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The 3 Best Kept Secrets About Commercial Real Estate Loans

Venturing into the world of commercial real estate can often feel like navigating a labyrinth filled with financial complexities. But what if there were hidden pathways, known only to a few, that could lead you to better opportunities and smarter investments?

In this insider’s guide, we unveil the 3 best-kept secrets about commercial real estate loans, secrets that have the power to transform your investment strategies and propel your business toward unprecedented success.

How can I buy commercial property with no money down?

Best Kept Secrets About Commercial Real Estate Loans: 1 Shocking Truth

When it comes to business loans and real estate financing, the top five frequently asked questions business owners often ask are:

  • “Am I eligible for a commercial real estate loan?”
  • “How do I get a commercial real estate loan?”
  • “How much do you have to put down on a commercial loan?”
  • “What kind of loans are available for commercial property?
  • “How can I get a loan for a commercial property without money down?”

The answers may not only surprise you but may change your business forever.

What if I told you that the real estate loan qualifications are much easier than you think?

What if I told you that the minimum requirements for a business real estate loan are often less than those of traditional banks?

What if I told you that they are a lot better than a hard money loan from a hard money lender?

Perhaps you’re about to read the best-kept secrets about the SBA 7(a) Commercial Real Estate Loans.

Please read below for the secret ingredient many business owners need to acquire commercial property to grow their businesses.

Can you get a commercial loan with no money down?

How about a low down payment?

You can get 100% financing at low-interest rates, with no down payment required for the SBA 7(a) commercial real estate loans. You read that right!

That means possibly zero down payment!

What’s the catch?

You will need some form of assets or collateral to secure and qualify for this type of financing. These assets will stand instead of the down payment.

Business owners, are you currently renting your property?

If given a choice, would you prefer to build equity in your business every month or just be left with canceled rent checks?

Did you know there are non-bank business lenders who can pre-qualify you for a real estate loan?

Did you know they can do this literally in five minutes or less with no impact on your credit score and with desirable interest rates?

The question is whether or not it makes sense to keep your money by investing it in your business versus paying high, exorbitant rents?

Have you ever wondered how you can do that?

Very often, owning is less expensive than renting. By purchasing the property and instead of paying rent, you can build equity in your company, while decreasing your monthly payments.

  • The result is an increase in cash flow.
  • The additional cash flow then provides an opportunity to grow and expand your business.
  • The free cash can be in the form of other new hires, technology, inventory, or advertising.
  • Do you have a considerable rental expense?
  • Does replacing that rental payment with a commercial mortgage finance loan option make sense?
  • Do I buy Commercial or do I Lease?

Here is the general rule of thumb.

If you plan on occupying the same space for at least seven years, the real estate purchase is usually less expensive than the rental.


Commercial real estate purchases are much more expensive upfront than your rental fees.

The bigger question is whether you have the purchase price funds to invest in the down payment for the mortgage without liquidating your net worth.

How much do you have to put down on a commercial loan?

The purchase of commercial real estate is much more expensive upfront than your rental fees.


Let me ask you a question.

Are you better off taking money to use as a down payment or investing that money in your business to grow and generate more annual revenue over time?

The answer is obvious.

What most business owners don’t know, and the banks won’t tell them, is that an SBA commercial real estate loan is affordable.

A $1 million SBA business real estate loan is just under $7,000 a month.

Compared to your monthly rent, that could be a steal!

Maybe you have a sizeable upcoming balloon payment with a bank loan? Perhaps you should consider refinancing your mortgage.

By refinancing, you might be able to improve your rate, term, or even your monthly payment.

What kind of loans are available for commercial property?

Types of Commercial Real Estate Loans

Can you tell me the differences between an SBA 504 Loan and the SBA 7(a) Loan and loan amounts?

The loan size is the first significant difference between the SBA 504 and the SBA7(a).

The SBA 504 has a minimum loan size of $125,000 and a maximum of $20M (or more).

The SBA 7(a) has a minimum of $50,000 and a maximum loan of $5 Million.

What Are Current Commercial Real Estate Loan Rates?

The loans offered through the Small Business Administration’s 504 and 7(a) have fixed rates and variable rates, respectively. (There are some fixed-rate options on the 7(a)).

The loan terms for the 504 are 20 years for real estate and 10 years for an equipment loan with a monthly repayment schedule.

These SBA options are far superior to either a revolving equity loan, equity LOC (line of credit), business lines of credit (LOC), or business credit cards.

The SBA 7(a) loan is twenty-five years for commercial property and up to 10 years for business equipment and an acquisition.

The 7(a) loan offers 5 – 7 years for working capital and a weighted average for mixed-use.

Here is the loan overview, application process, and what you need to know about the loan repayment and the SBA 7(a) Commercial Real Estate Loans.

  • These are 25 Year Fully Amortizing Term Loans
    No Balloon Payments
    Minimal Out of Pocket Expenses
    Build Equity in Your Business

You are currently looking at variable rates.

These rates are approximately between 5.50% and 6.75% and spread (prime rate plus) between 1.5% to 2.75% (and are subject to change).

What are the general eligibility and credit requirements?

Here are the general requirements for the business owner for the property through the Small Business Administration.

  • FICO score 675 (no bad credit) Minimum
  • Good Credit History and strong financials
  • Cash Flow $1.15 debt service coverage – the debt service coverage ratio (DSCR) measures your available cash flow to pay your current debt obligations.
  • 3 Yrs. Business Tax Returns
  • Bank checking accounts and saving accounts
  • Interim Balance Sheet
  • P&L
  • Net Operating Income
  • 51% Owner-Occupied
  • Commercial Real Estate
  • Zoned for Commercial or Industrial
  • 90% LTV Ratio
  • 2 Plus Years in Business (established businesses only)
  • Personally Guaranteeing

You will not qualify if you are a developer or landlord.
If you are a private investor looking for an investment property loan.
You do not occupy at least 51% of the property.

  • You will not qualify if you have a bankruptcy in the last three years.
  • There can be no foreclosures in the previous three years and no prior default on government-backed loans.
  • There can be no outstanding tax liens and no construction on an empty lot.
  • Lastly, there can be no building a new structure.
  • No investment properties or real estate investing.
  • No real estate flip projects for private real estate investors.

Once you get pre-approved, the lending process generally goes like this:

• Personal Financial Information, including personal credit score
• Loan Information, including the amount of purchase or refinance
• Business Ownership information
• Property Ownership information
• Business Tax returns – last three years
• Individual Tax returns – previous three years
• Year to Date P&L and Balance Sheet

There will be a Letter of Intent as the loan process moves along.

You can also expect to pay a refundable $5,000 deposit application fee. After credit approval, there will be a property appraisal value and an environmental review (Phase I).

The closing will have additional Business Documentation, the lease agreement, the loan document preparation, and closing costs.

If all things go smoothly during the application process, expect at least 45 days from start to finish. You can use our loan calculator to know all your costs.

Even after the origination, packaging, and referral fees, these SBA loans, rates, and fees are immensely cheaper than alternative loans from alternative lenders, a traditional bank, or even insurance companies.

Do You Need A Down Payment for An SBA Loan?

Why SBA7(a) Loans are the Secret Ingredient

Many small business owners would love to acquire commercial real estate to grow their companies.

As you may know, the Small Business Administration (SBA) is a designated government-sponsored agency.

This agency makes available these businesses commercial real estate loans. You no longer need private mortgage lenders or mortgage brokers to get your business finance money loan.

Why look for a bridge loan or, worse, hard money loans?

Especially with today’s current low mortgage rates. The SBA 7(a) and SBA 504 commercial loan programs are especially critical in today’s marketplace.

Operational requirements need a capital loan to grow. Because of the previous credit crisis, there is a shortage of bank and business loan lenders that provide real estate loans for small businesses.

Uncle Sam recognizes that the most significant recession since the great depression stifled economic growth in America, especially with business loans.

With many banks, financial institutions and credit unions teetering on collapse, these business lenders all but closed their doors to small businesses.

Washington D. C. recognized the need to bolster the economy. One of the aggressive steps they took was to encourage the use of the SBA programs without dealing with government district offices.

Now, remember, the Small Business Administration doesn’t make the loan. The role the SBA plays is to facilitate the financing and make it somewhat more accessible for the bank or lending institution to get you approved.

The SBA accomplishes this by guaranteeing up to 90% of the business loan secured by the banks or those lending institutions that specialize in financing by the SBA.

Another huge advantage of the SBA real estate loan is the terms. Quite frequently, commercial loans have terms of 5 to 10 years.

This program by the SBA enables you to amortize the loan over 20 to 25 years.

These terms, of course, are a tremendous relief on the cash flow of any business.

When you combine the fact that you can do this without a down payment, you can see how this is a powerful one-two punch.

You can keep your cash working for you while reducing your monthly payments.

Think about it.


The majority of conventional commercial real estate loans offered today require a substantial down payment.

Traditionally the LTV (Loan to Value Ratio) is 90%.

However, many institutions have cut their loan-to-value ratio from 75% down to 58% to 63%.

You can receive a 25-year fully amortizing
repayment term loan without balloon payments.

With 100% financing, if you qualify for the loan amount, you can have a minimum of out-of-pocket expenses with a low-interest rate.

This funding means rather than tie up your capital in a building and down payments, you can be putting it to work growing and expanding your business.

Imagine all these benefits plus a 3-year prepayment penalty declining from 5% in year one to 1% in year three.

The qualifications are simple.

It would be best if you have a FICO personal credit score of 675, and you must occupy at least fifty-one percent of the property.

You must be prepared to have this loan 100% collateralized.

This type of financing is not an unsecured business loan. You must take all your inventory, receivables, and equipment encumbered for the life of the loan.

You need to have the cash flow still to make the loan payment even without the down payment. You need the proper annual revenue to support the loan.

On top of this, you will have a blanket guarantee extending to your personal residence.

We suggest speaking to an online lender like Sunwise Capital rep and calling 888.456.9223 for additional information or Apply Now.


What is a Commercial Real Estate Loan?

A Commercial Real Estate Loan is a type of financing used to purchase, develop, or refinance commercial properties. Unlike residential loans, these are specifically for properties like office buildings, retail spaces, warehouses, and apartment complexes.

How do Commercial Real Estate Loans differ from Residential Loans?

Commercial loans typically involve larger amounts, shorter repayment terms, and higher interest rates. The underwriting process also heavily focuses on the property’s income-generating potential and the borrower’s business financials, unlike residential loans, which focus more on individual creditworthiness.

What are the types of Commercial Real Estate Loans?

Common types include traditional mortgages, bridge loans, hard money loans, and SBA loans like the 504 and 7(a) programs. Each type has its own terms, conditions, and use cases.

What are the typical terms for a Commercial Real Estate Loan?

Terms can vary widely, but generally, they have 5 to 20-year terms, with amortization periods often longer than the loan term, resulting in a balloon payment at the end.

How much down payment is needed for a Commercial Real Estate Loan?

Down payments typically range from 20% to 30% of the property’s purchase price, depending on the lender and the type of property.

What are the eligibility criteria for obtaining a Commercial Real Estate Loan?

Criteria include a good credit score, a solid business plan, profitable business operations, and sufficient collateral. Lenders will also assess the property’s value and its potential to generate income.

Can startups or new businesses get Commercial Real Estate Loans?

It’s challenging but possible. Lenders might require additional collateral, a higher down payment, or a personal guarantee.

What documents are needed to apply for a Commercial Real Estate Loan?

Required documents typically include business and personal financial statements, tax returns, property appraisals, business plans, and lease agreements.

How long does it take to get a Commercial Real Estate Loan?

The process can take anywhere from a few weeks to several months, depending on the loan type, lender, and complexity of the transaction.

Are there prepayment penalties for Commercial Real Estate Loans?

Commercial loans include prepayment penalties, varying based on the lender and the specific loan agreement.

Mark Kane 2

Mark J. Kane, Founder & CEO of Sunwise Capital, is a distinguished entrepreneur with over 16 years in business financing. Beginning as a psychologist, he quickly became a trailblazing Hospital Administrator. Mark has built multiple ventures, notably accelerating a startup to $18M within months. His transition to Sunwise Capital stems from a deep-seated desire to empower business owners with strategic financial solutions. Recognized for his expertise, Mark's leadership at Sunwise Capital reflects his commitment to fostering business growth and success. Click the link to read more about the author.

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