Commercial Loan

A commercial loan is a debt-based funding arrangement for purchasing, developing, or constructing commercial properties. It is affordable, long-term, and uncapped. Businesses that do not qualify for an SBA 7(a) or 504 Loan or need more funding than can be secured through an SBA program may consider a commercial loan viable.

Commercial loans work similarly to residential mortgage loans. One of the key differences, however, is that a commercial loan is secured against a commercial property instead of a residential property. Another key difference is that the Loan-to-Value (LTV) for a commercial loan may be limited to 75-80%. Lenders will also consider your business’s Debt Service Coverage Ratio (DSCR), so cash flow is important. The higher your business’s DSCR, the higher your likelihood of approval.

Exact terms will vary based on the lender, property type, DSCR of the business, creditworthiness of the borrower, and other factors.

Any business seeking a significant capital raise for a real estate investment, and whose options do not include an SBA loan, should consider applying.