# Commercial Loan Calculator

Need a commercial loan right now?  In just four minutes you can submit your commercial loan request to hundreds of commercial lenders using C-Loans.  And C-Loans is free!  Click here to use our commercial loan calculator and to submit your commercial loan request to hundreds of commercial lenders.
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Commercial estate lenders use two to three financial ratios to calculate the size of their commercial loans.  Whichever financial ratio produces the smallest, most conservative commercial loan is the one that the commercial lender will use.

Commercial Loan Calculator and the Three Limiting Financial Ratios

1. The first ratio that a commercial lender will apply is the loan-to-value ratio.  In theory commercial lenders will make commercial loans up to 75% loan-to-value (LTV) on commercial properties, such as office buildings, retail buildings and industrial buildings.  In theory, commercial real estate lenders will also lend up to 80% loan-to-value on multifamily properties (apartment buildings).  In practice, since the Great Recession started, most commercial real estate lenders have cut their LTV's back to 58% to 62% loan-to-value.  One reason the banks are using a more conservative commercial loan calculator is because commercial real estate values have been steadily falling for the last 2.5 years.
2. The second ratio that a commercial lender will use to calculate the size of his commercial loan is the debt service coverage ratio.   First of all, the commercial lender will create a pro forma operating statement in order to estimate the commercial property's net operating income (NOI).  The commercial lender will then divide the NOI by some debt service coverage ratio to calculate the maximum size of the monthly payments that the property can carry.  Then the commercial lender takes out his financial calculator and works backwards to calculate the maximum size of the commercial loan.  The higher the debt service coverage ratio, the more conservative the commercial lender is being.    Few commercial lenders will use a debt service coverage ratio of less than 1.25.
3. If the commercial loan request is for a construction loan, the commercial lender will apply one more financial ratio - the loan-to-cost ratio.  Commercial lenders want their developers to have some skin in the game.  Historically banks required that a commercial real estate developer contribute 20% of the total cost of the project.  Since the start of the Great Recession, however, commercial construction lenders have gotten more conservative.  They are now requiring developers to contribute 30% to 40% of the total cost of the project.

Each of the financial ratios above serves as a commercial loan calculator.  Each ratio produces a maximum loan size.  The commercial lender will then reconcile the above three results by choosing the smallest, most conservative commercial loan amount.

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Need a commercial loan right now?  In just four minutes you can submit your commercial loan request to hundreds of commercial lenders using C-Loans.  And C-Loans is free!  Click here to use our commercial loan calculator and to submit your commercial loan request to hundreds of commercial lenders.