Top 7 Commercial Real Estate Loan Options and Rates to Watch in 2025

Bank of America offers the funds you need to expand your business. Their streamlined process makes obtaining quick decisions simple. They provide a diverse selection of commercial financing options, such as term loans and lines of credit.

Their interest rates are highly competitive compared to other lenders, positioning them as a top choice among real estate banks.

Bank of America caters to both new and established small enterprises, offering products like no-collateral cash advances, basis loans, long-term loans, and lines of credit. These options help businesses access needed capital to grow and manage operational costs.

You can use a Smartbiz loan to purchase, refinance, or develop real estate with an SBA 7(a) loan.

SmartBiz network banks offer SBA 7(a) loans that are excellent for small businesses. These loans feature amortizing terms of 25 years and variable interest rates from 4.75% to 6.00%. With such a loan, a small business can fund real estate purchases, equipment acquisition, or renovations to expand their premises.

If you’re looking to refinance an existing real estate loan, buy an office building, or other owner-occupied commercial property, SmartBiz is definitely worth considering.

Wells Fargo collaborates closely with business owners to understand both their current and future goals, enabling the bank to develop tailored financing solutions that fit their specific needs. They offer a range of loan options suitable for startups as well as established small businesses, including SBA loans and various commercial financing programs.

With years of industry experience, Wells Fargo has the expertise to support your company’s growth, both now and in the future. Small business owners can benefit from their user-friendly financial tools, resources, and solutions designed to make managing finances easier and more efficient.

Your company’s expansion or acquisition of new commercial properties may require financing options.

Heading to PNC Bank can be an excellent choice for securing flexible loan terms tailored to your business needs.

PNC offers a variety of fixed and variable-rate loans, with repayment periods ranging from 5 to 15 years and the possibility of up to 25 years for amortization, making it easier to find a financing plan that fits your cash flow and growth plans.

Their offerings feature a wide range of mortgage amounts and maturity dates, surpassing many competitors, so most businesses can find a suitable product.

Whether you’re considering refinancing an existing property or purchasing a new one, PNC Bank’s experienced real estate finance specialists are ready to help you identify the best loan options.

Applying for a loan through their secure website is quick, simple, and can be done conveniently from your home or office.

PNC’s lending programs are designed to support businesses in expanding their operations effectively and flexibly.

You can access up to $3 million for business expansion or property purchase needs, giving many companies the financial leverage necessary to grow.

Explore PNC Bank’s loan options and features to find the right fit for your commercial property endeavors.as you need.

JP Morgan Chase is renowned for providing confidence through every stage of a commercial real estate loan process. They handle large loans for property renovations or expansions without issue, standing out as a reliable choice in the market. Their expertise in financing stabilized office, retail, industrial, and mixed-use properties makes them especially appealing to investors and property owners seeking tailored solutions and guaranteed execution. Their extensive industry experience, combined with personalized service, benefits operators, real estate firms, investors, and trusts alike.

Northeast Bank simplifies the lending process by offering quick approvals and streamlined procedures, saving you time and reducing the complexity often associated with loan applications. They focus on providing fast, reliable funding without unnecessary delays or bureaucratic hurdles. Their commitment to security means your funds are protected, and they offer competitive rates, sometimes with no additional fees. Their nationwide solutions ensure you get your funding promptly and efficiently, whether you’re managing performing or underperforming properties. They also provide financing options for real estate lenders, investors, and brokers through various loan products like lines of credit and equity lines.

Commercial real estate loans, often called construction loans, are used primarily to cover up to the full purchase price or the costs of building commercial properties.They can be used for renovation projects, refinancing debt, or providing working capital for businesses. The goal of a commercial loan is to borrow funds at fixed, variable, or adjustable rates to buy, develop, or refinance commercial properties.

Usually, these loans are paid back in monthly installments over a period of five to ten years, though longer terms can sometimes be arranged if needed.

Commercial real estate loans tend to involve substantial sums of money—much larger than personal real estate loans. Because of this, lenders will carefully review your credit history and financial situation to ensure you can repay the loan. They will also assess factors such as the property’s location, size, and condition, your business’s type and success, and any other debts or financial obligations you have that might impact your ability to make payments.

Average commercial real estate loan interest rates range from 2.2% to 18%. These rates are influenced by multiple factors, including the nature of the loan, the loan-to-value ratio, and the total amount borrowed.

Loan-to-value (LTV) is a key metric that compares the loan amount to the property’s appraised value. Lenders prefer lower LTV ratios because they present less risk; however, based on your credit score and other qualifying factors, some lenders may be willing to finance higher LTVs, which would result in larger monthly payments.

The size of the loan also impacts the interest rate—the larger the loan, the higher the cost generally is, since more money is borrowed. Lenders have specific underwriting standards to evaluate your loan request, reviewing your financial details to confirm that you qualify for the funding you’re seeking.

There are three main repayment options for commercial real estate loans: fixed rate, variable rate, and adjustable rate. Each has its own features and suitability depending on your financial situation.

Fixed-rate loans have consistent payments throughout the loan term, providing predictability for planning expenses like taxes or property maintenance. While interest-only payments are sometimes available, they are uncommon unless you’re financially prepared to handle larger payments later. Fixed-rate loans are ideal for borrowers who can afford steady, higher monthly payments and prefer stability.

Variable rate loans share similarities with fixed-rate loans in that the monthly payments are predetermined, but the interest rate can fluctuate over time based on an index. This means your payments may decrease or increase, depending on market conditions. These loans may be suitable for borrowers who want potential savings from lower initial rates but are willing to accept some risk of rising costs.

Adjustable-rate loans involve payments that can change based on an interest rate tied to a specific index. The adjustments may occur at set intervals, such as every six months or annually, after an initial fixed period. This type can be advantageous for borrowers seeking lower initial payments but should be prepared for possible increases over time.

Different property types can be financed with commercial loans, including office buildings, which are ideal for expanding business operations as staffing grows; industrial facilities suited for manufacturing or distribution needs; retail or mixed-use spaces that might help turn around underperforming businesses; multifamily or apartment complexes, which can generate significant income and build long-term equity; farmland or agricultural properties, suitable for companies looking to expand their agricultural operations; and shopping malls or retail centers, which provide opportunities to earn rental income without outright ownership.

Finally, there are various loan options available to meet different needs. A traditional commercial mortgage offers a recurring loan amount that can be used for property acquisition or investment, with monthly payments covering both interest and principal until paid off or renewed. Conduit or Commercial Mortgage-Backed Securities (CMBS) loans are typically used for property purchases and may have specific features tailored to large-scale real estate investments.

A particular category of loan with a set repayment schedule, these loans are often bundled with other types of commercial mortgages. Once bundled, they can be sold on secondary markets, providing liquidity options for lenders and investors.

The main drawback of a Commercial Mortgage-Backed Security (CMBS) loan is the difficulty in exiting the loan early if circumstances change. Early repayment can prove to be very costly, particularly when the lender requires the borrower to replace the loan with other financial instruments such as bonds. CMBS loans generally have a fixed interest rate determined at the start of the loan term.

The SBA 7(a) is a specialized loan aimed at supporting small businesses. These loans are primarily issued by private lenders but are partially insured by the Small Business Administration. You might qualify for one if your business has been operational for over two years and demonstrates solid annual revenue when you apply.

The SBA 504 loan is linked to the property you’re purchasing or improving. This type of financing emphasizes the amount you contribute upfront and aims to ensure the property’s value remains stable over time. It offers fixed, long-term funding of up to $5 million and is often used to promote business expansion and create employment opportunities.

A commercial bridge loan is a short-term financing solution designed for interim needs. You might use one of these loans to acquire property with the plan to flip it or wait until you qualify for a more traditional, long-term loan. Unlike permanent loans that support long-term investment, bridge loans are meant to provide temporary financial relief.

There are numerous steps and factors to account for during the process of obtaining a business loan. Being aware of these can help streamline your application and improve your chances of approval. Let’s explore some of these key factors and their significance.

Securing a commercial real estate loan typically requires a substantial initial payment. The proportion you need to pay varies depending on the loan type, making it important to consult with a lender beforehand to understand your specific requirements.

The Federal Deposit Insurance Corporation (FDIC) plays a vital role if you’re considering a commercial loan. It insures deposits across various financial institutions involved in consumer banking, offering an added layer of security. Knowing about the FDIC’s protections can influence your decision-making when choosing lenders.

The DSCR measures your capacity to cover debt payments based on your income. Lenders rely on this ratio, along with your overall debt-to-income ratio, to assess your ability to repay the loan and determine your borrowing eligibility.

In many cases, you may need to sign a personal guarantee, making you personally responsible for repaying the loan. This can impact your credit profile and financial stability. Similar to securing a startup business credit card without credit, understanding your liability is crucial before committing.

Some loans include prepayment penalties, which restrict you from paying off the loan early without incurring extra charges. This is a significant factor to consider, especially if you plan to pay off your debt ahead of schedule to save on interest.

Lenders often charge origination fees to cover administrative costs associated with setting up your loan. Additional charges, such as for title insurance or tax services, may also apply, increasing the total upfront costs.

The loan-to-value (LTV) ratio compares the loan amount to the value of the property securing it. It helps lenders assess risk by evaluating your borrowing capacity relative to your assets. For example, if you buy a commercial property valued at $500,000 and borrow $300,000, your LTV is 60%.

The SBA supports small businesses by providing guidance, resources, and financial backing. It advocates for their interests, offering advice, protecting their access to capital, and helping them thrive during tough economic conditions.

Given the variety of commercial mortgage options available, it’s essential to match a loan type with your company’s specific needs. Understanding your needs allows you to research and select the most suitable financing option.

Hard money loans rely on the value of the property to determine the loan amount, usually offering short-term financing at higher interest rates. These loans are suitable for urgent funding needs when other options are unavailable, especially if your business faces financial difficulties. Generally, they should be considered a last resort in real estate transactions due to their higher costs.

Obtaining a commercial real estate loan is a significant step in establishing or expanding your business. To begin, identify which type of financing aligns best with your goals and compare lenders specializing in that area. Keep in mind the various loan options, including SBA-backed loans, bridge loans, and traditional commercial mortgages. By evaluating interest rates and repayment conditions from different lenders, you can choose the best fit for your needs.

Here are some top lenders and what they excel at:

Using this list, you can better identify a long-term financing solution suitable for your business’s growth. Have you ever taken out a commercial property loan? Share your experience in the comments below.

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