CRE Loans

Every business needs a home base, whether that’s a distribution warehouse or a high-rise office. Renting that space puts money in someone else’s pocket, and is a missed opportunity for building equity. Buying commercial real estate, on the other hand, represents a big upfront investment. So how do small businesses solve the problem? The answer is CRE loans.

Commercial Real Estate Loan Benefits

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Loans make commercial property more affordable.

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Wide variety means any business can find the right loan.

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Many different types of properties can be financed.

What is a CRE loan?

There are loan options to match every kind of business need. Buy and hold business property or buy and resell it to grow income. Short-term loans help you close on prime properties before the competition. Long-term loans let you spread out real estate costs over 10 years or more. Even if your credit is under repair, there’s a CRE loan that can benefit your business. Grow your assets every month instead of sending your profits out the door. Ask your broker about finding the CRE loan that fits your specific needs.

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The cost of Commercial Real Estate is typically much higher than that of a home.

The goal of a commercial real estate purchase is to generate revenue, either as a location for conducting business, or as a property to be let to business or residential renters. Because of this, there are special requirements needed to qualify. One of those requirements is an adequate Debt-Service Credit Ratio (DSCR). To calculate your own business’s DSCR, divide your net operating income by your current debt obligations. Lenders use this score to determine if the company can afford to take on more debt. In general, a score of 1.25 or higher is preferred, but each lender may have different requirements. The property being purchased is typically used as collateral on the loan.

Interest rates, maturities, down payments, and maximum amounts vary by lender across a broad spectrum. Another term to be familiar with is the loan to value ratio or LTV. This is the loan amount divided either by purchase price or appraised value of the property. LTVs range between 65% to 100% depending on the lender.

Traditional and non-traditional lenders available to you

In Capital Accessible Through Our Network

Fastest time to funding through Platz Capital

Owner-Occupied

Some lenders, like the SBA, only fund CRE if you’ll be using part of the property for your own business. That means you need to occupy at least 51% of the building’s available space. You can rent the rest of the space out to other businesses as a way to generate additional income

Investment

Investment properties are income-generating; mainly hotels, apartments, office buildings, and retail centers. These provide regular income that can offset the cost of the loan. Loans for investment properties use the net operating income, or NOI, in the loan calculation.

Fix & Flip

Yes, CRE loans can be used to “flip” commercial properties. These loans cover not only the purchase of the property but also renovation costs. Fix & Flip loans are short-term and usually free from prepayment penalties. Proceeds from the property sale can satisfy the loan, letting you move on to the next opportunity.

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Step 1 – Preapplication

This is the step the banks miss. You’ll give us simple information that will help us position you for funding.

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Step 2 – Financing Selection

Our team sources and presents offers along with the critical information you need to make decisions.

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Step 3 – Closing

We facilitate the process from final selection to closing to create the smoothest process possible.

BEGIN THE PRE-QUALIFICATION PROCESS

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F.A.Q

Q. What is NOI?
NOI stands for Net Operating Income and it’s used to calculate property values. The simplest formula for NOI is Total Revenue – Operating Expenses = NOI (based on one year). It shows whether or not a property is covering its expenses or if it’s draining income from the company.
Q. Can CRE loans cover mixed-use properties?
Yes, CRE loans can cover mixed-use commercial property. A typical example of a mixed-use property is a building with retail shops on the ground floor and offices on the top floors. Both offices and retail spaces qualify as CRE.
Q. What are the different types of commercial buildings?
Commercial real estate has many forms, but the most easily recognized are hotels, offices, retail spaces, apartments, and industrial use properties. If you have a property need that doesn’t fit into one of these categories, let your broker help you find the right loan.
Q. When does residential property become commercial?
The rule when it comes to multifamily housing is four or more units, but some lenders have different requirements. Less than four units are usually considered residential property.