Compare Small Business Loans
Whether you’re looking to buy a new building or remodel an existing facility for your business, you’ll likely need to take out a commercial real estate loan to cover these costs. We researched several dozen lenders and loan programs and gathered the best commercial real estate loans and mortgages on the market for small business owners.
Best commercial real estate loans
We’ve summarized a few top picks for commercial real estate loans from traditional banks and online lenders.
|Credibly||Up to $10 million||Starting at 9.99% - 36.00%||Starting at 18 months||Borrowers with fair credit.|
|SBA 504 loan||Up to $5.5 million||Up to 3.157% for certified development company (CDC) portion; up to 9.25% for bank financing*||Up to 25 years||Borrowers with strong personal credit.|
|PNC Bank||$100,001-$3 million||Fixed or variable rates||Up to 15 years||Established businesses.|
|Fora Financial||$5,000 - $500,000||Factor rates from 1.1-1.35||Up to 15 months||Bridge funding while waiting for long-term financing.|
⚹Bank financing rate based on 3.25% prime rate, as of Nov. 2021
Best for fair credit: Credibly
Online lender Credibly provides long-term financing up to $10 million through its network of external lending partners. Business loans obtained through Credibly can be used for various commercial real estate purposes, including acquiring new property and renovating existing facilities. Terms start at 18 months and can vary depending on how you will use the loan proceeds. Credibly is an option even if your credit is less than perfect, though you may be restricted to smaller amounts.
Interest rates start at 9.99% , and borrowers pay a one-time origination fee. Potential 24-hour turnarounds on your application and same-day funding make Credibly a suitable option for business owners that need quick financing.
- A personal credit score of at least 500
- $15,000-plus average monthly revenue
- At least six months in business
Best for good credit: SBA 504 loan
The U.S. Small Business Administration (SBA) partners with certified development companies (CDCs) to provide small businesses with long-term financing via the SBA 504 loan program. Businesses can use the money on fixed assets to help expand or update their business operations. The CDC coordinates the three-part agreement:
- A conventional bank mortgage covering 50% of the project cost.
- The CDC portion of the 504 loan that serves as a second mortgage (backed by the SBA) covering up to 40% of the project cost.
- Business owners who make a down payment of 10% to 30%.
SBA 504 loans provide amounts up to $5.5 million for as long as 25 years. Interest rates are a bit complicated: The CDC sets one fixed rate for its portion while the bank charges another, which may be fixed or variable. CDC rates are often lower than those for other traditional or online loans. For example, as of November 2021, the rates on the CDC portion of the loan were set at 3.157% for a 25-year term.
- Good credit. Scores of 680 or above can boost the strength of your application.
- SBA eligibility. A for-profit U.S. small business with a tangible net worth of less than $15 million and an average net income of less than $5 million after federal income taxes for two years.
- Equity. The owner must invest some of their own equity — money and/or time — into the business.
Best for established businesses: PNC
Commercial real estate loan financing from PNC provides access to a range of amounts and terms when you want to buy or refinance owner-occupied commercial property for your company. Borrowers can get $100,001 to $3 million with a choice of a fixed rate or a variable rate spread above the 3.25% prime rate. Terms are available for Up to 15 years. Getting a commercial real estate loan from a bank probably means better rates than those from alternative online lenders. But banks do present barriers: Borrowers usually have to show they’ve been in business for several years to qualify.
- To occupy the commercial real estate you want to buy or refinance
- Three years (or longer in certain industries) in business
- Proof of general profitability showing an upward or stable trend in revenue, gross profit margins and net profit margins
- Clean personal credit history for at least the past five years, as well as a business credit history free of delinquencies
Best for bridge financing: Fora Financial
Online lender Fora Financial offers small business loans that can be used as bridge financing for businesses that have applied for and are waiting on long-term commercial real estate funding. A bridge loan can also offer interim cash flow relief to a startup that is waiting on capital from its next round of funding — the funds raised can then be used to repay the bridge loan.
Fora Financial provides small business loans of $5,000 to $500,000 with terms of up to 15 months. Instead of expressing rates as a percentage, Fora Financial uses factor rates from 1.1 to 1.35. Multiply your loan amount by your factor rate to determine the total cost. If you borrow $100,000 with a factor rate of 1.35, for example, you would need to repay $135,000 plus a 2.5% origination fee. As with other online lenders, Fora Financial’s financing may be more expensive than bank loans, but it has some of the most lenient requirements on this list and no restrictions on the way you use its funds.
- At least six in business
- $12,000 in gross monthly sales
- Minimum credit score of 500 and no open bankruptcies
How to get a commercial real estate loan or mortgage
Purchasing commercial real estate for your business and renovating an existing commercial property are some of the largest and most important expenses you’ll make as a small business owner. Getting the right space for your business to grow and expand is important for long-term sustained success. Depending on your needs, leasing instead of financing may be a better option for you. If you feel that a loan is the best option, you should always shop around. Get a few loan offers from banks and online lenders offering different types of loans like SBA loans, traditional commercial mortgages, hard money loans or bridge loans. Factors to consider include:
- Interest rate (fixed or variable) or factor rate
- Repayment schedule
- Total estimated repayment amount
Application process: What to expect
Applying for a commercial real estate loan and waiting for approval could take just 24 hours (for online lenders) or over two months (for SBA loans). Each lender has its own specific requirements and procedures — some lenders may place more weight on the borrower’s creditworthiness and business financials, while other lenders may prioritize the property value. Still, borrowers can usually expect a straightforward process when they apply for commercial real estate financing.
Lenders will typically require you to fill out an application online or in person at a bank branch to get prequalified. Generally, you will provide information about you and your business such as:
- Amount, type of loan you’re seeking and its purpose
- Business name, address and tax ID number
- Borrower name and contact information
- Monthly/annual revenue
- Time in business
You’ll also have to supply various documents, which may include:
- Official ID for all owners
- Bank statements from the last three months or more
- Business mortgage statement or lease agreement
- Most recent business tax return
- Business financial statements
- Information about collateral, if applicable
Once you’ve applied, it’s a waiting game, though how long you have to wait depends largely on which type of lender you chose, along with the complexity of your situation and perhaps the size of the loan you’re requesting. Alternative online lenders tend to move fastest — it’s a major selling point: Speed is one of the main advantages borrowers get in exchange for higher interest rates. Some online lenders, such as the ones listed above, usually provide approval within 24 hours. Traditional banks take longer, and SBA lenders will make applicants wait weeks, if not months.
What to watch out for
If and when you receive a loan offer, look for lender stipulations in the contract, such as whether you’ll be required to have inspections, you or your spouse must personally guarantee the loan or there will be a general lien on business assets.
Keep track of any additional requirements the lender may enforce, such as an environmental report or obtaining property insurance to protect against damage to the real estate. It’s a good idea to have a lawyer or legal advisor review the contract for potential red flags or points that can be negotiated. Lenders generally expect some back and forth on an offer, so don’t be afraid to negotiate.
To make choosing the right commercial real estate loan easier, we've looked at over 10 top industry leaders looking at credit score and business history requirements, maximum loan amounts and interest rates. Our choices are not influenced by our advertisers.