Navigate the complex world of commercial real estate financing with professional guidance from industry experts.
Commercial mortgages are specialized loans designed specifically for purchasing or refinancing income-producing properties and business real estate, with terms and structures distinct from residential mortgages.
Unlike residential loans, commercial mortgages feature larger loan amounts, shorter terms, different underwriting criteria focusing on property income, and specialized lenders with expertise in commercial real estate.
Commercial mortgage financing provides businesses with capital for expansion, stability through real estate ownership, potential tax benefits, and long-term equity building as property values appreciate.
Traditional loans offered by banks and credit unions with competitive rates for borrowers with strong credit and established businesses.
Commercial Mortgage-Backed Securities loans bundled and sold to investors, offering competitive fixed rates for stabilized properties.
Agency loans specifically for multifamily and affordable housing properties with favorable terms and competitive rates.
Small Business Administration loans with lower down payments, longer terms, and government guarantees for owner-occupied properties.
Short-term financing to "bridge" gaps between immediate funding needs and permanent financing for acquisitions or renovations.
Asset-based loans from private investors for borrowers who need fast funding or don't qualify for traditional financing.
Short-term financing for ground-up construction or major renovations with draws based on completed construction phases.
Supplemental financing that sits between senior debt and equity, often used for high-leverage transactions and developments.
Not technically a loan, but a form of capital investment that sits between common equity and debt in the capital stack.
Unlike residential mortgages, commercial loans typically have shorter terms, ranging from:
Commercial loans often have amortization periods (15-30 years) that exceed the loan term, creating a balloon payment at maturity.
Most commercial loans include prepayment restrictions:
Multifamily and industrial typically receive the most favorable rates, while hotels and special-purpose properties see higher rates.
Prime locations in major markets often qualify for lower rates than secondary or tertiary markets.
Lower LTV ratios (more equity) generally result in more favorable interest rates.
Higher DSCR indicates stronger cash flow relative to debt payments, resulting in lower rates.
Credit score, net worth, liquidity, and experience all impact available rates.
Federal Reserve policy, inflation, and overall economic outlook influence base rates.
Commercial mortgage qualification differs significantly from residential loans, with greater emphasis on property performance, business financials, and complex underwriting ratios.
Initial assessment of borrower and property eligibility based on preliminary information
Full loan application submitted with supporting documentation
Lender analyzes financial statements, tax returns, rent rolls, and property documentation
Property appraisal, environmental assessment, and property condition report ordered
Detailed analysis of all financial and property metrics to determine loan approval
Loan committee approval, commitment letter issued, and final closing process
1-3 days
5-10 business days
30-45 days
5-10 business days
7-14 business days
Total process typically takes 45-75 days from application to funding
Refinancing before a balloon payment comes due to avoid a large lump-sum payment at loan maturity
Taking advantage of lower market rates to reduce monthly payments and overall interest costs
Securing more favorable loan terms such as longer amortization periods or non-recourse structures
Accessing equity in the property to fund renovations, other investments, or business expansion
The commercial refinance process follows many of the same steps as the initial financing, with property performance history becoming a critical factor:
A cash-out refinance allows you to tap into your property's equity by taking out a new loan for more than you currently owe. Key points to consider:
Understanding the terminology used in commercial real estate financing is essential for navigating the lending process successfully.
The process of paying off a loan through regular payments over time, gradually reducing the principal balance while paying interest.
A large, lump-sum payment due at the end of a loan term, representing the remaining principal balance when the loan's amortization period exceeds its term.
The ratio between a property's net operating income (NOI) and its market value or purchase price, expressed as a percentage.
A ratio that measures a property's ability to cover debt payments with its net operating income, calculated as NOI divided by annual debt service.
A ratio calculated by dividing a property's net operating income by the loan amount, expressed as a percentage.
The ratio of the loan amount to the appraised value or purchase price of a property, expressed as a percentage.
A property's income after operating expenses are deducted but before debt service and income taxes are paid.
A fee charged to a borrower who pays off a loan before its scheduled maturity date.
A loan that allows the lender to seek payment from the borrower's personal assets if the collateral property value doesn't cover the outstanding loan balance in default.
A prepayment penalty designed to allow the lender to maintain the same yield as if the borrower had made all scheduled loan payments until maturity.
Let our experienced team guide you through the process of securing the right commercial mortgage for your business needs.