Business Credit Center

Commercial real estate financing for your business

Learn the different Business Real Estate Financing options and how to determine which is right for you.

Published: May 15, 2013
Updated: August 29, 2016

Whether you're making property improvements, expanding your business, or managing inventory, expenses come up all the time. The key to success is having the cash flow to cover expenditures and take advantage of unexpected opportunities.

Business Real Estate Financing (BREF) offers up to $750,0001 in real estate-secured loans and lines of credit designed for small business owners and commercial real estate investors. BREF provides financing with low closing costs2 — no application fee and no appraisal fee — just a low 1% origination fee,3 maximum $5,000, due at closing. The funds can be used to purchase or refinance commercial property, or for working capital. And there are a variety of both owner-occupied and investor commercial properties that can be used to secure the financing, such as retail, office, warehouse, light industrial, mixed use, and multi-family residential with five or more units, to name a few.

There are several Business Real Estate Financing options available. To find one solution that's right for you, it's important to understand the differences among the options.

Purchase loans vs. refinance loans

Purchase loans are designed for business owners and real estate investors looking to buy commercial property. Demand for purchase loans has grown significantly in the last few years as individuals regain the confidence to invest in commercial real estate. If you already own your business property, a refinance loan can help you take advantage of today's low interest rates.

Equity loans vs. lines of credit

Other options for commercial property owners include equity loans and lines of credit. An equity loan provides a one-time distribution, so it's ideal for large business expenses, while a line of credit is good for ongoing expenses over a period of time.  

For instance, if you need funds for a one-time expense, such as a parking lot resurfacing, an equity loan makes the most sense. An equity loan provides a lump sum distribution and repayments are made on a fixed schedule.

On the other hand, if you need to fund routine or seasonal expenses, like purchasing additional inventory, consider an equity line of credit. An equity line of credit gives you revolving access to capital, and borrowers have the flexibility to take out money as needed and repay it as their business allows.

Getting approved

When you apply for financing secured by commercial real estate, lenders traditionally look at five key criteria to evaluate both your personal and business history. The first area of review is your business and personal credit ratings, which can indicate how you have handled your credit obligations in the past. Cash flow and the capital you have invested in the company are also taken into consideration. Lenders will also appraise the property being used to secure the financing to determine its current market value. And finally, internal and external economic factors will be considered to understand the effect they have on the ability of a business to repay a loan, as well as the intended use of a loan.

There are a variety of Business Real Estate Financing options available to you. Work with your banker to identify the one that aligns with your specific needs. Once you've made your decision, you can be on your way to realizing your business goals. 


1 Financing from $50,000 to $750,000 for purchase and refinance loans; and $50,000 to $500,000 for equity loans and lines of credit.

2 Based upon analysis of application, appraisal, and origination fees for competing U.S. lenders as compiled by an independent third party research firm on a quarterly basis, beginning April 2016.

3 You will need to pay a nonrefundable deposit of up to $1,000 when accepting the terms of any loan or line of credit. If environmental insurance is required, you will be responsible for this one-time fee. Your deposit will be credited toward the origination fee and the environmental insurance fee, if applicable, at closing. If your deposit exceeds the origination fee and environmental insurance fee, or if it is not required, you will be reimbursed for any overage. You will also be responsible for any mortgage or deed of trust filing cost imposed by a state or other taxing authority. For purchase loans, you will be responsible for title and escrow fees and need to provide proof of funds for the required down payment. In states that require attorney closings, you will be responsible for title-related costs and attorney title work that exceeds $375. All financing is subject to credit approval.

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