The Answer for Your Next Investment Project: Commercial Property Loans
6 minute read
February 23, 2023


Commercial real estate loans are not only for investing in properties; they are also designed to fund the purchase or improvement of a property used for personal business. 

To qualify for a commercial loan, you must use the majority of the property to secure the loan for your commercial operations.

You can still rent out a portion of the real estate, but a minimum of 51% must be devoted to your business. If you intend to rent out more than 50%, a different loan is required since this is viewed as a more speculative venture.

Examples of when it might be beneficial to obtain a commercial real estate loan include:

  • Investing in a building to house your company
  • Extending or moving retail space for your shop
  • Acquiring a warehouse to store your stock
  • Purchasing, constructing or refurbishing a hotel to be run personally

General requirements for a commercial property loan

In order to acquire a commercial loan for real estate, one must have a good credit score, provide a deposit of at least 25%, and intend to use the majority of the property for their own business.

  • Borrowers generally must have a credit score of at least 660.
  • Different types of commercial real estate loans include term loans, SBA loans, lines of credit, and portfolio loans.
  • Most commercial real estate loans feature terms ranging from five to ten years. However, amortization periods can last up to 25 years—which could mean a large balloon payment becomes due at the end of the term.

Rates, conditions, and charges associated with business property lending

  • Interest rates generally start at about 3.5%
  • Down payments are rarely less than 25%
  • Loan terms span from five to 10 years, with up to 25 years for amortization
  • The debt-service coverage ratio (DSCR) must be at least 1.25
  • 660 is typically the least acceptable credit score
  • Qualifying property types include office, retail, industrial, hotels, restaurants, medical, entertainment, and special-use structures

Commercial real estate loans are meant for entrepreneurs attempting to purchase, construct, or remodel a building to either extend or establish their commercial operation.

What’s your loan scenario?

Lending options for commercial property loans

When it comes to financing commercial property, there are several loan types available. 

Each one has its own terms, rates, eligibility requirements, and application process. Thus, deciding which option best fits your needs is important before applying. 

Different loan types have different benefits for different types of borrowers. 

  • Bank term loan is best suited for those with an established banking relationship, 
  • Small Business Association loans (SBA loans) are ideal for business owners who have already attempted to get a loan from a conventional lender, 
  • A line of credit is good for those who own their property and are looking to borrow against their equity, 
  • Portfolio loan is suitable for those with multiple locations.
  • Hard money loans can be used for owner-occupied, non-owner-occupied, business, or consumer-purpose loans. Investment properties like multi-family units are also frequently purchased using these loans. 

How to qualify for a commercial property loan

For those seeking a loan for commercial real estate, the process is somewhat different from obtaining a mortgage for a residence. 

Since the money will be applied to a business endeavor and repaid with its proceeds, lenders require evidence that the enterprise can cover the costs of the loan.

In order to acquire a loan, three major categories of requirements must be met.


Before giving the green light to a loan, the lender must be confident the deal is sufficiently secured. This generally means you will need to have a minimum of 25% to 30% stake in the property. 

If you’re purchasing, you will require a 25% or higher down payment to be eligible.

Your lender will also need to be sure that you have taken out sufficient insurance to cover any damage to the collateral. They will conduct title research on the house and examine the deed to ensure no one has a lien or other claim on it. 


When assessing your application, loan providers want assurance that you bring in enough money to cover your expenses so you can easily make your loan payments. 

They look at your debt-service coverage ratio (DSCR) to do this. The least amount of DSCR depends on the property you intend to borrow against, but most creditors prefer to observe a DSCR of 1.25 or higher. 

You often must furnish two years of your tax returns, including personal and business. You’ll also be obligated to submit your organization documents, operating agreement, and personal documents like a W-9 and a copy of your birth certificate or passport.

Credit scores

If you want to acquire a loan for a business-related property, your lender will likely evaluate your business credit score. Also, lenders usually will need to assess your personal credit score.

The lowest credit ratings that lenders accept can differ but generally range from 660 to 680 for the majority of standard loans.

Hard money loans for commercial property projects

Instead of a bank, private lenders or funding groups are the types of lenders that finance hard money loans. 

These special loan providers are not subjected to the same regulations as conventional lenders and are typically unaffected by the big changes in interest rates we’ve seen lately. 

Hard money lenders can decide their terms and conditions regarding the loan. 

These loans are a great choice for short-term investments, like real estate investments, house flipping, or renovations, as they give access to a significant sum of money very quickly. 

Bridge loans and immediate cash for business purposes or other substantial purchases can also be obtained through hard money loans. The flexibility to tailor hard money loans—including a specific exit strategy—is an additional benefit. 

The lender and borrower can work out many other terms that benefit both parties by considering the project’s overall potential.

Marquee Funding for your commercial property financing solutions

Marquee Funding Group is the go-to source for hard money lending—filling the void left by banks and other traditional lenders. 

Dealing with Marquee gives you several advantages: 

  • Quick same-day approvals 
  • Closings in as little as seven days
  • Loans ranging from $50,000 to $20 million

We also offer a loan-to-value of up to 70%, and our products include: 

  • Purchase money loans 
  • Rate-and-term refinance and cash-out refinance 
  • Owner-occupied and non-owner-occupied consumer/business loans 
  • Single/multi-family, commercial, industrial, and land loans 

We also have a selection of construction loans like ground-up, fix-and-flip, fix-and-occupy, and value-add.

Don’t hesitate to reach out to one of our expert team members if you have questions about hard money lending or a unique lending situation.

Submit your loan scenario now. 

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