What's Inside This Guide
- Property types eligible for commercial financing
- Key qualification metrics: DSCR, LTV, credit, and experience
- Loan structures and terms you should expect
- Documentation checklist for a bank-ready package
- Why direct bank relationships beat broker channels
Why Commercial Real Estate Remains One of the Strongest Asset Classes
Commercial real estate (CRE) financing is one of the most sought-after lending categories for a reason: income-producing properties generate predictable cash flow, appreciate over time, and offer significant tax advantages. But securing the right financing requires understanding what banks look for—and knowing how to present your deal in the strongest possible light.
At Growth Fund Partners, we work directly with banks and institutional lenders to place CRE deals from $100K to $10M+. This guide shares the same insights we give our clients to help them close faster and at better terms.
What Property Types Qualify for Commercial Financing?
Banks finance a wide range of commercial property types. Each carries different underwriting considerations, but the fundamentals—cash flow, location, and borrower strength—remain consistent.
Multifamily (5+ units)
Apartment complexes, condo conversions
Office Buildings
Class A/B/C office space
Retail & Shopping Centers
Strip malls, standalone retail
Industrial & Warehouse
Distribution, manufacturing, flex space
Mixed-Use Properties
Retail + residential combinations
Self-Storage Facilities
Climate-controlled and standard units
Special-Use Properties
Properties like gas stations, car washes, churches, and hospitality require specialized lenders. These are financeable but typically involve different underwriting criteria and higher rates.
The Key Numbers Banks Evaluate
CRE underwriting is more property-focused than business lending. Banks analyze the deal itself as much as the borrower. Here are the metrics that matter most:
Debt Service Coverage Ratio (DSCR)
DSCR measures whether the property's net operating income (NOI) can cover debt payments. Most lenders require 1.20x to 1.25x minimum.
DSCR = Net Operating Income ÷ Annual Debt Service
Example: Property NOI of $150,000 with $120,000 annual debt = 1.25x DSCR ✓
Loan-to-Value Ratio (LTV)
LTV represents how much of the property's value the lender will finance. Commercial LTVs typically range from 65% to 80% depending on property type and use.
- • Owner-occupied: up to 80% LTV
- • Investment/income property: 65-75% LTV
- • Special-use: 60-70% LTV
Borrower Credit & Experience
While the property drives the deal, borrower strength still matters:
- • Credit score: 680+ for most conventional CRE lenders
- • Net worth: Ideally equal to or greater than the loan amount
- • Liquidity: 6-12 months of debt service in reserves post-closing
- • Experience: Track record with similar property types strengthens the application
Common CRE Loan Structures
| Structure | Term | Best For |
|---|---|---|
| Conventional CRE | 5-25 years | Stabilized income properties |
| SBA 504 | 10-25 years | Owner-occupied, lower down payment |
| Bridge Loan | 6-36 months | Value-add, repositioning, time-sensitive |
| Hard Money | 6-24 months | Fix-and-flip, BRRRR, rehab projects |
| CMBS | 5-10 years | Large stabilized assets ($2M+) |
Your CRE Loan Documentation Checklist
Having a complete loan package ready from day one signals professionalism and accelerates the process. Here's what most lenders will require:
Why Direct Bank Relationships Matter in CRE
In commercial real estate lending, who presents your deal to the bank can matter as much as the deal itself. Here's why working with a firm that has direct bank relationships—rather than a broker network—can make a significant difference:
Right Lender, First Time
Direct relationships mean knowing each bank's appetite, sweet spots, and current capacity—so your deal goes to the right desk immediately.
Faster Decisions
When the lender already knows and trusts the source, packages get reviewed faster and term sheets come quicker.
Better Pricing
Established relationships often translate to better rate holds, reduced fees, and more favorable terms than cold submissions.
Advocacy Through Closing
Direct access to decision-makers means we can address questions, clear conditions, and push deals through credit committee effectively.
Common Mistakes That Derail CRE Deals
Overestimating rental income
Banks underwrite to actual leases and market rents—not pro forma projections. Inflated numbers kill credibility.
Ignoring deferred maintenance
Unaddressed repairs show up in appraisals and inspections. Budget for them upfront in your business plan.
Insufficient reserves
Banks want to see 6-12 months of debt service in reserves after closing. Running thin on liquidity is a common decline reason.
Submitting to the wrong lender
A deal perfectly suited for a credit union goes to a CMBS desk and gets declined. Lender matching is critical.
Incomplete documentation
Missing rent rolls, stale financials, or unsigned leases create delays and erode lender confidence.
Frequently Asked Questions About CRE Financing
What is the minimum down payment for a commercial real estate loan?
Most commercial real estate loans require 15-25% down, depending on the property type, your experience, and the lender. Owner-occupied properties may qualify for as little as 10-15% down through SBA programs, while investment properties typically require 20-30%.
What DSCR do I need for a commercial property loan?
Most lenders require a Debt Service Coverage Ratio (DSCR) of at least 1.20x to 1.25x, meaning the property generates 20-25% more income than needed to cover debt payments. Stronger DSCRs (1.35x+) unlock better rates and terms.
How long does commercial real estate financing take to close?
Timeline varies by loan type: conventional CRE loans typically close in 30-60 days, SBA 504 loans in 60-90 days, and bridge/hard money loans can close in as little as 7-14 days. Having your documentation prepared upfront can significantly shorten the timeline.
Can I get a commercial real estate loan for a mixed-use property?
Yes. Mixed-use properties combining commercial and residential space are financeable. Lenders evaluate the overall income stream and may classify the loan differently depending on the percentage of residential vs. commercial use.
What credit score do I need for a commercial real estate loan?
Most conventional CRE lenders require a personal FICO score of 680+. However, strong property cash flow and experience can offset lower credit scores with certain lenders. Hard money and bridge lenders focus more on the property's value than personal credit.
Ready to Finance Your Commercial Property?
Growth Fund Partners places CRE loans from $100K to $10M+ through direct bank relationships. Check your eligibility in minutes.