Commercial Mortgage Loans
CRE is income-producing property used solely for business purposes. Examples include retail malls, shopping centers, office buildings and complexes and hotels.
Commercial real estate (CRE) is income-producing property used solely for business (rather than residential) purposes. Examples include retail malls, shopping centers, office buildings and complexes, and hotels. Financing—including the acquisition, development and construction of these properties—is typically accomplished through commercial real estate loans: mortgages secured by liens on the commercial property.
Just as with home mortgages, banks and independent lenders are actively involved in making loans on commercial real estate. Also, insurance companies, pension funds, private investors, and other sources, including the U.S. Small Business Administration’s 504 Loan program, provide capital for commercial real estate.
Here, we take a look at commercial real estate loans, how they differ from residential loans, their characteristics and what lenders look for.
- Conventional Commercial Loans For 5 Units and up Multi-Residential Units
- SBA Loans
- Commercial Loans For
a) Office Belongings
b) Shopping CTRs
c) Mix Use
Explaining Commercial Real Estate Loans
The majority of commercial loans require the individual guarantee to pay back so if the commercial property is under a third entity like Corporations LLC or trust the principal's of that entity has to guarantee & sign for the loan.
Terms + Conditions of Commercial Loans
The majority of programs available for commercial loans are based on 25yrs amortization and all of the commercial loans have to be self-sufficient when it comes to debt servicing.
What does self-sufficient mean: the income of the commercial property has to cover the debt that is being created against the property, the loan. If a commercial property is going o be owner-occupied for the majority of the space available (51% or more) then their income of the owner has to be sufficient to service the debt.