COMMERCIAL REAL ESTATE FINANCING

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Commercial financing is evaluated differently from a residential mortgage. The lender may review the property's income, operating history, occupancy, borrower or sponsor strength, experience, liquidity, collateral, business plan, and proposed exit strategy.

What Is Commercial Real Estate Financing?

Commercial real estate financing may be used to purchase, refinance, construct, renovate, or access equity from property primarily intended for business or investment use.

Unlike a standard residential mortgage, approval may depend on both the borrower and the property's ability to support the proposed debt. The lender may evaluate rent rolls, leases, operating statements, business financials, property condition, marketability, and projected cash flow.

Commercial loans can vary significantly in structure. Available options may include bank financing, agency loans, SBA programs, bridge loans, private capital, debt funds, construction financing, and other program-specific solutions.

Commercial Financing Options

• Commercial Property Purchase - Finance an eligible office, retail, industrial, mixed-use, hospitality, medical, or other commercial property.
• Commercial Refinance - Replace existing debt, adjust the loan structure, extend the term, improve cash flow, or consolidate eligible obligations.
• Multifamily Financing - Financing for apartment properties with five or more residential units, including acquisitions, refinances, and eligible renovation projects.
• Owner-Occupied Business Property - Financing for eligible business owners purchasing or refinancing real estate used by their operating company.
• Commercial Construction - Ground-up construction, expansion, major renovation, or repositioning financing for eligible commercial projects.
• Bridge and Short-Term Financing - Short-term financing for acquisitions, lease-up, renovation, stabilization, time-sensitive closings, or properties not yet ready for permanent debt.

Property Types We May Review - Multifamily

• Apartment buildings with five or more units
• Affordable or workforce housing
• Student or senior housing
• Mixed-use properties with residential units
• Value-add multifamily projects

Property Types We May Review - Commercial

• Office properties
• Retail centers
• Industrial and warehouse buildings
• Medical or professional buildings
• Mixed-use real estate
• Self-storage
• Mobile-home or RV communities
• Hospitality properties
• Special-use properties

Property Types We May Review - Business-Occupied Real Estate

• Owner-user office buildings
• Medical or dental practices
• Warehouses and industrial facilities
• Automotive properties
• Restaurants and hospitality businesses
• Daycare or educational facilities
• Franchise locations
• Other eligible operating-business properties

Commercial Loan Structures

• Permanent Financing - Longer-term financing for stabilized commercial or multifamily properties with established occupancy and operating history.
• Bridge Financing - Short-term capital for acquisition, renovation, lease-up, stabilization, or other transitional situations.
• SBA Financing - Eligible owner-occupied business real estate may qualify through an SBA-backed program when the borrower, business, occupancy, and transaction meet applicable requirements.
• Construction Financing - Financing for land acquisition, vertical construction, improvements, renovations, or project completion.
• Commercial DSCR Financing - Certain commercial programs may focus heavily on property cash flow and collateral rather than traditional personal-income documentation.
• Private and Alternative Lending - Private lenders, debt funds, and other alternative sources may consider transactions that do not fit conventional bank requirements.

What Determines Your Commercial Loan Options?

Available terms may depend on:

• Property type
• Property location
• Purchase price or current value
• Requested loan amount
• Loan purpose
• Property occupancy
• Existing leases
• Rent roll
• Net operating income
• Debt-service coverage
• Borrower or sponsor experience
• Credit profile
• Liquidity and reserves
• Net worth
• Business financial strength
• Renovation or construction budget
• Project timeline
• Exit strategy
• Environmental or property-condition concerns
• Recourse requirements
• Lender and program guidelines

How Commercial Properties Are Evaluated

• Property Cash Flow - The lender may review whether the property's net operating income supports the proposed mortgage payment.
• Occupancy and Tenants - Lease terms, tenant quality, concentration, vacancies, rollover risk, and market rent may affect the loan structure.
• Borrower and Sponsor Strength - Experience, credit, liquidity, net worth, and prior ownership or project history may be considered.
• Property Value and Condition - An appraisal, property-condition assessment, environmental review, engineering report, or other third-party report may be required.
• Business Plan - For transitional properties, the lender may evaluate the renovation scope, lease-up plan, operating projections, timeline, and exit strategy.
• Loan-to-Value and Debt Yield - Commercial lenders may consider several risk measures rather than relying on a single qualifying ratio.

Commercial Purchase vs. Refinance - Commercial Purchase Financing (May be used to acquire)

• Stabilized income-producing property
• Owner-occupied business real estate
• Value-add property
• Vacant or partially occupied property
• New construction or development sites
• Mixed-use or specialized assets

Commercial Purchase vs. Refinance - Commercial Refinance Financing (May be used to)

• Replace maturing debt
• Adjust the payment or amortization
• Access eligible equity
• Consolidate commercial obligations
• Fund improvements
• Complete a partner buyout
• Move from bridge debt to permanent financing
• Refinance after stabilization

Important Commercial Financing Considerations

• Rates and Terms Vary Widely - Commercial pricing depends on the property, lender, borrower, leverage, cash flow, loan size, market, and transaction structure.
• Recourse May Be Required - Some loans require personal guarantees, while certain eligible transactions may offer limited-recourse or non-recourse structures.
• Prepayment Provisions May Apply - Commercial loans may include declining penalties, yield maintenance, defeasance, minimum-interest provisions, or other restrictions.
• Third-Party Reports May Be Needed - The lender may require an appraisal, environmental report, property-condition assessment, engineering review, feasibility report, or other professional evaluation.
• Closing Costs Can Be Significant - Legal, appraisal, environmental, engineering, lender, title, escrow, and other transaction costs may be higher than those associated with residential financing.
• Approval Is Not Based on Property Value Alone - The lender may evaluate cash flow, marketability, sponsor strength, liquidity, experience, and repayment strategy in addition to collateral value.
• Timing Depends on the Transaction - A simple stabilized-property refinance may move differently from a construction, hospitality, mixed-use, vacant, or value-add transaction.

Your Commercial Loan Process

• Review the Property and Financing Goal - We discuss the property type, location, purchase or refinance purpose, requested loan amount, timeline, and business plan.
• Review the Initial Financial Information - We evaluate available rent rolls, leases, operating statements, borrower financials, business documents, project costs, and property information.
• Identify the Most Appropriate Lending Channel - The transaction may be reviewed for bank, SBA, agency, bridge, private, construction, debt-fund, or other specialized financing.
• Compare Preliminary Structures - You receive an initial comparison of potential leverage, rate structure, term, amortization, reserves, recourse, fees, and prepayment provisions.
• Submit the Loan Package - We coordinate lender submission, third-party reports, underwriting, due diligence, title, legal review, and closing requirements.
• Close and Execute the Business Plan - After approval, the financing is completed and any applicable construction, renovation, draw, lease-up, or stabilization process begins.

BUILD THE RIGHT FINANCING STRUCTURE FOR YOUR PROPERTY

Commercial financing is not one-size-fits-all. I can help you organize the transaction, identify the most appropriate lending channel, compare preliminary structures, and present the request to lenders that understand the property and business plan.

Commercial financing is subject to credit, property, valuation, cash flow, liquidity, experience, environmental, title, lender, legal, and program requirements. Rates, leverage, terms, fees, recourse, prepayment provisions, third-party reports, and program availability vary. This is not a commitment to lend.