Commercial Real Estate Financing

Commercial Real Estate

Financing is one of the biggest challenges that real estate investors face, whether they are buying a home to renovate and rent, or purchasing an office building in the city. Some business owners and entrepreneurs might have limited financing options because of their credit. A stated income loan is an option to finance or refinance commercial real estate without using the borrower’s credit score or assets. These loans are based on the value of the property being purchased or refinanced. Stated income loans are also options for funding renovations or consolidating debts and smaller loans.

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Uses of a Stated Income Loan

These commercial loans are available for buying or improving investment properties or to refinance commercial properties. While these loans are for commercial, not residential borrowers, they serve much the same purpose as a residential mortgage or refinancing. These loans are offered on almost any kind of commercial property, including:

  • Retail

  • Mixed-Use

  • Warehouse/Self-Storage

  • Office

  • Light Industrial

  • Automotive

  • Mobile Home Park

You can also use one of these loans to “cash out” of a property for which you hold the title. As noted above, a stated income commercial loan may be used for the same purposes as a traditional loan.

Characteristics of Stated Income Loans

Stated income loans work mainly, not entirely, on the value of the commercial property involved. The fair market value of the property and the property income value is what matters. The lender will insist that revenue from the property is enough to cover insurance, loan payments, and taxes.

As with other loans, the terms and interest rates available will vary with the lender, the property, and the size of the loan. A fixed interest rate and a term of 25 years are also common, though shorter loan terms are usually available. A good commercial real estate partner will be able to evaluate your needs and present good options.

Commercial borrowers tend to like these loans because there is less paperwork and evaluation involved relative to a regular commercial loan. This low paperwork burden means that closings in two or three weeks are possible. If you need capital quickly, a stated income or soft money loan can be a great alternative to other, higher-interest forms of credit.

If you need a quick loan to buy or improve a piece of commercial real estate, contact us to see what financing options we can offer you. These loans are available on almost any commercial property from a mobile home park to a strip mall to a mixed-use building.

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Limits and Requirements

The most important thing to know about these loans is that there are limits on how much an investor can borrow relative to the assessed value of the property. The loan-to-value (LTV) percentages vary from lender to lender and tend to also vary based on the type of property. One lender may loan 70% of the value for a small office building while another will only offer 65% financing.

Lenders offer financing within a certain range. For example, one lender might make loans from $200,000 to $10,000,000 while another lender in town lends amounts in the range of $100,000 to $5,000,000.

These loans are issued mainly based on the property’s income potential. A lender wants to know that the property can generate enough revenue to cover the loan, plus taxes and insurance. Self-employed individuals can also qualify for one of these loans too, because the qualities of the property, not the borrower’s personal credit or assets determine eligibility. For this same reason, a worker on a W-2 can also get a loan to buy a qualifying property.

Finally, a decent credit rating is important even though the loan is not based entirely on the borrower’s creditworthiness. If you or your business have very poor credit, some credit repair may be necessary in order to get a commercial loan. However, if credit is not a factor then a stated income commercial loan can provide fast access to money under resonable terms.


Borrowers most often use the loans to buy or refinance commercial real estate. Consolidated payments on leases or smaller loans are an option as well. The borrowed money can be a way to get out of a bubble mortgage or high-rate loan and save some money on financing charges.


Debt consolidation is a common motivator for borrowing money. A commercial borrower uses the value of a property to pay off smaller loans and leases and streamline their money management.


Commercial property often needs expensive upgrades or improvements to accommodate growth. The loan money may prove valuable in upgrading a commercial space. Just about any substantial property renovations could be financed by borrowing against a property’s market value to generate some cash. A business owner with limited credit could use the income from their business property to secure a loan against the property income and make substantial upgrades at a modest cost.


A stated income loan is a way to get quick access to money you need for inventory or to exploit an unexpected business opportunity. A renter could use the funds to purchase their space and turn it into an asset. A cash-out refi using the property’s income potential is another way to raise money.

A borrower’s credit history might make it difficult to get a conventional loan based on their personal or business credit. This credit issue can get in the way of making needed acquisitions or improvements at a reasonable cost. Unlike traditional loans, it just takes some money to invest and property with enough income to cover the borrowing costs.

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If you need money to finance a fix and flip, our online loan application process makes the financing work easy, and quick. We have deep experience in helping investors use hard money loans, lines of credit, and fix and flip loans to complete their projects.