Commercial Loans

Commercial loans are financing products provided by banks, credit unions, or alternative lenders to businesses (not individuals) for business-related purposes—like buying property, equipment, or covering operational expenses.

What Are Commercial Loans Used For? Few examples below

Types of Commercial Loans

1. Commercial Real Estate Loans (CRE)

• Used to buy or refinance owner-occupied or investment properties.
• Typical loan term: 5–20 years, amortized over 20–30 years.
• Often requires 20–30% down payment.
• Examples: office buildings, apartment complexes, shopping centers.

2. SBA Loans (Government-Backed)

Backed by the U.S. Small Business Administration (SBA), these loans have lower rates and longer terms.

a. SBA 7(a) Loan

• Most popular.
• Up to $5 million for working capital, expansion, equipment, or real estate.
• erms: 10–25 years.

• b. SBA 504 Loan
• For long-term, fixed-asset financing (real estate, equipment).
• Structure: 50% bank loan, 40% CDC (Certified Development Company), 10% down payment.

3. Business Lines of Credit

• Revolving credit — similar to a credit card.
• Access up to a set limit, only pay interest on the amount drawn.
• Useful for managing cash flow, seasonal expenses.

4. Equipment Loans

• Secured by the equipment being purchased.
• Easier to qualify since it’s self-collateralizing.
• Terms: 3–10 years, depending on the asset’s lifespan.

5. Bridge Loans

• Short-term financing to “bridge” a gap until long-term financing is secured.
• Higher interest rates, faster approval.

6. Commercial Construction Loans

• Used to build a new facility.
• Funds released in stages (draws) as construction progresses.
• Converted into a mortgage when construction is complete.