Commercial Real Estate
Commercial real estate financing covers loans for purchasing, refinancing, or renovating business properties including office buildings, retail spaces, warehouses, multifamily units, and mixed-use developments. CRE loans offer longer terms and lower rates than general business loans, with the property itself serving as collateral.
What You Need to Know
Commercial real estate (CRE) financing is one of the most significant capital decisions a business owner can make. Whether you're purchasing your first office, acquiring a retail strip center, refinancing a warehouse, or developing a mixed-use project, CRE loans are structured differently from residential mortgages and general business loans. Loan amounts typically range from $250,000 to $50,000,000+, with terms of 5-25 years depending on the loan type. The main CRE loan types include: conventional commercial mortgages (5-20 year terms, 65-80% LTV, rates from 6-9%), SBA 504 loans (up to $5.5M, 25-year terms, below-market fixed rates — the best option for owner-occupied properties), SBA 7(a) loans (up to $5M for properties that don't fit 504 requirements), bridge loans (short-term 6-36 month financing for acquisitions or renovations, rates 8-12%), and CMBS loans (securitized loans for larger stabilized properties, $2M+). To qualify, lenders evaluate the property's Debt Service Coverage Ratio (DSCR) — the ratio of the property's net operating income to the annual debt payments. A DSCR of 1.25x or higher is typically required, meaning the property generates 25% more income than the loan payment. Personal credit scores of 680+ are standard for the best rates, though some programs work with 650+. Down payments range from 10% (SBA 504) to 25-35% (conventional). The application process takes 30-90 days for most CRE loans, with SBA programs on the longer end. Key documents include property appraisal, environmental assessment, rent rolls (for investment properties), business tax returns, and a business plan. CRE loans also come with significant tax advantages: mortgage interest deduction, depreciation (straight-line over 39 years for commercial, 27.5 for residential), and cost segregation studies that can accelerate depreciation for massive first-year tax savings.