Loan FAQ Library

Commercial

What is a commercial real estate loan?

A commercial real estate (CRE) loan is a mortgage secured by income-producing or business-use property — such as office buildings, retail centers, multifamily apartments (5+ unit...

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Commercial

What is DSCR and why do commercial lenders require it?

DSCR (Debt Service Coverage Ratio) measures a property's ability to cover its loan payments from its own income. It is calculated by dividing Net Operating Income (NOI) by annual d...

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Commercial

What is a commercial bridge loan?

A commercial bridge loan is short-term financing (typically 6 months to 3 years) used to 'bridge' the gap between an immediate need and permanent long-term financing. Common uses i...

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Commercial

What is an SBA 7(a) loan?

The SBA 7(a) loan is the Small Business Administration's flagship lending program, offering loans up to $5 million for a wide range of business purposes including real estate, equi...

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Commercial

What is an SBA 504 loan?

The SBA 504 loan program provides long-term, fixed-rate financing for major fixed assets such as commercial real estate and heavy equipment. It is structured as two separate loans:...

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Commercial

What LTV ratio do commercial lenders typically require?

Commercial lenders typically require a loan-to-value (LTV) ratio between 65% and 80%, depending on property type and loan program. Stabilized, income-producing properties like mult...

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Commercial

What are typical term lengths for commercial real estate loans?

Commercial real estate loans typically have shorter terms than residential mortgages, often 5, 7, or 10 years, with amortization periods of 20–30 years. This creates a balloon pa...

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Commercial

What is a commercial hard money loan?

A commercial hard money loan is a short-term, asset-based loan funded by private investors or companies rather than traditional banks. Approval is based primarily on the property's...

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Commercial

What is a capitalization (cap) rate?

The capitalization rate (cap rate) is a key metric used to evaluate commercial real estate investments. It is calculated by dividing the property's Net Operating Income (NOI) by it...

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Commercial

What is Net Operating Income (NOI) in commercial real estate?

Net Operating Income (NOI) is the annual income a commercial property generates after subtracting all operating expenses, but before deducting mortgage payments (debt service), dep...

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Commercial

What is the difference between recourse and non-recourse commercial loans?

In a recourse commercial loan, the lender can pursue the borrower's personal assets if the property's value does not cover the loan balance after default and foreclosure. The borro...

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Commercial

What documents are needed for a commercial loan application?

A commercial loan application typically requires: current rent roll (list of tenants, lease terms, and rental amounts), last 2–3 years of property operating statements or tax ret...

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Commercial

What is a CMBS loan?

A CMBS (Commercial Mortgage-Backed Securities) loan, also called a conduit loan, is a commercial real estate loan that is pooled with other loans and sold to investors as bonds on...

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Commercial

What is a commercial construction loan?

A commercial construction loan provides financing to develop or significantly renovate a commercial property. Unlike permanent loans, construction loans are typically interest-only...

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Commercial

What are typical commercial loan origination fees?

Commercial loan origination fees (also called points) typically range from 0.5% to 2% of the loan amount, though hard money and bridge loans can charge 2–5 points. A $2,000,000 c...

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