What is a commercial real estate loan?
A commercial real estate loan finances property used for business or income: apartment buildings of five or more units, retail, office, industrial, self-storage and hospitality. Lenders size it on the property's net operating income, debt service coverage and loan to value, along with the sponsor's experience and liquidity.
Commercial real estate loan options
Loan types
- Acquisition
- Refinance and cash-out
- Bridge and value-add
- Construction and renovation
What lenders look at
- Net operating income and DSCR
- Loan to value
- Sponsor experience and liquidity
- Tenant quality and lease terms
What to have ready
- Rent roll and trailing 12-month operating statement
- Purchase contract or current mortgage statement
- Sponsor resume and personal financial statement
- Entity documents
How commercial lenders size a loan
Commercial loans are underwritten property by property. Lenders start with net operating income, then test the loan against debt service coverage and loan to value. Some also look at debt yield, which is net operating income divided by the loan amount. Sponsor experience, liquidity and tenant quality shape the final terms.
Our CPA-led review of the rent roll and operating statements shows where the property lands on each test before it goes to a lender.
How we structure and place your loan
For commercial transactions, Front Street evaluates the property and the sponsor, structures the request and presents it across hundreds of lending sources, including banks, credit unions, life insurance companies and private capital providers.
From first review to closing
Tell us about it
A short intake or a call. Progress saves as you go.
CPA-led underwriting
We analyze the numbers, structure and documents before anything moves forward.
Term sheet or placement
On select investor programs, qualifying deals receive a term sheet from us. Other financing is structured and presented to sources in our network.
Approval and closing
Final approval, appraisal, title and insurance through funding. Steps vary by program.
Commercial real estate loan FAQs
How is a commercial loan different from a residential investor loan?+
Residential investor loans cover 1–4 units and lean on standardized guidelines. Commercial loans are underwritten property by property, on operating income, tenant quality and the sponsor.
What DSCR do commercial lenders want?+
It varies by lender and property type. We review your operating statement first and show you where the property lands before it goes to a lender.
Do you finance owner-occupied commercial property?+
Yes, often through SBA 7(a) or 504 programs, which offer longer terms and lower down payments.