How to apply for a commercial real estate loan is one of the most common questions investors and business owners ask when they’re ready to purchase or refinance property. Whether you’re expanding your operations, buying a new office space, or developing a rental property, understanding the application process can make or break your approval chances.
Securing a commercial real estate (CRE) loan isn’t the same as getting a residential mortgage; lenders look closely at both your business financials and the property’s income potential. In this guide, we’ll walk you through each step of the process so you can apply with confidence, avoid common mistakes, and find the best loan for your situation.
💡 Quick tip: Before you apply, check your business credit score, calculate your debt service coverage ratio (DSCR), and compare lenders for the best rates.
Step 1: Define Your Financing Needs Before Applying for a Commercial Real Estate Loan
Before applying, be clear about why you need the loan—lenders tailor products differently for purchases, refinancing, construction, or short-term transitions.
Ask yourself:
What type of property am I financing? (Office, retail, multifamily, warehouse, etc.)
What’s my desired loan amount?
Am I looking for long-term stability or short-term flexibility?
Common Loan Types
| Loan Type | Best For | Typical Rate | Term |
|---|---|---|---|
| Conventional CRE Loan | Strong borrowers, stabilized properties | 5%–8% | 5–25 yrs |
| SBA 504 / 7(a) | Small businesses, owner-occupied property | 6%–10% | 10–25 yrs |
| Bridge Loan | Short-term or transitional property | 8%–12% | 6–36 mos |
| Hard Money Loan | Fix-and-flip, quick funding | 10%–18% | 6–24 mos |
📌 Compare rates and lenders → [Best Commercial Real Estate Lenders]
Step 2: Check If You Qualify for a Commercial Real Estate Loan
Lenders analyze three key metrics before approving your loan:
| Metric | Definition | Ideal Range |
|---|---|---|
| Credit Score | Your business/personal credit history | 660+ (banks), 680+ (SBA) |
| Debt Service Coverage Ratio (DSCR) | NOI ÷ Annual Debt Payments | ≥ 1.25x |
| Loan-to-Value (LTV) | Loan ÷ Property Value | ≤ 75–80% |
Example: If your property earns $180,000 NOI and debt payments are $150,000 → DSCR = 1.2. Strong enough for approval with some lenders.
💡 Pro tip: Improve your DSCR by reducing operating expenses or increasing rent before applying.
Step 3: Documents Needed When Applying for a Commercial Real Estate Loan
Preparation is half the battle. Organize your documents early to avoid underwriting delays.
Most lenders require:
2–3 years of business and personal tax returns
Current business financials (P&L + balance sheet)
Property details (appraisal, rent roll, leases)
Business plan and projections (if for expansion or new project)
Personal guarantee (for SBA loans)
Environmental and title reports
Step 4: How to Apply for a Commercial Real Estate Loan With Different Lenders
Not all lenders are equal—your approval odds, interest rate, and funding speed vary widely by lender type.
| Lender Type | Pros | Cons | Best For |
|---|---|---|---|
| Traditional Banks | Lowest rates, stability | Slow approval, strict requirements | Established borrowers |
| SBA Lenders | Low down payment, flexible use | Longer process | Small businesses |
| Alternative/Online Lenders | Fast approval, creative underwriting | Higher rates | Investors or time-sensitive projects |
💡 See our [Top Commercial Real Estate Lenders]
Step 5: Submit, Get Approved, and Close Your Commercial Real Estate Loan
Once you’ve selected a lender, complete their online or in-branch application.
Tips for a strong application:
Double-check for missing documents.
Be transparent about property income and existing debt.
If your DSCR is weak, include a written explanation or business plan improvement.
“Ready to apply? Platforms like Lendio, Kiavi, and Lima One Capital allow you to compare loan offers from multiple lenders with a single application.”
Step 6: Underwriting & Approval
This is where the lender evaluates your risk profile. Expect deep financial analysis, appraisals, and possible site inspections.
Typical timelines:
SBA: 4–8 weeks
Conventional: 2–6 weeks
Alternative lenders: 1–2 weeks
✅ Tip: Respond to lender requests quickly—delays often happen when documentation is incomplete.
Step 7: Closing & Funding
Once approved, you’ll receive closing documents outlining your loan rate, term, fees, and repayment schedule.
Expect these closing costs:
Origination fees (0.5%–2%)
Legal and title fees
Appraisal and environmental costs
Prepayment penalties (if paid off early)
Funds are typically disbursed via escrow directly to the seller or project account.
📌 Finalize your deal faster—explore lenders with 2-week closing times here.
Common Mistakes to Avoid When You Apply for a Commercial Real Estate Loan
Submitting incomplete financials
Overestimating property value
Applying for the wrong loan type
Ignoring DSCR or credit score thresholds
✅ Avoid this: Always match your loan request to your property’s cash flow reality.
Pro Tips to Boost Approval Odds
Strengthen your credit before applying.
Offer a higher down payment (reduces LTV).
Prepare a strong business plan showing rental income growth.
Partner with a commercial mortgage broker for negotiation leverage.
📌 See our [Commercial Loan Broker Guide]. →
Typical Timeline: From Application to Funding
| Stage | Timeframe | Key Milestones |
|---|---|---|
| Preparation | 1–2 weeks | Gather docs, prequalify |
| Application | 1 week | Submit an initial review |
| Underwriting | 2–4 weeks | Appraisal and financial checks |
| Approval | 1 week | Receive conditional approval |
| Closing | 1–2 weeks | Sign documents and fund |
Frequently Asked Questions About Applying for a Commercial Real Estate Loan
1. How long does it take to get approved?
Typically, 4–8 weeks for SBA, 2–6 weeks for conventional, and as little as 1–2 weeks for online lenders.
2. What credit score do I need?
Banks prefer 660+; SBA loans 680+; alternative lenders may accept 600–640 with strong collateral.
3. How much down payment is required?
Usually 20–30% for banks; as low as 10% for SBA loans.
4. Can I apply with an LLC?
Yes—but you’ll need to provide entity formation documents and personal guarantees.
5. Can I apply for multiple properties at once?
Yes, via a portfolio loan or multiple CRE loans, depending on DSCR and total equity.
Conclusion: Apply for a Commercial Real Estate Loan With Confidence
Applying for a commercial real estate loan may seem complex, but with preparation and the right lender strategy, it’s completely manageable.
Next Step:
Gather your documents
Check your DSCR
Compare lenders → [View Best Commercial Real Estate Lenders]
Apply and close with confidence
Final Takeaway
Commercial loans are about cash flow, credibility, and collateral.
Master those, and lenders will compete for your business.