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Industry-Specific Financing

Commercial Real Estate Loans for Small Businesses

$10K–$5MLoan amounts
12 mo TIBMin. time in business
600+ creditMin. credit score
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By Marcus Webb — Small-business lending analyst Published Updated Editorial policy

What is a commercial real estate loan?

A commercial real estate (CRE) loan is financing used to purchase, refinance, or build commercial property — office buildings, retail, warehouses, multi-family (5+ units), and hotels. Typical CRE loans range $250K to $50M+ with 15-30 year amortizations, 5-10 year balloons, 25-35% borrower equity, and rates of 6-12% APR. SBA 504 offers 10% down + 25-year fixed rates for owner-occupied properties.

Commercial Real Estate Financing for Business Owners

Commercial real estate (CRE) loans allow businesses to purchase or refinance office buildings, retail spaces, warehouses, industrial facilities, and mixed-use properties. This includes owner-occupied properties (where the business occupies ≥51% of the space) and investment properties.

Types of Commercial Real Estate Loans

SBA 504 Loan — Best Rates for Owner-Occupied CRE

The SBA 504 program is designed specifically for owner-occupied commercial real estate. Structure: 50% conventional lender + 40% SBA Certified Development Company (CDC) + 10% borrower down payment. Rates: Fixed below-market for the SBA portion (approximately 6.5–9%). Terms: 10, 20, or 25 years. Max: $5.5M SBA portion ($14M+ total project).

SBA 7(a) Real Estate Loans

SBA 7(a) loans can fund commercial real estate up to $5M with up to 25-year terms. More flexible than 504 but typically higher rates. Best for properties that don’t fit 504 eligibility or when combined with equipment/working capital needs.

Conventional CRE Loans (Bank)

Traditional bank financing for commercial properties. Typically 65–75% LTV, 20–25 year amortization, 5–10 year balloon. Rates: Prime-based or fixed. Best for strong borrowers with established banking relationships.

Hard Money CRE Loans

Asset-based lending secured primarily by the property value. 55–65% LTV, 12–36 month terms, 10–18% APR. Fast closing (10–21 days). Best for time-sensitive acquisitions or properties that don’t qualify for conventional financing.

Key Qualification Requirements

RequirementSBA 504Conventional Bank
Down Payment10% (borrower)20–35%
Owner Occupancy≥51% requiredNot required
DSCR1.25+1.25–1.35+
Credit Score680+ personal680+
Time in Business2+ years3+ years
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Frequently Asked Questions

What credit score do I need for a commercial real estate loan?
Conventional CRE lenders typically require 680+ owner credit, 25-35% down payment, and demonstrated property cash flow. SBA 504 CRE loans need 680+ credit and 10% down. Bridge lenders and asset-based CRE loans approve 600+ with higher rates and shorter terms.
How much down payment do I need for commercial real estate?
Conventional CRE: 25-35% down. SBA 504: 10% down (15-20% for special-use properties). SBA 7(a) for real estate: 10-20% down. Owner-occupied properties (51%+ business use) qualify for SBA programs with lowest down payments.
What's the difference between SBA 504 and 7(a) for real estate?
SBA 504: real-estate-and-equipment-only, 10% down, fixed rates 25-year terms, structured 50/40/10 (bank/CDC/borrower). SBA 7(a): more flexible use, 10-20% down, up to 25-year terms, variable rates typically. 504 is cheaper for pure real estate; 7(a) combines real estate with working capital.
How long do CRE loans take to close?
Conventional CRE loans: 30-60 days. SBA 504: 60-120 days (longer due to CDC involvement). SBA 7(a) for real estate: 45-90 days. Bridge loans: 14-30 days. Plan ahead — environmental Phase I and feasibility studies often add 30 days.
What is debt service coverage ratio (DSCR)?
DSCR = net operating income ÷ annual debt service. Most CRE lenders require 1.20-1.40 DSCR (property generates 20-40% more income than the debt payment). Stronger DSCR means lower rates. SBA 504 typically requires 1.15-1.25; conventional lenders prefer 1.25-1.40.
Can I use seller financing for commercial real estate?
Yes — seller financing is common for 10-20% of commercial real estate purchases. Seller carries a second mortgage at typically 2-4% above market rates. Combined with bank or SBA primary loan, seller financing reduces your cash-down requirement and helps close deals when full traditional financing is challenging.
Marcus Webb Certified Lending Professional (CLP)

CLP Certification, 14 years commercial lending, SBA loan origination

Marcus Webb is a Certified Lending Professional (CLP) with 14 years of experience in commercial lending and SBA loan origination. He has helped over 2,000 small businesses secure financing ranging from USD 50,000 to USD 5,000,000. Marcus holds a Bachelor of Finance from NC State University and the American Bankers Association Certified Lender designation.

All content is reviewed against SBA, Federal Reserve, and CFPB guidelines. Small Business Loans Today is an independent affiliate publisher — not a lender or broker.

Related reading

Sources referenced on this page

Authoritative references consulted for lender-program details, rate ranges, and eligibility requirements discussed above. See our research sources policy for how we verify claims.

  1. U.S. Bureau of Labor Statistics — Industries at a Glance
  2. SBA — Industry-Specific Loan Programs
  3. U.S. Census Bureau — NAICS Codes

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