What is a commercial real estate loan?
A commercial real estate loan is financing secured by property used for business purposes. It can fund a purchase, construction, or renovation and is underwritten on DSCR, LTV, business strength, and collateral value.
How much down payment is needed for commercial property?
Conventional loans often require 20%–35% down. SBA 504 commonly requires 10% down, plus 5% for special-purpose properties and another 5% for startups, for a potential total of 20%.
What are typical commercial mortgage rates?
Rates vary with market indices (e.g., Treasuries or SOFR), property risk, DSCR, and credit profile. Established, profitable businesses may qualify for competitive fixed or variable pricing, but terms vary by lender and market conditions.
What is an owner-occupied commercial loan?
It’s a loan where your operating company occupies at least 51% of the property. Lenders assess business cash flow alongside the property, often enabling favorable LTVs and pricing.
How does an SBA 504 loan work?
The SBA 504 pairs a bank first-lien (about 50%) with a CDC second-lien debenture (about 40%) and a borrower down payment (about 10%). The CDC portion is long-term fixed-rate, making it attractive for owner-occupied projects.
How long does it take to close a commercial real estate loan?
Conventional loans can close in 45–75 days. SBA 504 often runs 60–90 days due to CDC/SBA steps. Bridge loans may close faster when documentation is ready.
Can I buy property under an LLC?
Yes, many businesses buy through a real estate holding LLC. Lenders may still require personal guarantees for owner-occupied loans. Consult your attorney and CPA for entity structuring.
