When seeking capital, business owners and real estate investors often face many loan options. Two types that frequently appear in commercial financing searches are commercial real estate (CRE) and commercial and industrial (C&I) loans.
While both fall under the umbrella of commercial lending, each serves a different purpose and is evaluated using distinct underwriting principles.
Understanding these differences is essential, especially when launching a development project or seeking capital for business operations.
This guide clarifies the fundamental differences between CRE and C&I loans:
- How they function
- Their intended uses
- Why these distinctions matter
- Some practical examples of each
Finally, we’ll outline why Marquee Funding Group’s new construction bridge loan might be your best solution for new construction CRE financing.
Let’s Get Your Loan Started
What is a CRE loan?
A CRE loan is used to finance income-producing or owner-occupied commercial property.
The property secures the loan and is typically structured around the asset’s income potential or future value.
CRE properties might include offices, retail centers, multifamily housing with five or more units, industrial facilities, and mixed-use developments.
Borrowers may use CRE loans for acquisitions, renovations, or ground-up construction.
Developers, commercial investors, and business owners purchasing property for their own operations commonly rely on this loan type.
What is a C&I loan?
A C&I loan supports ongoing business operations and is not necessarily tied to real estate ownership.
These loans are issued to operating companies and are secured by business assets such as equipment, accounts receivable, or inventory.
Borrowers use C&I loans for working capital, payroll, equipment purchases, and other operational needs. These loans generally have shorter terms and more frequent payment schedules than CRE loans.
Lenders evaluate creditworthiness and cash flow performance rather than property value. Unlike CRE loans, C&I loans prioritize business health and cash flow over property value.
How CRE and C&I loans differ in structure and use
CRE and C&I loans vary in purpose, underwriting criteria, collateral, and borrower profile.
CRE loan structure and use
- The property itself secures a CRE loan.
- The structure reflects the real estate project’s timeline and the asset’s expected performance.
- Repayment terms often extend over longer periods and are tied to the development phase or the income the property is expected to generate.
- Loan decisions are based on the property’s characteristics and the proposed project’s feasibility.
C&I loan structure and use
- A C&I loan supports the financial activity of a business without being tied to a specific property.
- The loan is intended to meet immediate operational needs and is often structured to reflect the rhythm of business activity.
- Approval focuses on financial records, revenue history, and the ongoing stability of the business.
Why proper loan classification matters
Choosing the incorrect loan type can create funding delays, increase costs, or result in denied applications.
Traditional lenders rarely provide C&I loans for construction. These institutions do not underwrite speculative real estate or extend credit based on projected property value.
So, if you’re a business owner pursuing ground-up development, this type of loan will likely not meet your project requirements.
The same issue arises for developers managing entitlement processes, site improvements, or lease-up efforts, which typically fall outside C&I loan parameters.
The limitations of traditional lending for new construction CRE
Even if borrowers identify a CRE loan as the appropriate type, traditional lending often proves difficult for many projects.
Bank financing for real estate development often creates friction through drawn-out timelines and limited flexibility, which can restrict access to adequate capital.
Common barriers include:
- Long approval timelines
- Conservative loan-to-cost ratios
- Inflexible draw schedules
- Strict requirements related to borrower income or liquidity
As a result, qualified borrowers may struggle to secure the capital needed to move forward.
C&I loans are even less suited to construction needs. These loans are not designed to accommodate phased funding models or financing structures that rely on projected property value after improvements.
In most cases, they cannot be used for land acquisition or entitlement work.
Why Marquee’s construction bridge loan supports new construction CRE
Marquee Funding Group offers a commercial construction bridge loan to support real estate development. This loan structure addresses common barriers and provides greater speed and flexibility than conventional options.
Marquee’s construction loan offers:
- Up to 75 percent loan-to-cost (LTC)
- Up to 70 percent loan-to-after-repair value (LTARV)
- Interest-only payments on drawn funds
- Fixed interest rates starting at 9.75 percent for residential projects and 11.25 percent for multifamily projects
- Loan terms between 12 and 24 months
- Non-recourse options for qualified borrowers
- In-house underwriting and funding decisions
- Transparent draw management through third-party fund control
Marquee’s construction bridge loan is suitable for business owners building their own facilities and for experienced developers undertaking larger commercial projects.
Practical examples of CRE and C&I loan use
To fully understand how these loans are used, let’s take a look at the following common scenarios in which a CRE or C&I loan is necessary.
Scenario #1:
A logistics company is building a warehouse to support expanded operations. The project involves land acquisition, permits, and vertical construction.
Verdict: This is a real estate initiative and requires a CRE loan.
Scenario #2:
A developer is constructing a medical office building in a growing market. Tenants have not yet been secured, so projecting income is not possible.
Verdict: A CRE construction bridge loan can work here.
Scenario #3:
A manufacturer is financing new machinery to increase production. This is an operational expense and does not involve real estate acquisition.
Verdict: A C&I loan is appropriate in this case.
Get the right loan for your commercial project
Choosing the right loan type depends on your project’s goals, collateral, and financial profile.
C&I loans support business operations using non-real estate assets, while CRE loans finance the acquisition or development of commercial property.
If you’re preparing to build, Marquee Funding Group offers the speed, flexibility, and expertise that conventional lenders often lack—even before the first shovel hits the ground.
Submit your loan scenario today and discover how Marquee’s CRE bridge financing can support your next development project.