Commercial Real Estate Loans Basics

Business.com / Funding / Last Modified: February 22, 2017

A commercial real estate loan allows a business to purchase real property including open land or buildings for use or development. The ...

A commercial real estate loan allows a business to purchase real property including open land or buildings for use or development. The business owner may obtain the loan in their personal name. A business with a tax identity can obtain a business loan as well.

Commercial real estate financing requires the same qualifications as private loans. The business should have a good credit history and the means to make payments on the loan. Meet the following commercial real estate loans basics to qualify:

1. Provide a good credit score showing good past credit use, secured and unsecured, in business identity or personal owner identity to lenders of commercial real estate.

2. Show proof of income for the business for consideration of commercial real estate funding.

3. Meet the loan-to-value ratio required by the commercial real estate lender with a 20% down payment.

Find commercial real estate lenders

Commercial real estate lending provides businesses with the funds they need to purchase real estate. There are several types of lenders available. Most private banks offer funding for these real estate purchases. Hard money lenders may also be available to fund real estate purchases.

Compare commercial real estate loan rates and terms

Commercial building loans are not all created equally. Compare interest rates and terms to find the most affordable loans that meet the business's needs. Consider fixed rate and adjustable rates.

Know the types of funding for commercial real estate available

Commercial real estate funding can be government backed or conventional. Those businesses unable to qualify for conventional loans may wish to seek out government-backed loans. These federally backed loans require less strict criteria.
Small Business Association (SBA) for loan information if your small business is new or otherwise may not qualify for a standard loan. The SBA offers several types of loans including the 7(a) loan for real estate purchases. Conventional loans are available through commercial lenders. BusinessFinance provides a list of available commercial real estate loan providers.
  • Take the time to compare each type of loan and several commercial real estate lenders to determine the best loan for your purchase. For new businesses, the business owner may need to use his personal credit history to qualify for a loan. Compare loans several ways to find the most affordable option.

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