If you’re looking to scale your real estate investments or buy property for your business, chances are you’ll need a commercial real estate loan. But qualifying—and applying—for one isn’t as simple as filling out a form online. It’s a strategic process that depends on your financials, your property’s potential, and choosing the right lending partner.
In this guide, we’re going to walk you through exactly how to qualify and apply for a commercial real estate loan, what lenders are really looking for, and how to prepare so you can close with confidence.
What Is a Commercial Real Estate Loan?
A commercial real estate loan is a financing solution used to purchase, develop, or refinance income-producing properties. These properties can include multi-family apartment buildings, retail plazas, warehouses, office spaces, hotels, or even industrial parks.
Unlike residential mortgages, commercial loans are usually made to a business entity (LLC, corporation, or partnership), and the underwriting is based heavily on the property’s income-generating ability.
Who It’s For
These loans are designed for entrepreneurs, property developers, and real estate investors who are:
- Expanding a portfolio of rental properties
- Opening or relocating a business to a new facility
- Developing land or engaging in construction projects
- Refinancing existing debt into better terms
Where to Find CRE Loans: Types of Lenders
When it comes to commercial real estate lending, choosing the right type of lender can have a big impact on how smoothly your deal goes—and how much it costs in the long run.
Banks and Credit Unions
Traditional banks offer competitive interest rates and longer-term stability, but they come with tight credit requirements and a slow, documentation-heavy approval process. They tend to favor borrowers with excellent credit and low-risk projects.
Private Direct Lenders (like eFunder Capital)
Private lenders are more flexible and often specialize in speed and deal structure creativity. They’re ideal for investors who need fast approval, are working on value-add or fix-and-flip deals, or don’t meet the strict requirements of a bank. At eFunder Capital, we fund deals based on property performance and borrower experience—not just your credit score.
Non-Bank Institutional Lenders
Insurance companies, pension funds, and real estate investment firms also fund large-scale commercial projects. These players are usually involved in high-ticket financing—$5M and up—and offer competitive rates but extensive due diligence.
SBA-Backed Lenders
For owner-occupied commercial properties, SBA commercial real estate loans through the 504 or 7(a) programs provide long-term financing at reduced down payment requirements. However, the approval process can be lengthy and highly regulated.
Types of Commercial Real Estate Loans
| Loan Type | Best For | Pros | Cons |
| SBA 504 and SBA 7(a) Loans | Business owners purchasing owner-occupied | Low down payment, long terms, fixed rates | Long approval timeline, strict use requirements, more paperwork |
| Conventional Commercial Loans | Experienced investors or business owners with strong credit | Competitive rates, flexible terms | High credit and income standards, slower process |
| Bridge Loans | Investors needing fast funding for acquisitions or acquisitions or flips | Fast closing, minimal red tape | Higher interest rates, shorter repayment periods |
| Construction Loans | Builders and developers starting new construction projects | Flexible funding tied to construction progress | Requires detailed plans, experienced contractors, and ongoing oversight |
| DSCR-Based Loans | Real estate investors with strong rental income but limited documentable income | Asset-based underwriting, less emphasis on borrower’s income | Higher interest rates, may require larger down payment |
There’s no universal commercial loan—it all depends on your project, risk tolerance, and timeline. Here’s a breakdown of the most common types, how they work, and who they’re best suited for.
SBA 504 and SBA 7(a) Loans
These are government-backed loans designed to help small businesses buy, renovate, or build commercial property. SBA 504 loans, for example, are ideal for buying owner-occupied buildings with as little as 10% down. The SBA guarantees part of the loan, which lowers the lender’s risk and gives borrowers access to long-term, fixed-rate financing.
Conventional Commercial Loans
Conventional loans are issued by banks and other financial institutions. They’re not backed by the government, which means lenders set their own guidelines. You’ll usually need strong credit, stable income, and a higher down payment (often 25–30%).
Bridge Loans
Bridge loans provide short-term financing to “bridge the gap” between immediate cash needs and long-term solutions. Investors often use them to purchase a property quickly, complete renovations, or cover holding costs before refinancing into a permanent loan.
Construction Loans
These loans fund ground-up developments or major renovations. The loan is disbursed in stages (called “draws”) based on project milestones. Once construction is complete, borrowers typically refinance into a long-term loan.
DSCR-Based Loans
Some lenders offer DSCR-based loans, where the focus is on the property’s cash flow—not the borrower’s tax returns or income history. This is especially useful for investors with high-performing properties but unconventional income structures.
Ready to Fund Your Next Deal?
Choosing the right commercial real estate loan—and the right lender—can make all the difference in your investment outcome. You don’t have to guess or settle for rigid bank timelines. You need speed, transparency, and expertise.
At eFunder Capital, we specialize in customized lending solutions for investors, developers, and entrepreneurs nationwide. Whether you need an SBA loan, a fast bridge loan, or a long-term rental portfolio refinance, we’ll guide you every step of the way.
✅ Get personalized loan options
✅ Understand your borrowing power
✅ Close faster with direct access to decision-makers
Let’s build something big. Contact us now to get prequalified or speak with a commercial lending expert.
Commercial Real Estate Loan Requirements
Every lender has its own criteria, but here’s what they almost all want to see.
Borrower Qualifications
- Credit Score: A minimum of 660 is standard, but 700+ puts you in a stronger position.
- Cash Reserves: Expect to invest 10–30% of the total project cost.
- Experience: For investors, a history of successful projects increases trust.
- Debt-to-Income Ratio (DTI): Keep it below 45% for better terms.
- Debt Service Coverage Ratio (DSCR): Most lenders require a DSCR of 1.25 or higher, meaning your property’s income should be at least 125% of the loan payment.
Property Requirements
- Zoning and Use Compliance: The property must be zoned for commercial use.
- Appraisal and Condition: It should appraise close to or above the purchase price.
- Stability and Cash Flow: Lenders want properties with reliable tenants and lease structures.
If you’re unsure whether you meet these commercial real estate loan requirements, reach out to a commercial loan advisor early—so you don’t waste time chasing the wrong product.
Step-by-Step: Commercial Real Estate Loan Process
The commercial real estate loan process can stretch anywhere from 30 to 90 days. Here’s how to navigate each step:
Step 1: Prequalification
Get a quick estimate of your borrowing power based on your credit profile, business history, and investment strategy. At this stage, lenders assess your high-level eligibility.
Step 2: Gather Your Documents
You’ll need:
- Business and personal tax returns (2–3 years)
- Bank statements
- Rent roll (for income properties)
- Operating agreement or business license
- Purchase agreement or property details
Step 3: Loan Underwriting and Appraisal
Once your initial file is submitted, underwriting begins. Your lender will:
- Analyze financial ratios like DSCR
- Order a third-party appraisal
- Perform background checks and credit pulls
- Review lease agreements, if applicable
Step 4: Final Approval and Closing
If the underwriting checks out, you’ll receive a Loan Commitment Letter or Term Sheet. Then comes title work, legal review, and signing. Funds are disbursed shortly after closing.
Conclusion: Get Ready to Secure Your Commercial Loan
Qualifying for a commercial real estate loan doesn’t have to be overwhelming—if you know the process and prepare ahead of time. Understand the requirements, choose the right loan type, and work with a lender that specializes in your goals.
Whether you’re investing in a new income property or securing a location for your business, the right loan can unlock major growth.
Ready to get started? Talk to a real lending expert at eFunder Capital and get prequalified today.
