Commercial Real Estate Loans

Commercial real estate loan is a term used to describe a loan made for the purpose of purchasing or refinancing a piece of commercial real estate. Commercial real estate loans are a specific type of commercial loan and are usually available from lenders who specialize exclusively in commercial real estate loans. Commercial real estate, like all real estate, is usually purchased by paying a small percentage of the total purchase price in cash, usually ten to twenty percent, and paying the remainder of the purchase price by obtaining a commercial real estate loan. In exchange the commercial real estate loan is almost always secured by the real estate in question and therefore, is a relatively low risk type of loan for many lenders. Because of the relatively low risk nature of commercial real estate loans there are numerous lenders specializing in offering such business loans. Assuming the purchaser is credit worthy and the property being purchased meets certain qualifications, a purchaser usually will have more than one choice of commercial real estate loan and will be able to opt for the most favorable. There is usually a prevailing commercial real estate loan rate that will be available to qualified purchasers. In the case of a purchaser who does meet the lender’s creditworthy requirements, such purchaser will usually only be able to secure a commercial real estate loan at an above market rate.