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How to Get a Commercial Real Estate Loan

3 min read • Aug 14, 2019 • Elizabeth Aldrich

If you’re in the market for commercial real estate, it’s worth considering a commercial real estate loan. These loans can help you purchase a new property, refinance an existing property, or gain access to cash using the equity in your existing property. Read on to learn how to get a commercial real estate loan.

How to Qualify for a Commercial Real Estate Loan

Commercial real estate loans are more difficult to qualify for than personal loans. Since this loan is specifically designated for real estate, there are a few strict requirements lenders will usually ask you to meet.

The Building You Purchase Must Be Owner-occupied 

In other words, your business occupies the majority (51%) of the building. If you don’t meet this requirement, you’ll need an investment property loan instead.

Your Business Must Generate Enough Revenue to Support the Debt

This determination uses your business’s debt service coverage ratio (DSCR), which is your net operating income divided by the annual payment you’ll have to make on the commercial real estate loan. Most lenders require this number to be at least 1.2.

You Must Have Good Business and Personal Credit

Most lenders will look at both your business and personal credit scores, and they’ll usually require a good or excellent credit score. However, it’s possible to find some lenders with less stringent credit requirements, especially because the property you’re buying can serve as collateral.

The Property Value Must Be Sufficient to Serve as Collateral for the Loan Amount

The property you’re buying will help guarantee the commercial real estate loan. Because of this, some lenders are more concerned with property value than your credit. Most lenders now will aim for a loan-to-value ratio of 60%.

Where to Get a Commercial Real Estate Loan

Many lenders offer commercial real estate loans, and there are a variety of types of commercial real estate loans as well. Here are some of the most common places to get commercial real estate loans.

Traditional Banks

Plenty of traditional banks offer commercial real estate loans at very competitive rates. They’re some of the most difficult loans to qualify for, but also some of the most affordable. You’re also more likely to get large loan amounts from a big bank.

Lending Marketplaces

You can find online commercial real estate loans from a wide variety of lenders on lending marketplaces, which serve as a great alternative to traditional banks. These lending marketplaces have higher approval rates and tend to have faster application processes, so you’ll get your money quicker and don’t need to have perfect credit. At the same time, they usually offer very affordable loans with reasonable interest rates.

SBA Commercial Real Estate Loans

Both traditional banks and lending marketplaces offer SBA loans that can be used to purchase commercial real estate. The Small Business Administration partially backs these loans, so they come with generous terms and it’s sometimes easier to qualify.

Hard Money Loans

Private lenders offer these loans, which are some of the easiest to qualify for. However, they often come with high interest rates and rarely offer large loan amounts. On top of that, you’ll be required to put forward a larger down payment.


Commercial real estate loans are a good idea for many businesses. If you want to use real estate to expand and achieve your business goals, a commercial real estate loan is worth considering.


Elizabeth Aldrich

Elizabeth is a freelance writer covering personal finance, business, and travel. Her writing has appeared in The Motley Fool, Business Insider, Yahoo! Finance, LendingTree, Student Loan Hero, FOX Business, and more.