Commercial Loans

Who is making commercial loans today? If you need a commercial real estate loan, to whom should you submit your deal? What kinds of lenders are making commercial loans today? There is a pecking order in the commercial financing industry. The lenders with the very best commercial mortgage rates cream the market. If a commercial loan won't qualify with the very cheapest commercial lender, the commercial mortgage deal then goes to the commercial lender with the next best commercial mortgage rates - and so on. The pecking order is as follows: life insurance companies, conduits (CMBS lenders), banks, savings banks and S&L's (known as thrifts), credit unions, mortgage REIT's, and finally hard money lenders. (Visit Our Commercial Loans Center)

Commercial Mortgage Rates

What kind of commercial mortgage rates can I expect? Commercial mortgage rates are typically about 75 to 150 basis points (0.75% to 1.50%) higher than the prime, 30-year residential mortgage rate. For example, suppose you could refinance your personal residence on a 30-year basis at 4.0% today. If you are an "A" quality borrower, you could therefore expect conventional commercial mortgage rates from commercial banks to be between 4.75% and 5.5%. Commercial mortgage rates on SBA loans and USDA loans are typically 2% to 2.5% higher than the prime residential mortgage rate. Therefore, if the banks in town are quoting 4.0% on 30-year home loans, you will probably pay between 6.0% and 6.5% for an SBA loan or a USDA loan. The commercial mortgage rates of life companies and conduits - because the loans are typically quite large ($3MM+) - are a little better than the commercial mortgage rates of the typical bank. You can expect to pay 35 to 75 basis points (0.35% to 0.75%) over the prime, 30-year residential mortgage rate. (Visit Our Commercial Mortgage Rates Center)

Commercial Real Estate Loan

Will I qualify for a commercial real estate loan? Due to the Great Recession, banks are much tougher when they underwrite commercial loans these days. Will you qualify? It all depends on the three C's of underwriting - credit, capacity to repay, and collateral. Let's look at credit first.

Commercial banks are the lenders who are making most of the commercial loans today, and banks require good credit. You will usually need a credit score of at least 680, and a credit score of over 700 is greatly preferred. Now if your credit score is lower than 680, please don't panic. We recently convinced a bank to approve a commercial loan for a veterinarian with a foreclosure on his record (due to a divorce) and a credit score of just 630. And even if a bank won't do your particular deal, there are still scores of hard money commercial mortgage companies willing to make subprime commercial loans. (Visit Our Commercial Real Estate Loan Center)

USDA Business and Industry Loans

What is a USDA Business and Industry loan? Rural areas in America are often very low income areas. Jobs are scarce. This is why many international car companies have opened car manufacturing plants in the rural South in recent years. The wage rates in the rural South are among the lowest in the United States. In order to foster the creation of jobs in rural areas, the Federal government offers a partially-guaranteed commercial loan program called the USDA Business and Industry ("B&I") Loan program.

The USDA Business and Industry Loan Program is modeled after the very successful SBA loan program. The United States Department of Agriculture (USDA) does not actually make these loans. Instead, the USDA merely guarantees qualified commercial loans made in rural areas. The loans are actually underwritten and made by banks. If the construction of a new building or factory will create long-term jobs in a rural area, up to 80% of the loan will often be guaranteed by USDA. (Visit Our USDA Business and Industry Loan Center)