments. Lenders typically require a DSCR of 1.2x or higher to ensure the property generates sufficient income to cover debt.

How long does it take to get approved?

• SBA loans: 4–8 weeks

• Conventional loans: 2–6 weeks

• Alternative lenders: 1–2 weeks (often fastest for investors)

Can I refinance a commercial real estate loan?

Yes, refinancing is common to lower interest rates, extend terms, or access equity. Banks and alternative lenders may offer refinancing solutions, often subject to property value and DSCR.

What fees should I expect with a commercial real estate loan?

Typical fees include:

• Origination fee (0.5%–2% of the loan)

• Appraisal and environmental review fees

• Legal and closing costs

• Prepayment penalties (if applicable)

Conclusion & Take Action Today

Commercial real estate loans are powerful tools for businesses and investors looking to buy, refinance, or develop income-generating properties. From traditional bank loans to SBA-backed programs and alternative financing, there’s a solution for almost every type of borrower and project.

By understanding loan types, rates, requirements, and lender options, you can confidently select the financing that aligns with your business goals.

Why Act Now

• Commercial real estate financing is competitive — rates and terms can change quickly.

• Using the comparison table above, you can apply to multiple top lenders instantly, saving time and improving your chances of approval.

• Pre-qualifying and submitting applications early allows you to lock in better rates and secure the property you want.

Next Steps

1. Review the lenders in our Best Commercial Real Estate Loans Table.

2. Click “Apply Now” for the lender(s) that match your needs.

3. Gather your documents, understand DSCR and LTV requirements, and submit your application.

4. Close the loan and move forward with your property investment confidently.

Final Tip:
Even if you’re unsure which loan is best, starting the process with platforms like Lendio or consulting a commercial mortgage broker can streamline the journey and save you thousands in interest and fees.

Take action today — the right loan can unlock your commercial property goals faster than you think.