The Difference Between Business and Commercial Real Estate Loans

When seeking financing for your company, it's easy to confuse business loans with commercial real estate loans. While both are crucial funding tools for business owners, they serve very different purposes. Understanding the differences can help you choose the right loan for your needs—and avoid costly mistakes.

At Commercial Partners of Texas, we help business owners and investors across Houston and the state of Texas navigate complex financing options. Here's a breakdown of how business loans and commercial real estate loans differ.

What Is a Business Loan?

A business loan is a broad category of financing used for a variety of company needs. It’s typically unsecured (or partially secured) and is based on your company’s financial performance, creditworthiness, and cash flow.

Common Uses of Business Loans:

• Purchasing equipment or inventory

• Covering payroll and operating expenses

• Marketing and advertising campaigns

• Working capital during slow seasons

• Debt consolidation

Types of Business Loans:

• SBA Loans

• Term Loans

• Business Lines of Credit

• Equipment Financing

• Merchant Cash Advances

Business loans are not tied to real estate. They’re usually shorter in term (1–10 years) and can be used for anything that supports your business operations.

What Is a Commercial Real Estate Loan?

A commercial real estate loan (CRE loan) is specifically used to purchase, refinance, or develop income-producing property. These loans are asset-backed—meaning the real estate serves as collateral—and are generally long-term in nature.

Common Uses of CRE Loans:

• Buying an office, retail, industrial, or multifamily property

• Refinancing an existing commercial mortgage

• Ground-up construction or property redevelopment

• Owner-occupied or investment properties

Types of Commercial Real Estate Loans:

• Life Insurance Company Loans

• CMBS Loans (Commercial Mortgage-Backed Securities)

• Bank Loans

• Bridge Loans

• Hard Money Loans

• SBA 504 Loans (for owner-users)

CRE loans are more complex than business loans and often require detailed underwriting, property appraisals, and third-party reports. They also typically have lower interest rates due to their collateralized nature.

Key Differences at a Glance

Feature	Business Loan	Commercial Real Estate Loan
Purpose	General business needs	Purchase/refinance real estate
Collateral	May be unsecured or lightly secured	Secured by the property itself
Loan Term	Short to medium (1–10 years)	Long-term (5–30 years)
Interest Rates	Generally higher	Generally lower
Approval Factors	Business credit, revenue, time in biz	Property income, borrower financials
Loan Amounts	Typically smaller	Larger, starting in the hundreds of thousands

Which Loan Do You Need?

If you’re growing your business and need funds to operate, a business loan is likely the better fit. But if you're looking to acquire or refinance an office building, strip center, warehouse, or multifamily property, a commercial real estate loan is the right path.

At Commercial Partners of Texas, we specialize in arranging competitive commercial real estate loans across Texas—from $500,000 to over $50 million. Whether you're an investor or an owner-user, we’ll tailor a financing solution that aligns with your goals.

Ready to Explore Your Loan Options?

We make commercial real estate financing easy and efficient. Contact us today to discuss your project:

📞 832-607-1113📧 george@amerimort.com🌐 www.amerimort.com

Commercial Partners of Texas – Houston’s Trusted Source for Commercial Real Estate Financing