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: April 23, 2019

Whether you're making property improvements, expanding your business, or managing inventory, expenses come up all the time. One 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 $1 million 1 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
  • No appraisal fee
  • Low 1% origination fee, 3 maximum $5,000, due at closing3

The funds can be used to purchase or refinance commercial property, or to access equity for a variety of business needs. 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 options available. To find a solution that may be right for your business, 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. The 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 may help you take advantage of today's interest rates, which may be lower than what you have now.

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, or working capital over a period of time. An equity loan provides a lump sum distribution and requires repayments on a fixed schedule. For instance, if you need funds for a one-time expense, such as a parking lot resurfacing, an equity loan may make the most sense. An equity line of credit gives you revolving access to capital, giving borrowers the flexibility to take out money as needed and repay it as their business allows. If you need to fund routine or seasonal expenses, like purchasing additional inventory, consider an equity line of credit.

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:

  • 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 considered.
  • The appraised value of the property being used to secure the financing to determine its current market value.
  • Internal and external economic factors, which 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. 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 $1 million on purchase and refinance loans in first lien position; $50,000 to $500,000 for lines of credit, equity loans, and refinance loans in second lien position. Maximum $500,000 for cash-out. All financing is subject to credit approval.

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.

3 You will need to pay a deposit of up to $1,000 when accepting the terms of any loan or line of credit. The deposit is nonrefundable, unless the loan closes or line of credit opens, in which case the unused portion of the deposit (if any) will be returned or credited to you after closing. If environmental insurance is required, you will be responsible for a one-time fee of $1,866. You will also be responsible for any mortgage or deed of trust filing fee imposed by a state or other taxing authority. In states that require attorney closings, you will be responsible for title-related costs and attorney title work that exceeds $375. For purchase loans, you will be responsible for title and escrow fees and need to provide proof of funds for the required down payment.