Commercial real estate loans are essential financing tools that help business owners, developers, and investors purchase, build, or refinance income-generating properties. Whether you’re buying an office building, expanding a warehouse, or developing a multifamily project, these loans provide the capital needed to turn real estate opportunities into profitable ventures.
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In this ultimate guide, you’ll discover everything you need to know about commercial real estate loans, including the different loan types, current market rates, top lenders, qualification requirements, and how to apply step-by-step. We’ve also compared the best financing options so you can make confident, data-driven decisions when choosing a lender.
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💡 Quick Tip: Commercial real estate financing is not one-size-fits-all. The right loan depends on your property type, credit strength, and business goals. This guide breaks it all down clearly, whether you’re a first-time borrower or a seasoned investor.
What Is a Commercial Real Estate Loan?
A commercial real estate loan (often called a CRE loan) is a mortgage secured by income-producing property that’s used for business purposes, not personal or residential use. It allows companies or investors to buy, refinance, or develop properties that generate rental income or house business operations.
How It Differs from a Residential Mortgage
While a residential mortgage is based on your personal income and credit score, a commercial loan focuses more on the property’s performance and the business’s financials. Lenders evaluate the property’s cash flow, typically measured by the Debt Service Coverage Ratio (DSCR), and the borrower’s contribution of equity, as indicated by the Loan-to-Value (LTV) ratio.
| Factor | Residential Loan | Commercial Loan |
|---|---|---|
| Purpose | Personal home | Business or investment property |
| Borrower | Individual | Business entity or investor |
| Qualification | Based on personal credit & income | Based on property cash flow & business strength |
| LTV | Up to 95% | Typically 65%–80% |
| Term | 15–30 years | 5–25 years (often with balloon payment) |
Common Property Types Financed
🏢 Office Buildings – For owner-occupied or leased office spaces
🏬 Retail Properties – Shopping centers, stores, or mixed-use spaces
🏭 Industrial & Warehouses – For logistics or manufacturing operations
🏘️ Multifamily Apartments – 5+ unit complexes generating rental income
🏗️ Land or Construction Projects – For ground-up or redevelopment projects
Example Use Case
Suppose a business wants to purchase a $2 million warehouse. The lender approves a 75% LTV, providing $1.5 million as a loan, while the borrower invests $500,000 as a down payment. The property’s rental income is used to service the debt, and if it generates strong cash flow, the owner can later refinance or expand operations using the property’s equity.
✅ Key takeaway: A commercial real estate loan lets you leverage property value to grow your business or portfolio, but lenders will expect strong financials, a solid DSCR, and a clear plan for repayment.
👉 Learn more in How Commercial Real Estate Loans Work (LTV, DSCR, and Terms)
Main Types of Commercial Real Estate Loans
Different goals call for different loan types. Below is a quick breakdown of the 7 major commercial real estate loan types, each designed for specific projects and borrower profiles.
| Loan Type | Best For | Typical Rate (2025) | Loan Term |
|---|---|---|---|
| Conventional CRE Loan | Established businesses | 5–8% | 5–25 years |
| SBA 7(a) Loan | Small business expansion | 8–12% | Up to 25 years |
| SBA 504 Loan | Owner-occupied properties | 5–7% (fixed) | 20–25 years |
| Bridge Loan | Short-term or transitional deals | 8–12% | 6–36 mos |
| Hard Money Loan | Fix-and-flip / high-risk | 10–18% | Short-term |
| Construction Loan | New builds or major renovations | Prime +1–3% | Varies |
| Portfolio Loan | Multi-property investors | 6–10% | Flexible |
📘 For detailed use cases, pros & cons, and lender examples, read:
➡️ Bridge Loans Explained: Short-Term CRE Financing Options
Commercial Loan Rates and Market Trends
Commercial real estate loan rates remain steady heading into this year, with modest declines expected as inflation cools.
| Loan Type | Current Average Rate | Source / Notes |
|---|---|---|
| Conventional CRE | 6.2%–6.8% | Bank averages (CommLoan) |
| SBA 504 | 5.1%–6.7% | Government-backed, fixed |
| Bridge / Short-Term | 8%–13% | Based on risk profile |
| Construction | Prime + 1%–3% | Interest-only, variable |
📉 Trend Insight:
Borrowers with strong DSCR and low LTV qualify for better rates.
Lenders remain selective but active in multifamily and industrial markets.
SBA 504 remains the most affordable fixed-rate option for owner-occupied property.
How Commercial Real Estate Loans Work
Lenders look beyond personal credit; they analyze the property’s ability to generate income. Here are the main factors that drive approval and pricing:
1. Loan-to-Value Ratio (LTV)
Usually capped at 65%–80%.
Lower LTV → lower risk → better interest rate.
2. Debt Service Coverage Ratio (DSCR)
Measures the property’s net income vs. debt payments.
Minimum DSCR: 1.20x–1.40x (the property must earn 20–40% more than its annual loan payments).
3. Term & Amortization
Loan term: 5–10 years
Amortization: 20–25 years
Many CRE loans include a balloon payment at maturity.
4. Collateral & Guarantees
The property itself secures the loan.
SBA loans require a personal guarantee from the borrower.
👉 Learn more: How Commercial Real Estate Loans Work (LTV, DSCR & Amortization)
Top Commercial Real Estate Lenders
Choosing the right lender depends on your property type, credit profile, and loan purpose. Below is a quick overview of some top-rated lenders:
| Lender/Platform | Typical Loan Range or Type | Indicative Rates* | Key Features/Conditions | Apply Now |
|---|---|---|---|---|
| Lendio | $50,000 to $5M+ (multiple commercial loan types) | 4.5%–13% (depending on loan type) | Broad marketplace, fast comparison, good for small to medium projects | [Apply Now →] |
| U.S. Bank | Owner-occupied & non-owner occupied commercial real estate | Varies (5%–10%+ depending on credit & term) | Strong for owner-occupied projects, established banking partner | [Apply Now →] |
| Bank of America | Commercial real estate, SBA 504, SBA 7(a) | Discounted rate for Preferred Rewards members (0.25%–0.50% off) | Good bank, wide reach, SBA-backed options | [Apply Now →] |
| Kiavi | Bridge, fix-and-flip, DSCR rental, portfolio loans | 6.75% – 9.45% depending on loan type | Speed and flexibility, more tolerance for creative financing | [Apply Now →] |
| Lima One Capital | Short-term commercial, bridge, fix-and-flip | 8.45%–10.2% | Good for short-term holds, rehab, or transitional properties | [Apply Now →] |
| RCN Capital | Experienced real estate investors | (Varied, higher risk/niche deals) | More niche, often leveraged by seasoned investors | [Apply Now →] |
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), and 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 and bridge) having wider spreads.
📘 For a deep comparison of pros, cons, and rates:
➡️ Best Commercial Real Estate Lenders (Top 6 Compared)
SBA vs. Conventional Loans: Which Is Better?
Both options serve different borrower profiles.
Here’s a snapshot:
| Feature | SBA 504 / 7(a) | Conventional Loan |
|---|---|---|
| Down Payment | 10–15% | 20–30% |
| Rates | 5–10% | 5–8% |
| Term | 20–25 years | 5–10 years |
| Best For | Small business owners | Strong, established investors |
💡 Tip: If you’ll occupy 51%+ of your property, SBA 504 often offers unbeatable terms.
📘 Full breakdown: SBA vs. conventional commercial real estate loans
How to Apply for a Commercial Real Estate Loan
Here’s a simplified process to help you prepare and get approved faster.
Step 1: Define Your Loan Needs
Property type, budget, purpose, and loan structure.
Step 2: Prepare Your Documents
Include tax returns, P&L statements, rent rolls, and appraisals.
Step 3: Compare Lenders
Get multiple offers via marketplaces like Lendio or approach banks directly.
Step 4: Apply & Underwrite
Expect 2–8 weeks, depending on loan type (SBA loans take longer).
Step 5: Close the Loan
Review final rates, terms, and closing costs before signing.
📘 Read the complete guide: How to Apply for a Commercial Real Estate Loan (Step-by-Step)
Qualifications & Requirements
To qualify, you generally need:
Credit score: 660+ (banks), 600+ (alternative lenders)
Down payment: 20–30%
DSCR: ≥1.20x
Strong business financials and stable income
Keep clean documentation, and consider SBA programs if your credit or equity is limited.
Example: DSCR & LTV in Practice
Example:
Property value = $1,000,000
Loan = $750,000 (75% LTV)
Annual debt = $150,000
NOI = $180,000
→ DSCR = 1.20x ✅ (acceptable)
Frequently Asked Questions (FAQs) About Commercial Real Estate Loans
Q1: Can I get a commercial 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.
Q2: Are CRE loan rates fixed or variable?
👉 Both SBA 504 loans are fixed; many bridge and construction loans are variable.
Q3: How long does approval take?
👉 1–2 weeks for private lenders; 4–8 weeks for SBA or traditional banks.
Conclusion: Choosing the Right Commercial Loan
Commercial real estate loans can unlock growth, equity, and new opportunities if you choose the right lender and structure.
Key takeaways:
Compare at least 2–3 lenders before committing.
Understand your DSCR and LTV before applying.
Use SBA loans for owner-occupied, conventional loans for large-scale investments.
Ready to explore financing options?
👉 Compare Top Commercial Real Estate Lenders Now
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