This article is part of a larger series on Business Financing.
A commercial real estate (CRE) loan is a mortgage loan used to purchase, refinance, or renovate a commercial property. Many online and traditional lenders offer CRE loans with slightly different terms, costs, and required qualifications. A business owner should consider the purpose of the commercial real estate loan and find a lender that best serves that loan purpose. If more than one lender offers the loan, choose the lender with the rate and terms that best match your needs.
The list below includes the best providers for commercial real estate loans and what each lender is best used for:
- U.S. Bank: Best overall and for long-term owner-occupied commercial real estate loans
- JPMorgan Chase: Best commercial real estate loans for multifamily projects
- SmartBiz: Best online platform for Small Business Administration (SBA) 7(a) commercial real estate loan providers
- Lendio: Best SBA 504 loans for larger projects where borrowers may struggle getting a conventional bank loan
- Wells Fargo: Best conventional bank loans for prime borrowers who have a high net worth
- Northeast Bank: Best for niche or high-risk industries.
U.S. Bank: Best Overall Commercial Real Estate Lender
Owner-occupancy requirement: This is a requirement of the lender that the borrower’s business must occupy a certain percentage of the property being financed—typically 50% or more.
U.S. Bank offers several types of commercial real estate loans, including SBA loans. It’s the best choice for borrowers looking for long-term, owner-occupied real estate loans with terms of up to 25 years. However, with a minimum credit score of 700 required, U.S. Bank does have higher credit requirements than the other lenders on this list.
Even though U.S. Bank only has physical bank branches in 26 states, mainly in the Midwest and western United States, its mortgage products are available nationwide through its website and local branches. In addition, even states without local branches have loan officers available locally to assist businesses with CRE loans.
While you cannot apply directly through its website, you can submit your contact information through a web form or call a toll-free number to get the application process started.
JPMorgan Chase: Best CRE Loans for Multifamily Projects
JPMorgan Chase touts itself as the nation’s leading multifamily lender, promising cost-effective financial solutions with a high-speed loan closing. The maximum loan amount for its CRE loans is $15 million, which increases to more than $25 million for multifamily projects. Newer businesses can benefit from JPMorgan Chase not having a minimum-time-in-business requirement. JPMorgan Chase requires an apartment building to have at least five units to be considered for multifamily financing.
You can contact JPMorgan Chase through its website to get started. You can also submit documents securely online. If you wish to meet with a lender in person, there are 13 branch offices located throughout the United States.
SmartBiz: Online SBA 7(a) Commercial Real Estate Loans
SmartBiz is an excellent choice for SBA 7(a) commercial real estate loans. As there are many requirements specific to Small Business Administration loans, we encourage you to check out our article on SBA 7(a) loans before beginning the application process so you know what to expect.
Rates on SBA loans tend to be lower than online lenders’ rates and traditional bank rates because of the SBA guarantee. You can get financing of up to $5 million for up to 25 years. One other advantage over a traditional bank loan is being able to have a loan-to-value of up to 90%, reducing the down payment required.
There’s a prepayment penalty for loans with a term greater than 15 years if you prepay more than 25% of your loan in the first three years. The fee is charged against the amount you prepaid and is 5% for prepayments in year one, 3% in year two, and 1% in year three.
You can enter your business’s information and go through a prequalification process on the SmartBiz website without impacting your credit score. Check out SmartBiz’s website to get more information or to begin the application process.
Lendio: Best for SBA 504 Loans
Lendio is an excellent choice for SBA 504 loans. An SBA 504 loan is a combination of two loans: one comes from a lender and one from a nonprofit lender known as a CDC. Both loans are closed simultaneously. SBA 504 loans are good choices because they offer up to $14 million in financing for up to 25 years. In addition, SBA 504 loans allow the borrower to go up to 90% loan to value, reducing the down payment compared to a traditional loan.
Our guide on SBA 504 loans goes through the requirements and qualifications needed for the loan. Important guidelines to remember before applying for an SBA 504 loan for commercial real estate include:
- Property must be owner-occupied
- Jobs must be created
- Business must have a net worth of less than $15 million
Lendio is a broker that can match you up with an SBA 504 lender that can help you get the right commercial real estate loan. Check out its website for more information.
Wells Fargo: CRE Loans for Prime Borrowers Who Have a High Net Worth
For commercial real estate borrowers looking for a conventional bank mortgage loan, Wells Fargo is an excellent choice. Wells Fargo provides funding of up to $1 million for five and 10 years, although it can go up to 20 years for larger projects.
One thing to be aware of is that Wells Fargo requires the potential borrower to deposit $1,000 when accepting the conditional approval of any loan or line of credit. It’s nonrefundable if the loan doesn’t close, but if the loan is closed, it’s applied to any applicable fees due at closing. Any unused portion of the deposit is credited to the borrower after closing.
Also, if you pay the loan off within three years, there’s a prepayment penalty of 3% of the principal amount prepaid.
Wells Fargo is a good choice for those looking for their first commercial real estate loan with no years-in-business requirements. You can apply through the Wells Fargo website or at your local branch. To get started, contact Wells Fargo to be set up with a lending specialist.
Northeast Bank: CRE Loans for Niche Industries
Despite being a traditional bank lender, Northeast Bank closes and funds loans faster than most traditional banks. Northeast Bank funds a wide variety of industries, including:
- Gas stations
- Healthcare facilities
- Skilled trades
- Assisted living
The company also offers both SBA and USDA loans.
You can submit your contact information through Northeast Bank’s website or chat with them on the site. The company also has a toll-free phone number and email address to contact them. Reach out today for more information about Northeast Bank’s commercial real estate loan products.
How We Evaluated Top Commercial Real Estate Lenders
When comparing commercial real estate lenders, we examined the terms, rates, and costs of each of the lenders. We also looked at the variety of loan products offered, the time-in-business requirements, and the funding speed of each lender.
While all of the companies on our list of the best commercial real estate lenders provide excellent products, each offers different maximum loan amounts with varying requirements, terms, rates, and conditions. Always compare different lenders and lending products to determine the long-term costs of a CRE loan and choose the one that works best for your business.