I buy, rent out or develop property as a business. What are my options?
Commercial real estate loans, SBA 504 and 7(a) loans for owner-occupied buildings, bridge loans and Opportunity Zone equity, cheapest first.
This guide is for businesses buying, developing or refinancing commercial property, or raising money for a business that holds property. It does not cover consumer home mortgages or personal buy-to-let mortgages for individuals.
Property lenders look first at what the building is worth, how much equity you are putting in, and whether the loan will be repaid from an operating business's earnings or from tenants' rent.
- Bank commercial real estate (CRE) loans and LTV limits: federal bank regulators expect banks to set loan-to-value (LTV) limits within supervisory ceilings: 85% of value for a finished commercial property, 80% for commercial construction, 75% for land development and 65% for raw land. Most commercial real estate transactions above $500,000 require an appraisal by a state-certified or licensed appraiser (12 CFR 34.43). Many CRE loans run for 5 to 10 years with payments amortized over 20 or 25 years, leaving a large final balloon payment that you must repay or refinance.
- Buildings you occupy vs property you rent out: SBA 504 and 7(a) loans can finance long-term commercial real estate with as little as 10% down on a 504 project, but only for an operating business that occupies the property itself (for a new building on a 504 loan, the borrower must occupy at least 60% of the space immediately, with rules on leasing the rest under 13 CFR 120.870). Passive landlords and speculative real estate developers are ineligible for SBA business loans under 13 CFR 120.110, though a small general contractor building or renovating properties to sell can use an SBA Builders CAPLine.
- Short-term bridge and hard-money loans: when a property has to be bought quickly, refurbished or leased up before it qualifies for a bank mortgage, bridge and hard-money lenders lend for months against the property's value at much higher rates and fees; your exit is selling the property or refinancing into a long-term loan.
- Location-based tax incentives: projects in designated census tracts can sometimes attract patient capital through New Markets Tax Credit (NMTC) financing or Qualified Opportunity Funds investing in Qualified Opportunity Zones.
9 routes to look at, cheapest first
Compare the first 4 side by side- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved.- Government-backed and community lending
New Markets Tax Credit financing
Loans or investments on better terms than the market, from a Community Development Entity that has federal tax credits to offer its investors, for businesses and buildings in low-income communities. Flexible and cheap, but scarce, slow and complex, so it suits larger projects.
6 months or moreLoans, or shares if you choose - Government-backed and community lending
SBA 504 loans
Long-term, fixed-rate financing for buildings, land and long-life equipment, split between a bank and a nonprofit Certified Development Company backed by the SBA. You usually put in 10% yourself.
MonthsUp to $5.5mPersonal guarantee likely
- Government-backed and community lending
- L2
Mainstream secured debt
Standard borrowing from banks, credit unions and mainstream lenders, often secured on assets or backed by a personal guarantee.- Government-backed and community lending
SBA 7(a) loans
A business loan of up to $5 million from a bank or other lender, with part of it guaranteed by the SBA, for businesses that cannot get the credit they need on reasonable terms elsewhere.
MonthsUp to $5mPersonal guarantee likely - Government-backed and community lending
SBA export loans
Bank loans and lines of credit of up to $5 million for small businesses that sell outside the US, with the SBA guaranteeing up to 90% so lenders take on export risks they would otherwise turn down.
WeeksUp to $5mPersonal guarantee likely - Government-backed and community lending
USDA Business and Industry loan guarantees
A loan from a bank or other lender, with up to 85% guaranteed by USDA Rural Development, for businesses, cooperatives and others whose project is in a rural area. Up to $25 million, for up to 40 years, for buildings, equipment, buying a business and more.
MonthsUp to $25m - Bank and mainstream debt
Bank and credit union term loans
A lump sum from a bank or credit union, repaid in fixed installments over an agreed term, usually one to five years. Usually cheaper than online lenders, but slower, and usually secured on assets with a personal guarantee.
WeeksPersonal guarantee likely - Bank and mainstream debt
Commercial real estate loans
A loan secured on business property, to buy, build or refinance the building you trade from or one you rent out. Long-term money at a lower risk to the lender than most business loans, but you need a deposit, and many loans end with a large final payment you must refinance.
Months
- Government-backed and community lending
- L4
Expensive or fast
Quick to arrange, often unsecured, and usually the most expensive way to borrow. - Equity rungs. These routes cost no interest, but you give up part of the ownership and control of your business. They are ranked by how much you give up, not by a made-up interest rate. Over time, equity can be the most expensive money of all.E2
Significant dilution and investor rights
Investors take a meaningful stake and usually get rights such as a board seat, a veto over big decisions, or a preferred return.
Worth knowing
- Before taking a 5-year loan with a 20-year amortization schedule or a short-term bridge loan, stress-test how you will refinance the balloon payment if interest rates are higher or the property appraises for less at maturity.
- Budget early for third-party closing costs — appraisal, Phase I environmental site assessment, survey, title insurance and legal fees — which you usually pay whether or not the loan closes.
- Note that state commercial financing disclosure laws in California, New York, Utah, Florida, Georgia, Kansas and Missouri exempt loans secured by real property, so a non-bank bridge or hard-money lender does not have to give you a state APR disclosure form; ask for the rate, points, fees and default terms in writing.
- If you are buying a building along with the business that trades from it, seller financing on part of the price can sit behind a bank or SBA loan, subject to the senior lender's standby rules.
Sources
- OCC Comptroller's Handbook: Commercial Real Estate Lending (version 2.0, March 2022): loan types, supervisory LTV limits, amortization and DSCR · checked October 20, 2026
- 12 CFR 34.43: appraisals required (thresholds for commercial real estate and business loans) · checked October 20, 2026
- 13 CFR 120.870: leasing project property (occupancy of new buildings on SBA 504 loans) · checked October 17, 2026
- 13 CFR 120.110: businesses that are ineligible for SBA business loans (including passive businesses) · checked October 17, 2026
Facts about each route are sourced on its own page.