Financing for Commercial Real Estate

Many types may be considered, such as multifamily, office, retail, industrial/warehouse, mixed-use, medical office, self-storage, hospitality and owner-occupied business property. Not every lender finances every type. Eligibility depends on the lender, program and the specific property.

It varies widely. Property type, loan program, property income, your financial strength and the loan amount all matter. For a refinance, the lender looks at the equity you already have in the property.

It compares what the property earns after normal operating costs (called net operating income) with the loan payments. It shows whether the property earns enough to pay the loan. Required levels vary by lender and program.

Amortization is the period used to calculate your monthly payment. In commercial loans it can be longer than the loan term, which keeps payments lower but may leave a balance at the end of the term.

A balloon payment is the remaining loan balance that comes due at the end of the loan term. Borrowers usually pay it off, sell the property or refinance. Not every program has one.

Recourse describes whether a lender may have rights beyond the property itself if the loan is not repaid. The structure varies by loan and lender. Review the loan documents with the appropriate legal professional if you have questions about your personal obligations.

It depends on the loan. Common items include the rent roll, leases, income/expense information, business financial statements, tax returns, bank statements and the purchase contract. We tell you exactly what your transaction needs.

SBA financing follows SBA program rules and is mainly for eligible owner-occupied business property and certain business purposes. Conventional/bank commercial loans are outside the SBA structure. Neither is automatically better; it depends on the property and how it will be used.