This comprehensive guide explores everything you need to know about commercial real estate loans in 2025, including loan types, lender options, qualification criteria, and how to get the best terms.
What is Commercial Real Estate Financing?
Commercial real estate financing refers to loan products designed to help businesses purchase, develop, or refinance income-generating properties or operational business locations. Unlike residential loans, these are tailored to the complex needs of business borrowers and investment properties.
Types of Commercial Real Estate Loans
- Traditional Commercial Mortgages
These are standard loans offered by banks or credit unions to purchase or refinance commercial properties.
- Loan Terms: 5–25 years
- Down Payment: Typically 20–30%
- Interest Rates: Fixed or variable (7%–12%)
- Best For: Businesses seeking long-term ownership of real estate
- SBA 504 Loans (U.S. Only)
Offered through the Small Business Administration, SBA 504 loans are specifically designed for real estate and equipment purchases.
- Loan Size: Up to $5.5 million
- Down Payment: As low as 10%
- Interest Rates: Below market average
- Repayment Term: Up to 25 years
- Best For: Small businesses buying owner-occupied commercial property
- SBA 7(a) Loans
Although more general in nature, SBA 7(a) loans can be used to purchase or refinance commercial property.
- Loan Size: Up to $5 million
- Terms: Up to 25 years for real estate
- Interest: Fixed or variable
- Best For: Businesses that want flexibility in how they use the funds
- Commercial Bridge Loans
These are short-term loans designed to “bridge the gap” between urgent financing needs and long-term solutions.
- Term: 6–36 months
- Speed: Fast funding (sometimes within days)
- Rates: Higher (8%–15%)
- Best For: Property flippers, transitional financing, or waiting for long-term loan approval
- Hard Money Loans
Offered by private lenders, hard money loans are asset-based and ideal for high-risk or fast-close deals.
- Approval Based On: Property value, not borrower credit
- Interest Rates: 10%–18%
- Terms: 6 months to 3 years
- Best For: Investors and developers with a strong exit strategy
- Construction Loans
Used to finance new commercial property development or heavy renovations.
- Loan Structure: Disbursed in phases
- Conversion: Often rolls into permanent mortgage
- Best For: Ground-up builds, expansions, or major upgrades
What Properties Qualify for Commercial Real Estate Loans?
- Office buildings
- Retail storefronts
- Warehouses
- Mixed-use developments
- Industrial sites
- Multifamily apartments (5+ units)
- Hotels and hospitality businesses
- Medical or dental offices
Benefits of Commercial Real Estate Financing
- ✅ Preserve working capital for business operations
- ✅ Build equity through property ownership
- ✅ Tax benefits including depreciation and mortgage interest deductions
- ✅ Appreciation potential over time
- ✅ Rental income from tenants or unused space
- ✅ Professional credibility and stability
How to Qualify for Commercial Real Estate Financing
- Credit Score
- Business credit and personal credit both matter.
- A score of 680+ is preferred by most banks.
- Down Payment
- Expect to put down 20% to 30% of the purchase price.
- Debt-Service Coverage Ratio (DSCR)
- Lenders prefer a DSCR of 1.25+, meaning your property’s income is 125% of its debt obligations.
- Business Financials
- Tax returns (2–3 years)
- Profit & loss statements
- Balance sheets
- Rent roll (if investment property)
- Collateral
- The property being financed typically serves as the primary collateral.
- Business Plan or Exit Strategy
- Especially important for investors, developers, or startups entering a new market.
Top Commercial Real Estate Lenders in 2025
| Lender | Loan Type | Max Loan Amount | Best For |
| Chase Bank | Traditional Mortgage | $5M+ | Owner-occupied property |
| Wells Fargo | SBA & CRE Loans | $5M+ | Small to mid-sized businesses |
| CIT Bank | Commercial Real Estate | $1M–$15M | Professional investors & developers |
| Lendio | SBA, Traditional, Bridge | $500K–$5M+ | Loan comparison shopping |
| Funding Circle | Term Loans (CRE Included) | $500K+ | Fast peer-to-peer business lending |
| SmartBiz | SBA 504 & 7(a) | $350K–$5.5M | SBA-qualified businesses |
| AVANA Capital | CRE, SBA, and Construction | Custom | Sustainable and specialty projects |
Tips to Secure the Best Commercial Real Estate Loan
- Prepare your documents early: Lenders require extensive paperwork.
- Build business credit: Strong credit = better rates.
- Negotiate terms: Don’t settle for the first offer—compare multiple lenders.
- Get an appraisal: Independent valuations strengthen your case.
- Use a commercial mortgage broker: They can access better deals and save time.
Costs to Expect with Commercial Real Estate Loans
| Fee Type | Estimated Cost |
| Application Fee | $500–$1,000 |
| Origination Fee | 0.5%–2.5% of the loan amount |
| Appraisal Fee | $1,500–$5,000+ depending on property |
| Legal Fees | Varies based on complexity |
| Closing Costs | 2%–5% of the loan amount |
| Prepayment Penalties | Sometimes included—read the fine print |
When to Refinance Your Commercial Property
- Interest rates have dropped
- Your business credit has improved
- You want to cash out equity
- You want to switch from variable to fixed rates
- Your balloon payment is approaching
Final Thoughts on Commercial Real Estate Financing
Commercial real estate financing is a powerful asset-building strategy for businesses and investors alike. The right loan structure can free up your cash flow, strengthen your balance sheet, and position your company for long-term growth.
As with any major financial decision, take the time to compare lenders, understand your obligations, and consult professionals when needed. A well-structured loan isn't just about property—it's about opportunity, stability, and strategic growth.