Commercial Real Estate Loans: Compare Financing Options

Acquiring, developing, or refinancing commercial property is one of the most impactful capital investments a company or real estate investor can make. Whether you are expanding retail operations, purchasing an industrial warehouse, or securing corporate office space, securing the right debt structure is essential for maintaining liquidity and maximizing yield.

At Hunter Fisher LLC, we provide comprehensive financing solutions tailored to operational business owners, commercial developers, and institutional property investors. Understanding the nuances of commercial real estate loans empowers you to select the best structure for your growth objectives. Read on to compare financing options, evaluate loan terms, and learn how to position your property for competitive underwriting.

[IMAGE: Exterior view of an office building financed with a commercial real estate loan]

What Are Commercial Real Estate Loans?

A commercial real estate loan is a mortgage debt instrument secured by a lien on commercial property rather than residential property. Unlike residential mortgages—which focus primarily on personal borrower income—commercial real estate lending evaluates both borrower financial strength and the property’s income-generating capacity.

These loans fund property acquisition, debt refinancing, gut renovation, adaptive reuse, and ground-up development. Borrowers typically include corporate entities, single-purpose LLCs, partnerships, and individual business owners. Because commercial assets encompass diverse property categories—ranging from multi-tenant retail strips to specialized logistics centers—loan terms, leverage ratios, and pricing vary based on asset quality, tenant stability, and local market fundamentals.

To gain a complete overview of underlying debt mechanics, underwriting benchmarks, and fundamental vocabulary, explore our comprehensive guide to commercial real estate loans.

Types of Commercial Property Loans We Offer

Different property types present unique risk profiles, operational cash flows, and valuation metrics. Our lending desk structures debt across multiple commercial property sectors to ensure tailored capital solutions.

Office Building Loans

Office property financing accommodates suburban corporate parks, urban multi-tenant towers, and medical office buildings (MOBs). Underwriting evaluates tenant lease rosters, weighted average lease terms (WALT), creditworthiness of major anchor tenants, and localized vacancy trends. Flexible structures—including fixed-rate conventional debt and interest-only transition loans—help owners stabilize occupancy while optimizing cash flow.

Retail Space Loans

Retail property loans serve single-tenant net-lease (STNL) storefronts, regional shopping centers, and urban neighborhood strip centers. Lenders analyze sales-to-rent ratios, co-tenancy provisions, foot traffic metrics, and lease longevity. Whether financing an owner-occupied storefront or a multi-anchor shopping center, custom amortization options ensure long-term balance sheet stability.

Industrial & Warehouse Financing

Industrial real estate continues to be one of the most resilient asset classes. We fund logistics facilities, flex-warehouse spaces, cold storage plants, and light manufacturing facilities. Key underwriting factors include clear ceiling heights, loading dock configurations, highway access, and long-term industrial tenant demand.

For a detailed breakdown of specialized funding mechanisms—including SBA loans, bridge facilities, and hard money solutions—review our complete analysis of the types of commercial property loans.

Current Commercial Real Estate Loan Rates

Pricing for business real estate loans depends on broader macroeconomic benchmarks—such as the Secured Overnight Financing Rate (SOFR) and U.S. Treasury yields—combined with property-specific risk adjustments.

Commercial real estate interest rates generally fall into two categories:

Fixed-Rate Commercial Mortgages: Provide predictable debt service payments over 5-year, 7-year, or 10-year loan terms, typically amortized over 20 to 25 years.
Variable-Rate Commercial Mortgages: Pegged to SOFR or prime rates plus a margin, offering lower initial coupons but subject to periodic rate adjustments.

To calculate projected monthly payments, debt service coverage ratios, and total borrowing expenses, consult our detailed resource on commercial real estate loan rates.

[IMAGE: Business owner shaking hands with a commercial property loan specialist]

Basic Requirements & Eligibility

Securing a commercial mortgage loan requires satisfying both borrower credit criteria and property cash flow standards. Key underwriting criteria include:

Debt Service Coverage Ratio (DSCR): Most traditional lenders require a minimum DSCR of 1.20x to 1.25x, meaning net operating income (NOI) must cover annual principal and interest payments by at least 20% to 25%.
Loan-to-Value Ratio (LTV): Maximum leverage generally ranges from 65% to 75% for conventional loans, while government-backed programs (like SBA 504) can reach up to 90% LTV for owner-occupied properties.
Credit Score & Guarantor Liquidity: Principal guarantors typically need personal credit scores of 680+ and net worth at least equal to the total loan amount, along with liquid reserves covering 6 to 12 months of debt service.
Property Occupancy & Cash Flow: Tenanted commercial properties must demonstrate stable historical income, verified through 2 to 3 years of audited financial statements and tax returns.

How to Apply for a Business Real Estate Loan

Securing commercial mortgage financing involves a structured, multi-phase application and underwriting process:

Phase 1: Initial Discovery & Executive Summary: Compile property details, rent rolls, historic P&L statement, and guarantor balance sheets.
Phase 2: Term Sheet & Soft Quote: Receive an initial expression of interest outlining loan amounts, interest rate ranges, loan fees, and required covenants.
Phase 3: Formal Application & Underwriting: Submit complete historical financials, personal financial statements (PFS), and environmental reports while the lender orders third-party appraisal and property condition reports.
Phase 4: Final Approval & Closing: Complete legal documentation, satisfy title and insurance requirements, and execute loan closing documents to disburse funds.

Frequently Asked Questions

What is the typical down payment for a commercial real estate loan?

Most conventional commercial property loans require a down payment between 20% and 30% (70% to 80% LTV). However, owner-occupied business properties qualifying for SBA 7(a) or SBA 504 loans may require as little as 10% down.

How do commercial real estate loans differ from residential mortgages?

Commercial real estate loans are typically made to business entities (LLCs or corporations), have shorter term lengths (5 to 10 years with balloon payments or refinancing triggers), and base eligibility heavily on property cash flow (DSCR) rather than personal debt-to-income (DTI) ratios.

Can I get a commercial loan for an owner-occupied business property?

Yes. Owner-occupied commercial real estate—where your business occupies at least 51% of the total square footage—qualifies for specialized owner-occupied commercial property loans, including SBA financing options with favorable terms and lower down payments.

How long does it take to close a commercial property loan?

A standard conventional commercial mortgage typically takes between 45 and 75 days to close. The timeline accounts for property appraisals, environmental site assessments (ESA Phase I), title searches, and legal underwriting.