Commercial Real Estate Loan Criteria

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Loan Criteria:

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Loan Size – $200,000 to $150,000,000

Locations – All markets in the USA

Term – 2 to 30 years (fixed)

Amortization – 10 to 30 years; partial or full-term interest-only options available

Origination Fees – 0.5% to 2%

Interest Rates – Treasury or SOFR rates plus a margin

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1. Property Type

Lenders assess the type of commercial property being financed, such as:

• Office buildings

• Retail spaces

• Industrial warehouses

• Multifamily housing (5+ units)

• Hotels

• Special-use properties (e.g., self-storage, medical facilities)

 

2. Loan-to-Value (LTV) Ratio

Typically 65% to 80% of the property’s appraised value.
Lower LTVs are preferred as they reduce lender risk.

 

3. Debt Service Coverage Ratio (DSCR)

Measures the property’s net operating income (NOI) against annual debt payments.

Typical DSCR: 1.20 to 1.50

Example: If annual debt payments are $100,000, the NOI must be at least $120,000 to achieve a DSCR of 1.20.

 

4. Creditworthiness of the Borrower

• Personal and business credit scores are evaluated

• Strong credit profiles can lead to better loan terms

• Guarantors may be required for larger loans

 

5. Borrower Experience

Lenders prefer borrowers with experience managing similar properties or business ventures.

 

6. Down Payment

Typically ranges from 20% to 35%.
Some SBA or special programs may allow lower down payments.

 

7. Property Location

Properties in prime locations are considered less risky and more attractive to lenders.
Market demand and local vacancy rates are also evaluated.

 

8. Financial Statements

Borrowers are typically required to provide:

• Two to three years of personal and business tax returns

• Recent bank statements

• Profit and loss statements

• Balance sheets

 

9. Appraisal

A professional appraisal is required to determine the property’s market value.

 

10. Lease Agreements (if applicable)

For income-producing properties, lenders require lease agreements to assess income stability and cash flow.

 

11. Loan Purpose

Clear documentation of how the loan proceeds will be used (e.g., purchase, refinance, or renovations).

 

12. Interest Rates and Loan Terms

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Rates and terms depend on:

• Loan type (fixed or variable)

• Borrower risk profile

• Loan term (typically 5 to 25 years)

 

13. Collateral

The property typically serves as collateral.
Additional guarantees or cross-collateralization may be required.

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