Min Credit
650
Min Time In Business
24 months
Best Commercial Real Estate Loans
Commercial real estate loans help small-business owners:
Small-business owners can get commercial real estate loans through banks, online lenders and Small Business Administration lenders. The best lender for your business will depend on your qualifications, the type of real estate loan you’re looking for and how fast you need funding.
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Written by Ryan Brady
Lead Writer
5 best commercial real estate loans
| Product | Min Credit | Max Loan Amount | Learn more |
|---|---|---|---|
 SBA 7(a) loan Apply now with Fundera by NerdWallet | 650 | $5,000,000 | Apply now with Fundera by NerdWallet |
SBA CDC/504 loan | 680 | $5,000,000 | |
 iBusiness Funding - Online term loan NerdWallet Rating Apply now with Fundera by NerdWallet | 660 | $500,000 | Apply now with Fundera by NerdWallet |
 TAB Bank - Commercial real estate loan | 700 | $10,000,000 | |
 Bank of America - Commercial real estate loan NerdWallet Rating | 700 | Undisclosed |
A closer look at the best commercial real estate loans
SBA 7(a) loan
Best for borrowers who can't qualify for bank financing.
SBA 7(a) loans are the SBA’s most popular and versatile business loan program. Aside from using them to finance real estate purchases, small-business owners can also use borrowed funds for operating expenses, equipment, furniture and more.
While the SBA’s 504 loan program is more tailored to commercial real estate and other major purchases, 7(a) loans can provide small-business owners a bit more flexibility. Down payments for SBA 7(a) loans are typically 10%, but can be higher.
Apply now
with Fundera by NerdWallet
Maximum loan amount
$5 million
Interest rate range
10.75-14.25%
Maximum term length
25 years
SBA 504 loan
Best for borrowers who want low interest rates.
SBA 504 loans provide small-business owners money to fund major business expenses, such as commercial real estate or equipment that’s meant to last 10 years or longer. To qualify, you must use the borrowed funds to promote economic growth or job creation.
While 504 loans have more restrictions and qualification criteria than 7(a) loans, they often come with lower interest rates. Down payments for SBA 504 loans are typically 10%, but can be higher.
Min Credit
680
Min Time In Business
24 months
Read Review
Maximum loan amount
$5 million
Interest rate range
5-7%
Maximum term length
25 years
iBusiness Funding
Best for borrowers who need money fast.
IBusiness Funding (formerly Funding Circle) offers online term loans that can fund your real estate project in as little as two business days. As an online lender, iBusiness Funding is a good choice for small-business owners seeking fast and easy financing with monthly payments.
However, in exchange for ease and flexibility, you’ll likely pay a higher interest rate than if you went with a bank or SBA loan, but there’s no prepayment penalty if you decide to pay the balance early.
Min Credit
660
Min Time In Business
24 months
Apply now
with Fundera by NerdWallet
Maximum loan amount
$500,000
Interest rate range
15.22-45%
Maximum term length
7 years
TAB Bank
Best for larger businesses with strong finances.
TAB Bank’s commercial real estate loan offers lots of options for financing your next real estate venture, whether you’re trying to fund a new construction project, buy an investment property or expand your company’s physical footprint.
This bank offers more favorable terms than many online lenders, such as large loan amounts and relatively low interest rates. However, it will likely be tough to qualify for a TAB Bank real estate loan. For example, you’ll likely have to pay a large down payment and have a personal credit score of 700 or higher.
Although its loans are available in all 50 states, TAB Bank specializes in helping business owners in the western half of the U.S.
TAB Bank
TAB Bank - Commercial real estate loan
Min Credit
700
Maximum loan amount
$10 million
Interest rate range
Treasury rate + 3%-5%
Maximum term length
10 years (balloon)
Bank of America
Best for smaller businesses with strong finances.
Bank of America’s commercial real estate loan can be used to renovate or buy commercial property, or refinance an existing commercial mortgage. You can choose a 10-year balloon mortgage, or opt for a fully amortizing loan that lasts for up to 15 years.
As is the case with most business bank loans, you’ll need strong financials to qualify: $250000 in annual revenue, a personal credit score of 700 or higher and at least 24 months in business.
Min Credit
700
Min Time In Business
24 months
Read Review
Minimum loan amount
$25,000
Starting interest rate
6%
Maximum term length
15 years
What is a commercial real estate loan?
A commercial real estate loan is a type of commercial loan used to purchase, refinance or renovate a property that’s used for business purposes, such as office buildings, storefronts, restaurants or warehouses. They can also be used to finance investment properties like apartment buildings or commercial spaces to be leased out, or the construction of commercial properties.
How do commercial real estate loans work?
Commercial real estate loans work similarly to personal mortgages. They are structured as term loans to be repaid over a set period of time, with interest, and are usually secured by the property being financed.
Balloon mortgages are real estate loans where the amortization term, the period of time it would take to fully pay off the loan amount plus interest, is longer than the repayment term. They are more commonly found in commercial real estate loans than consumer mortgages. Balloon loans essentially limit the amount of cash you need upfront to purchase a property, and lower your monthly payments; however, at the end of the loan term, the remaining balance of the loan, or the “balloon” payment, is due.
Commercial real estate loan terms and repayment
Repayment terms on commercial property loans generally range anywhere from five to 25 years, depending on the type of property, your lender's business loan requirements and other factors. And unlike residential mortgage loans, commercial mortgages often have an amortization period that’s longer than the life of the loan.
For instance, a lender may offer a commercial property loan with a term of five years, but an amortization period of 10 years. In that case, you would make payments on the loan for five years, but the amount of each payment would be based on the loan being paid off over 10 years. At the end of the five-year period, you’d pay one final balloon payment to satisfy the remaining balance.
In other words, if you received a $500,000 loan with an interest rate of 5%, you would make monthly payments of $5,303.28 for five years, followed by a final balloon payment of $281,024.31 to pay off the debt.
Some small-business lenders, on the other hand, offer full amortization — which means the amortization period is the same length as the loan. At the end of the term, the loan is paid in full and there is no remaining balance that needs to be paid off in a balloon payment. The same $500,000 loan fully amortized over 10 years would require monthly payments of $5,303.28 over the 10-year term.
Commercial real estate loan rates and fees
Interest rates on commercial mortgage loans can also vary based on the lender, the type of loan, the value of the property you’re financing, and your business’s qualifications.
Anecdotally, interest rates range from 5% to 15%, though it’s challenging to find recent reports that confirm the average interest rate on commercial property loans. However, as a traditional lender, Bank of America’s starting rate of 5.50% may at least be a good indicator of the lowest rate you could expect with excellent credit and strong business financials.
Commercial mortgages tend to have more fees than other types of business loans. Commercial real estate lenders may charge origination fees, loan application fees, property appraisal fees, legal fees and other closing costs.
