How to Get a Commercial Real Estate Loan

Commercial real estate financing is more complex than residential mortgages. There are more loan types, more underwriting variables, and more moving parts. But the process becomes manageable when you understand what lenders are evaluating and what to prepare.

Here's a practical guide to getting a commercial real estate loan.

Step 1: Identify Your Loan Type

The right loan depends on how you plan to use the property:

• Owner-occupied: SBA 504, SBA 7(a), or conventional owner-occupied CRE
• Investment property: Conventional CRE, DSCR, or agency (for multifamily)
• Value-add or transitional: Bridge loan, then permanent financing after stabilization
• Construction: Construction loan, then permanent takeout

Step 2: Understand What Lenders Underwrite

For investment properties, the primary underwriting metric is DSCR — the property's net operating income relative to its debt service. For owner-occupied properties, the borrower's business cash flow takes precedence. Both types require an appraisal.

Key metrics lenders evaluate:

• Loan-to-value (LTV) — typically 65 to 80% depending on property type and loan program
• DSCR — typically 1.20x or higher
• Borrower credit score — typically 660 to 700+ depending on program
• Property condition and location
• Lease terms and tenant quality (for investment properties)

Step 3: Gather Your Documents

For investment properties:

• Current rent roll
• 2 years of property operating statements
• Lease agreements
• Personal financial statement and tax returns
• Entity documents

For owner-occupied properties, add your business financials — tax returns, P&L, balance sheet, and bank statements.

Step 4: Get an Appraisal

Lenders order their own appraisal — you can't provide one yourself. The appraisal determines the property value that drives the LTV calculation. Factor in 2 to 4 weeks for appraisal turnaround and order it as early as possible.

Step 5: Work with the Right Lender

CRE lenders specialize. A lender that does multifamily well may not have the same appetite or pricing for retail or industrial. A bridge lender has different criteria than a permanent lender. Working with a broker who knows the CRE lending market can significantly improve your rate, terms, and probability of approval.

Timeline

Conventional CRE loans typically take 45 to 60 days from application to closing. Bridge loans can close in 14 to 21 days. SBA programs typically take 30 to 60 days through a PLP lender. Build your financing timeline into your purchase contract accordingly.

KQT Advisors is a commercial loan broker and does not make lending decisions. All loan approvals, rates, and terms are subject to lender underwriting. Information in this article is for general informational purposes only.