What is a commercial real estate loan?

A commercial real estate loan is a mortgage secured by a lien on commercial property as opposed to residential property. Commercial real estate (CRE) refers to any income-producing real estate that is used for business purposes; for example, offices, retail, hotels, and apartments.

What are the types of commercial real estate loans?

1. What are the different types of commercial real estate loans? There are three basic types of commercial loan financing: traditional loans, government-backed Small Business Administration (SBA) loans, and private loans. For all of them, the business or businesses must occupy at least 51% of the square footage.

Is a commercial real estate loan a mortgage?

It’s simply a term that describes a first mortgage on a piece of commercial property. These are your basic, fixed-rate or variable rate loans offered by most commercial lenders that most closely resemble a consumer mortgage.

What is considered a commercial loan?

A commercial loan is a debt-based funding arrangement between a business and a financial institution such as a bank. … This means that, not unlike individual consumers, smaller businesses must rely on other lending products, such as lines of credit, unsecured loans or term loans.

Do you have to put 20% down on a commercial loan?

Determine Your Down Payment Amount

While most home mortgages loan requires a 20% down payment or loan to value criteria, the values can vary when it comes to commercial real estate purchases. Before considering or approving a loan application, most commercial lenders ask for a minimum 30% down payment.

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What is the difference between a commercial loan and a residential loan?

Most residential loans are for 30 years. In contrast, commercial loans are often amortized over shorter periods. With a shorter term loan, it’s less risk for the lender and they get higher payments every month. For you, this means your costs go up.

What is the current interest rate for a commercial loan?

Commercial loan rates are currently in between 2.21% and 13.21%, depending on the loan product. For conventional commercial mortgages the current rates are between 2.21% and 6.43%.

Key Market Index Rates.

KEY MARKET INTERESTS
30 Year Swap 1.716%
5 Year Treasury 1.170%
7 Year Treasury 1.340%
10 Year Treasury 1.430%