Commercial property is usually the largest purchase a business ever makes, and the financing decision quietly determines whether the deal works. Pick the wrong structure and you either overpay on rate for decades or, worse, lose the deal because your financing couldn't close on time. The building is the same either way — the loan behind it is what separates a smart acquisition from an expensive one.
The catch is that "commercial real estate financing" isn't one product. It is at least four very different ones, each built for a different priority: lowest rate, fastest close, highest leverage, or flexibility on income. Calling banks one at a time rarely surfaces all of them, because any single lender only offers the slice it likes. This guide lays out the full menu — conventional CRE loans, the SBA 504, bridge and hard money, and mezzanine debt — and shows how to match the structure to the deal in front of you.
The four main ways to finance commercial property
Before comparing numbers, it helps to see the four structures and the job each one is built for. Most commercial deals are financed by one of these — or a senior loan plus a layer stacked on top.
- Conventional / owner-occupied CRE term loan — a commercial real estate loan from a bank or non-bank lender, repaid over a long fixed or adjustable term. The workhorse for buying property your business will occupy.
- SBA 504 — a government-backed structure built specifically for owner-occupied purchase, construction, or major renovation. Lowest rate, long fixed term, low down payment.
- Bridge & hard-money — short-term, asset-based loans that close fast for time-sensitive or value-add deals, often with light or no income verification.
- Mezzanine debt — a higher-cost layer that sits above the senior loan to fill an equity gap, used on larger deals where you don't want to write the full down payment.
Owner-occupied conventional CRE loans
This is the default for a business buying its own location. A bank or non-bank lender funds the purchase against the property and your business cash flow, typically at 80–90% LTV with a 1.25x or higher debt-service-coverage ratio. Rates are competitive and terms are long, but underwriting is thorough — expect tax returns, financials, and an appraisal. Structurally it behaves like a long, secured term loan, just sized to real estate and amortized over a much longer horizon.
SBA 504: the low-rate owner-occupied play
The SBA 504 is purpose-built for owner-occupied real estate and heavy fixed assets. It combines a conventional first mortgage, a long fixed-rate SBA-backed second, and your down payment — often just 10%. The result is usually the cheapest, longest-fixed financing a small business can get on a building it occupies. The trade-off is process: more documentation and a longer timeline, covered in our SBA Loans Guide.
Bridge & hard-money: speed and flexibility
When the deal won't wait — a competitive purchase, an auction, a value-add project mid-renovation — bridge and hard-money loans underwrite the asset's value, not years of income. They close in weeks, sometimes with no income verification, which lets borrowers who can't document income cleanly still transact. You pay for it in rate, and you plan to refinance into permanent financing once the property stabilizes.
Mezzanine: filling the gap on bigger deals
On larger projects, a senior loan might cover 70–75% and you don't want to fund the entire remaining equity yourself. Mezzanine debt layers on top of the senior loan to fill part of that gap, at a higher cost than the senior debt but cheaper than giving up equity. It is a tool for scale, not for a first owner-occupied purchase.
Comparing the options on what actually matters
The right structure is the one that wins on your top priority — and quietly acceptable on the rest. Here is how the four stack up.
| Structure | Typical rate | Speed to close | Typical LTV | Credit / income needs |
|---|---|---|---|---|
| Conventional CRE term loan | Low–moderate | 30–60 days | 80–90% | Strong credit + verified cash flow |
| SBA 504 | Lowest | 30–60+ days | Up to ~90% | Good credit, DSCR, owner-occupied |
| Bridge / hard-money | Highest | 1–3 weeks | 65–75% of value | Asset-driven; often no income verification |
| Mezzanine | High | Varies | Fills gap above senior | Deal-level underwriting |
The trade-off you're really making: speed vs. cost
Almost every commercial real estate decision comes down to one tension: the cheapest money is the slowest, and the fastest money is the most expensive. The SBA 504 sits at one end — lowest rate, most paperwork, longest wait. Hard money sits at the other — close in two weeks, pay for the privilege.
The mistake is treating that as a permanent choice. Experienced investors routinely use a fast bridge loan to win the deal, then refinance into a low-rate conventional or SBA loan once the property is stabilized and there is time to underwrite slowly. The bridge loan's higher rate only runs for a few months, so its true cost is small relative to losing the deal entirely. Match the loan's speed to the deal's clock, and the rate to the holding period.
Cash-out refinance and equity takeout
Financing isn't only for buying. If you already own commercial property that has appreciated or that you've paid down, a cash-out refinance lets you pull that trapped equity out as working capital — to renovate, acquire another property, or fund the business — by replacing the existing loan with a larger one and taking the difference in cash.
The same speed-versus-cost logic applies. A conventional cash-out refinance offers the best rate but underwrites your income and the property fully. A bridge-style equity takeout is faster and leans on the asset, useful when you need the cash quickly and intend to refinance into permanent debt later. Either way, you're converting dead equity into deployable capital.
What property types qualify — and how to shop smart
Most income-producing and owner-occupied property can be financed, though appetite varies by lender:
- Owner-occupied — offices, warehouses, retail, medical, light industrial your business uses.
- Multifamily and mixed-use — apartments and combined residential-commercial buildings.
- Investment / non-owner-occupied — leased property where the rent roll, not your business, carries the loan.
- Special-purpose — hospitality, self-storage, gas stations, and similar; financeable but with fewer lenders and tighter terms.
Here is the practical problem: the lender who loves owner-occupied warehouses may have zero appetite for a value-add multifamily bridge, and you can't tell from the outside. Calling banks one by one means you only ever see the structures each happens to offer — and you re-explain your deal every time. Our Types of Business Loans overview shows where CRE fits among the eight product categories, and Why a Funding Marketplace Beats One Bank explains the shopping problem directly.
That is exactly why one application to a network beats the phone tree. You describe the deal once, and it routes to the lenders whose criteria — property type, structure, speed, LTV — your deal actually meets. Offers come back side by side, so you compare real rates and terms instead of guessing which bank to call next. For the broader playbook on running this process, see How to Get a Business Loan.
One 2-minute application, routed across our lender network. Compare side-by-side commercial real estate offers — conventional, SBA 504, and bridge — with no effect on your credit until you accept one.
Commercial real estate financing rewards owners who treat it as a menu, not a single product. Decide what the deal needs most — lowest rate, fastest close, highest leverage, or income flexibility — match the structure to that priority, and compare across lenders instead of settling for the first yes. Do that, and the building works as an asset instead of an anchor.