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
| Requirement | SBA 504 | Conventional Bank |
|---|---|---|
| Down Payment | 10% (borrower) | 20–35% |
| Owner Occupancy | ≥51% required | Not required |
| DSCR | 1.25+ | 1.25–1.35+ |
| Credit Score | 680+ personal | 680+ |
| Time in Business | 2+ years | 3+ years |