What is a commercial loan?

A commercial loan is a mortgage or financing arrangement secured by income-producing or owner-occupied commercial real estate — such as office buildings, retail centers, industrial properties, multifamily apartments, hotels, and healthcare facilities. Unlike residential mortgages, commercial loans are underwritten primarily on the property's income (NOI and DSCR) and the borrower's financial strength, not just personal credit score. Commercial loans are available in fixed and floating rate structures, with terms typically ranging from 3 to 40 years depending on the program.

What credit score is required for a commercial loan?

Most conventional commercial lenders prefer a minimum personal credit score of 680–720. SBA programs typically require at least 650–680. CMBS (conduit) lenders are less focused on personal credit and more focused on property cash flow. Non-recourse programs like CMBS and life company loans evaluate the property's income rather than the borrower's personal credit. Borrowers with lower scores may still qualify through bridge loans, hard money lenders, or with compensating factors like strong property income and low LTV.

What is the minimum down payment for a commercial loan?

Down payment requirements vary by program. Conventional commercial loans typically require 20–35% down (65–80% LTV). CMBS loans generally cap at 75% LTV (25% down). SBA 7(a) and SBA 504 programs allow as little as 10–15% down for owner-occupied properties. FHA/HUD programs for healthcare facilities allow as little as 10% down. USDA programs may allow up to 100% financing for eligible rural non-profit facilities. Bridge and construction loans are typically underwritten at 75–85% of total cost.

How long does it take to close a commercial loan?

Commercial loan closing timelines vary by program. Bridge loans can close in 2–4 weeks. Conventional bank loans typically close in 45–90 days. CMBS loans close in 60–90 days. SBA loans take 60–120 days. HUD/FHA programs take 6–12 months. USDA loans typically close in 90–180 days. The timeline depends on the complexity of the transaction, completeness of the borrower's financial package, and the lender's current pipeline.

What is the difference between recourse and non-recourse commercial loans?

A recourse commercial loan holds the borrower personally liable for the debt — if the property fails to generate enough revenue and the lender forecloses, the borrower can be pursued for any deficiency balance. A non-recourse loan limits the lender's recovery to the property itself (the collateral), protecting the borrower's personal assets. CMBS, life company, and HUD/FHA loans are typically non-recourse. Conventional bank loans, SBA loans, and most bridge loans are full recourse. Non-recourse loans almost always include 'carve-outs' — specific events (fraud, misrepresentation, environmental violations) that can trigger personal liability even on a non-recourse loan.

What documents are needed to apply for a commercial loan?

A standard commercial loan application package includes: 3 years of personal and business tax returns, current personal financial statement (PFS) with schedule of real estate owned, current rent roll and signed leases, trailing 12-month profit and loss statement (operating statement), year-to-date P&L, property photos and a site plan or survey, and a purchase contract or letter of intent for acquisitions. Additional documents may be required depending on the loan program and property type.

Commercial Real Estate Financing | Commercial Loan Direct

Commercial Real Estate Loans and Financing

Commercial loans are mortgage financing arrangements secured by commercial real estate — used to purchase, refinance, renovate, or construct income-producing and owner-occupied properties. Unlike residential mortgages, commercial loan underwriting focuses primarily on the property's net operating income (NOI), debt service coverage ratio (DSCR), and the borrower's overall financial strength. Commercial Loan Direct sources commercial loans from conventional banks, conduit lenders, life insurance companies, SBA, FHA/HUD, USDA, and private bridge lenders — giving borrowers access to the most competitive rates and terms across every loan type.

Commercial loans take two primary forms: owner-occupied (where the business using the property controls 51%+ of its square footage) and investment (where income from tenants services the debt). The right program, rate, and structure depend on which category your property falls into.

Property types we finance:

🏢 Office 🏪 Retail / Shopping Center 🏭 Industrial / Warehouse 🏥 Hospital & Healthcare 📦 Self Storage 🏨 Hotel & Hospitality 🏗️ Mixed Use ⛪ Church 🩺 Medical Office

How to Get a Commercial Loan

The commercial loan process differs significantly from residential mortgage lending. Lenders evaluate properties and borrowers on multiple dimensions — cash flow, leverage, market position, and management experience. Following these steps will improve your approval odds and help you secure the most competitive terms available.

Determine Your Loan Type: Owner-Occupied vs. Investment

The first and most important distinction is whether your property is owner-occupied (your business uses 51%+ of the building) or investment (tenants generate the cash flow). Owner-occupied properties qualify for SBA 7(a) and SBA 504 financing — giving you access to the highest leverage and longest terms. Investment properties are financed through conventional, CMBS, bridge, or USDA programs. Misidentifying this from the start can cost you weeks and direct you to the wrong lenders entirely.
Calculate Your Property's NOI and DSCR

Before approaching a lender, know your numbers. Net Operating Income (NOI) is gross income minus operating expenses (excluding debt service). The Debt Service Coverage Ratio (DSCR) is NOI divided by annual loan payments — most lenders require 1.20x to 1.35x minimum. Use our DSCR calculator and NOI calculator to run these figures before applying. Walking in with pre-calculated financials signals to lenders that you are a prepared, credible borrower.
Choose the Right Loan Program

Not all commercial loans are created equal. Conventional bank loans offer flexibility; CMBS delivers non-recourse fixed-rate financing for stabilized investment properties; SBA programs maximize leverage for owner-occupiers; bridge loans fund transitional assets. The best program depends on your property type, occupancy, loan size, timeline, and recourse preference. Review the program summaries below and use our commercial loan rates page to compare current pricing across programs.
Assemble Your Loan Package

A complete, well-organized loan package dramatically speeds the lender review process. Standard commercial loan documentation includes 3 years of personal and business tax returns, a personal financial statement (PFS) with a schedule of real estate owned, a current rent roll with signed leases, trailing 12-month and year-to-date operating statements, property photos, and a purchase contract or letter of intent for acquisitions. Incomplete packages are the single most common cause of delayed closings. Download our templates on the financial forms page.
Submit an Application and Receive a Term Sheet

Once you've selected a program and assembled your package, submit a loan application to Commercial Loan Direct. Our team will review your submission, identify the most appropriate lenders from our network of 200+ sources, and return binding term sheets for your review — typically within 2 to 5 business days for conventional programs. Term sheets outline the loan amount, rate, LTV, DSCR, term, amortization, recourse structure, fees, and key conditions.
Complete Lender Due Diligence

After you accept a term sheet, the lender orders third-party reports — including a property appraisal, Phase I Environmental Site Assessment, Property Condition Assessment (PCA), and for some programs, a survey and title search. You will also be asked to provide additional financial documentation for credit underwriting. This phase typically takes 30 to 60 days for conventional programs. CMBS and government programs (SBA, HUD, USDA) require additional documentation and have longer timelines.
Close and Fund

After lender credit approval, the transaction proceeds to closing. The closing attorney or title company coordinates signing, funds disbursement, lien recordation, and issuance of title insurance. For acquisition transactions, the purchase price is paid at closing from the combination of your down payment and loan proceeds. For refinances, existing debt is paid off and net proceeds are distributed. For construction loans, funds are disbursed on a draw schedule tied to construction progress milestones.

Basic Qualifications for Commercial Loans

Commercial lenders evaluate applications across several dimensions simultaneously — property performance, borrower financial strength, and market conditions all influence approval and pricing. While every program has different requirements, these are the core qualification criteria that apply across most commercial loan types. Use our commercial loan calculators to pre-qualify your property before applying.

Debt Service Coverage Ratio (DSCR)

Min. 1.20x – 1.35x

DSCR measures whether the property's net operating income covers its annual debt payments. Most commercial lenders require a minimum DSCR of 1.20x to 1.35x. A DSCR below 1.0x — meaning the property cannot cover its own debt — is a disqualifying condition for permanent financing. CMBS lenders typically require 1.25x; SBA programs may allow 1.15x for strong borrowers.

Loan-to-Value (LTV)

65% – 90% Max LTV

LTV is the loan amount as a percentage of the property's appraised value. Conventional bank loans cap at 70–75% LTV. CMBS loans cap at 75%. Life company loans cap at 60–65%. SBA programs reach 80–90%. Bridge loans can reach 80–85% of cost. The lower your LTV, the better your rate and terms — lenders reward lower risk.

Personal Credit Score

650+ (680+ Preferred)

Conventional and SBA lenders review personal credit for all principals with 20%+ ownership. A minimum score of 650–680 is typical; 720+ unlocks the most competitive pricing. CMBS (non-recourse) lenders are less focused on personal credit and underwrite primarily on the property's income. Recent bankruptcies, foreclosures, or major derogatory items are generally disqualifying for conventional programs.

Occupancy / Lease Structure

80%+ Typical for Permanent

Investment properties typically need 85–90% physical occupancy with in-place signed leases for permanent financing. Single-tenant net-lease properties can qualify at 100% on tenant credit strength alone. For value-add and lease-up situations, bridge loans are underwritten on stabilized pro forma NOI rather than current occupancy.

Borrower Net Worth & Liquidity

Varies by Program

CMBS and life company lenders typically require borrower net worth equal to the loan amount and post-closing liquidity of 5–10% of the loan amount. Conventional bank lenders evaluate overall financial strength, including liquidity, total debt load, and the borrower's portfolio of real estate. SBA programs focus more on business viability than borrower net worth thresholds.

Property Condition & Type

All Major Property Types

The property must be zoned for commercial use with no residential dwellings. A Property Condition Assessment (PCA) is required for most programs. Lenders favor functional, well-maintained properties in liquid markets. Environmentally contaminated properties require Phase II testing and remediation before most lenders will close. Specialty properties (churches, car washes, gas stations) have a narrower lender pool.

Experience & Track Record

Preferred for Most Programs

Lenders prefer borrowers with documented experience owning or operating similar commercial properties. First-time commercial real estate investors may face higher equity requirements, lower LTV caps, or the need for a more experienced co-sponsor or guarantor. SBA programs are more accessible to first-time owner-operators focused on their core business rather than real estate investment.

Debt Yield

7.5%+ for CMBS / Life Co.

Debt yield is NOI divided by the loan amount — a lender-side stress test that is independent of interest rates. It is most important for CMBS and life company executions. A minimum debt yield of 7.5–9% is typical for institutional non-recourse programs. Debt yield ensures that even in a higher-rate environment, the property's income can adequately service the debt.

Not sure if you qualify? Submit a brief loan application and our team will assess your situation and identify the programs most likely to work for your property and financial profile. There is no cost and no obligation.

Conventional Commercial Loans

Best for: Stabilized owner-occupied or investment properties with experienced sponsorship. Offered by banks, credit unions, and CMBS lenders. Recourse: Full personal guarantee typically required.

Conventional commercial mortgages can be used for any property type. Maximum leverage typically ranges from 70–80% LTV (85% in limited circumstances). Personal guarantees are typically required but may be waived or limited depending on the leverage and program. Terms range from 3 to 10 years with amortization up to 25 years.

Conventional Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
Conventional	5.18% - 8.75%	Hotel, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$1,000,000+	80%	3 - 15 Years	15 - 30 Years

Conventional Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
Conventional	5.18% - 8.75%	Apartment, Hotel, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$1,000,000+	75%	3 - 15 Years	15 - 30 Years

Conduit / CMBS Commercial Loans

Best for: Stabilized investment properties ($2M+) with strong NOI seeking non-recourse, fixed-rate financing. Recourse: Non-recourse with standard carve-outs.

Conduit (CMBS) mortgages are typically used for investment office, retail, large industrial, self-storage, flagged hotel, and commercial mixed-use properties. Minimum loan amount is $2 million (although $3 million is preferred), maximum leverage is 75% LTV, and mortgages are non-recourse with standard carve-outs. These loans are securitized and sold to investors, resulting in highly structured terms with limited flexibility for modification after closing. Fixed rates for the full term, amortization up to 30 years.

CMBS Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
CMBS	6.02% - 7.90%	Apartment, Hotel, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$2,000,000+	75%	5 - 10 Years	20 - 30 Years

Life Insurance Company Loans

Best for: High-quality, stabilized commercial assets ($5M+) seeking the lowest long-term fixed rates. Recourse: Non-recourse, full, or limited depending on program.

Life insurance company loans offer the most competitive long-term fixed rates available in commercial real estate. They are reserved for institutional-quality investment properties — office, retail, industrial, and flagship hotels. Maximum leverage is typically 65–70% LTV (stretching to 75% in select cases). Most programs start at a $5 million minimum loan amount. Terms of 10 to 30 years with conservative, prudent underwriting.

Insurance Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
Insurance	5.52% - 8.72%	Apartment, Hotel, Industrial, Mixed-Use, Office, Retail	$5,000,000+	75%	5 - 30 Years	15 - 30 Years

FHA / HUD Hospital & Senior Care Loans

Best for: Licensed hospitals, skilled nursing facilities, assisted living, and memory care. Recourse: Non-recourse with standard carve-outs.

FHA/HUD facilitates commercial loans for hospitals and senior care facilities under its Section 202, 232, and 242 programs. Eligible collateral includes hospitals, memory care, skilled nursing facilities (SNFs), and assisted living facilities. Maximum leverage is 80–90% LTV and all mortgages are non-recourse except standard carve-outs. Amortization up to 40 years makes these among the most favorable long-term fixed-rate programs available for healthcare real estate. See our hospital financing page and FHA hospital mortgages page for full program details.

FHA / HUD Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
FHA / HUD	4.94% - 8.75%	Apartment, Affordable Housing, Cooperative, Hospital, Memory Care, Senior Housing, Skilled Nursing Facilities	$3,000,000+	83%	30 - 40 Years	30 - 40 Years

SBA Commercial Loans

Best for: Owner-occupied commercial properties where the business occupies 51%+ of the space. Recourse: Full recourse — personal guarantee required.

SBA programs facilitate 80–90% LTV commercial loans for owner-occupied properties by providing a federal guaranty through its 7(a) and 504 programs. Collateral can be any type of commercial real estate (and/or capital equipment) as long as the sponsor(s) occupy over 51% of the property's square footage. SBA 7(a) loans offer up to 80% LTV with terms up to 25 years. SBA 504 loans pair a conventional first mortgage with a CDC second, enabling as little as 10% down. All SBA mortgages are full recourse. See our SBA loans overview, SBA 7(a) page, and SBA 504 page for full program details.

SBA Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
SBA	5.75% - 8.75%	Hotel, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$1,000,000+	90%	3 - 25 Years	15 - 30 Years

USDA Commercial Loans

Best for: Commercial properties in rural markets (population under 50,000). Recourse: Typically full recourse.

USDA guaranteed commercial loans can be used for any commercial real estate collateral located in a designated rural area (generally populations under 50,000). Maximum LTV is up to 90% under some programs, with most capping at 80–85%. USDA programs are almost always full recourse. The USDA Business & Industry (B&I) program supports commercial real estate for rural businesses; the Community Facilities program serves hospitals, schools, and essential community infrastructure. See our USDA loans page for full program details.

USDA Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
USDA	6.00% - 8.75%	Hotel, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$1,000,000+	85%	5 - 15 Years	15 - 30 Years

USDA Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
USDA	6.00% - 8.75%	Apartment, Hotel, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$1,000,000+	85%	5 - 15 Years	15 - 30 Years

Bridge Financing

Best for: Transitional, value-add, or lease-up properties not yet bankable by conventional standards. Recourse: Typically full recourse.

Bridge commercial loans provide short-term financing (typically 12 to 36 months) for the light rehabilitation and/or stabilization of investment or owner-occupied properties. Cash flows are underwritten to pro forma numbers, but still must meet a 1.0x DSCR with in-place net cash income. Interest-only for the full term. Bridge loans are the gateway to conventional or non-recourse permanent financing once the property is stabilized. Ideal for acquisitions, value-add repositioning, renovation, and lease-up projects. See our bridge loans page for details.

Bridge Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
Bridge	5.75% - 12.75%	Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$3,000,000+	75%	1 - 3 Years	15 - 30 Years

Construction Loans

Best for: Ground-up development or substantial rehabilitation that cannot service debt at 1.0x DSCR during construction. Recourse: Typically full recourse during construction phase.

Commercial construction loans fund ground-up development or substantial rehabilitation of buildings that cannot service loans at a 1.0x DSCR during the building phase. These loans are interest-only and disburse on a draw schedule tied to construction milestones. Upon completion and stabilization, the loan either converts to a permanent amortizing loan or must be refinanced. Loan amounts and LTVs depend on the program, developer track record, and pre-leasing activity.

Construction Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
Construction	5.50% - 8.75%	Apartment, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$3,000,000+	75%	1 - 3 Years	15 - 30 Years

SBA Construction Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
SBA Construction	5.50% - 8.75%	Industrial, Medical, Mixed-Use, Office, Retail	$3,000,000+	80%	1 - 3 Years	15 - 30 Years

Conventional Construction Loans

Loan Type	Rates	Properties	Loan Amount	Max LTV	Term	Amortization
Conventional Construction	5.50% - 8.75%	Apartment, Industrial, Medical, Mixed-Use, Office, Retail, Self-Storage	$1,000,000+	70%	1 - 3 Years	15 - 30 Years

Commercial Loan FAQs

Common questions about commercial loans, qualification requirements, and the financing process.

A commercial loan is a mortgage or financing arrangement secured by income-producing or owner-occupied commercial real estate — such as office buildings, retail centers, industrial properties, hotels, and healthcare facilities. Unlike residential mortgages, commercial loan underwriting focuses on the property's net operating income (NOI), debt service coverage ratio (DSCR), and the borrower's overall financial strength. Commercial loans are available in fixed and floating rate structures, with terms typically ranging from 3 to 40 years depending on the program.

Most conventional commercial lenders prefer a minimum personal credit score of 680–720. SBA programs typically require at least 650–680. CMBS (conduit) lenders are less focused on personal credit and more focused on property cash flow — they underwrite the asset, not the borrower. Borrowers with lower scores may still qualify through bridge loans or with compensating factors like low LTV and strong property income.

Down payment requirements vary by program. Conventional commercial loans require 20–35% down. CMBS loans require 25% down (75% LTV). SBA 7(a) and SBA 504 allow as little as 10–15% down for owner-occupied properties. HUD/FHA programs for healthcare allow as little as 10% down. USDA programs may allow up to 100% for eligible rural non-profit facilities. Bridge and construction loans are typically underwritten at 75–85% of total cost.

DSCR (Debt Service Coverage Ratio) is the ratio of a property's net operating income (NOI) to its annual debt service. A DSCR of 1.25x means the property generates 25% more income than needed to service the debt. Most commercial lenders require a minimum DSCR of 1.20x to 1.30x. A DSCR below 1.0x means the property cannot cover its own payments — a disqualifying condition for permanent financing. Use our DSCR calculator to check your property before applying.

A recourse commercial loan holds the borrower personally liable — if the lender forecloses and the property sale does not cover the full balance, the lender can pursue the borrower personally. A non-recourse loan limits recovery to the property itself. CMBS, life company, and HUD/FHA loans are typically non-recourse. Conventional bank loans, SBA loans, and most bridge loans are full recourse. Non-recourse loans always include "bad boy carve-outs" — specific events like fraud or misrepresentation that can trigger personal liability.

Timelines vary by program: bridge loans can close in 2–4 weeks; conventional bank loans in 45–90 days; CMBS loans in 60–90 days; SBA loans in 60–120 days; HUD/FHA programs in 6–12 months; USDA loans in 90–180 days. The single biggest factor affecting timeline is the completeness of the borrower's financial package. A complete, well-organized package consistently closes faster than an incomplete one — often shaving 2 to 4 weeks off the schedule.

A standard commercial loan package includes: 3 years of personal and business tax returns, current personal financial statement (PFS) with schedule of real estate owned, current rent roll with signed leases, trailing 12-month and year-to-date operating statements (P&L), property photos and site plan, and a purchase contract or letter of intent for acquisitions. Download templates from our financial forms page.

Rates, terms, and program availability are subject to change without notice and do not constitute a commitment to lend. Formal credit approval and due diligence are required for all transactions.

Commercial Loans & Commercial Real Estate Financing

How to Get a Commercial Loan

Determine Your Loan Type: Owner-Occupied vs. Investment

Calculate Your Property's NOI and DSCR

Choose the Right Loan Program

Assemble Your Loan Package

Submit an Application and Receive a Term Sheet

Complete Lender Due Diligence

Close and Fund