What Is a Conventional Loan?
A commercial loan is a debt product that gives access to funding to purchase, refinance, build or redevelop commercial or investment property, or provide working and capital funds for your business. Lenders will look at the income from the property and the strength of the borrower, unlike residential lending which looks at your income and Credit.
Quick Facts
| Question | Answer |
|---|---|
| What is it? | Financing for investment property, business property or a business’s growth |
| Loans we arrange | Commercial mortgages, business loans, mixed-use, SBA, retail, construction, land, bridge, fix and flip, rehab |
| Typical down payment | Often 20% to 30% on commercial purchases; varies by program |
| Typical terms | Often a 5 to 10 year term with a longer amortization, such as 20 to 25 years |
| Typical timeline | Commonly 45 to 90 days; bridge and fix and flip loans can be faster |
| Documentation options | Full doc, stated and lite doc programs |
What Types of Commercial Loans Do We Arrange?
We arrange the following. Which one fits depends on the property, your plan and your timeline.
| Loan type | What it does | Best for |
|---|---|---|
| Commercial mortgage | Buys or refinances income-producing property | Investors and owners of office, retail and multifamily buildings |
| Mixed-use purchase | Finances buildings with both retail and residential units | Storefront-and-apartment buildings |
| Retail | Finances retail spaces and shopping centers | Landlords and owner-operators |
| Business loans | Funds business growth, equipment or operating needs | Established businesses |
| SBA loans | Government-backed loans with longer terms | Owner-occupied business property and acquisitions |
| Construction | Funds ground-up building | Developers and builders |
| Land loans | Finances raw or entitled land | Builders and long-term investors |
| Bridge loans | Short-term financing to bridge a gap | Buyers who need to close fast or have a property in transition |
| Fix and flip / rehab | Funds purchase and renovation for resale or rental | Investors renovating properties |
| Special-purpose properties | Gas stations, laundromats, auto shops and body shops | Owner-operators in these industries |
What Documentation Options Are Available?
We provide full documentation, stated and lite doc products. With a full doc you will need to provide tax documents and company accounts. With stated and lite doc products you will have fewer documents to complete if you qualify, however you will typically pay a higher deposit.
How Much Down Payment Do You Need for a Commercial Loan?
Commercial purchases typically require a larger down payment than home loans, often 20% to 30% of the price. SBA programs can allow less, and some bridge and fix and flip programs finance part of the purchase and rehab costs. The amount depends on the property type, your experience and the lender.
| Loan type | Typical down payment |
|---|---|
| Commercial mortgage | Often 20% to 30% |
| Mixed-use and retail | Often 25% or more |
| SBA | Can be as low as 10% for qualifying purchases |
| Construction and land | Varies; land often requires more |
| Bridge and fix and flip | Varies by program and experience |
How Do You Qualify for a Commercial Loan?
Lenders look at the property’s income, your finances and your experience. Requirements vary by lender and program.
- Debt service coverage ratio (DSCR): the property’s net operating income divided by its debt payments. Lenders commonly look for 1.25 or higher.
- Loan-to-value (LTV): commonly 65% to 80% of the property’s value.
- Credit and finances: personal credit, liquidity, net worth and a record of managing properties.
- The property: its income, condition, location and appraised value.
- Experience: investors with a track record often receive better terms.
For an owner-occupied business property, lenders also review the business’s financial statements and cash flow.
What Is an SBA Loan and Who Is It For?
An SBA loan is a loan for businesses which is partially guaranteed by the U.S. Small Business Administration. This allows lenders to offer longer terms and lower deposits than many traditional commercial loans. The SBA provides loans up to $5 million through their 7(a) scheme. This can be used to purchase a business/property, working capital and equipment.
When using an SBA loan for real estate, the business will generally need to occupy the majority of the property (often 51%+). We can provide SBA loans and can advise if your project will qualify.
What Is a Bridge Loan?
A bridge loan is a short term loan. Often lasting between 6-36 months. Bridge loans are often used by investors to help them get into a deal quickly, purchase a property that will need stabilising or ensure they do not lose out on a deal by waiting for their bank. Bridge loans are typically more expensive than longer term loans. So it is important to have an exit strategy.
How Do Fix and Flip and Rehab Loans Work?
These loans provide finance to purchase a property and carry out renovations. They are short term loans, often interest only. They are intended to be paid back upon sale of the property or refinanced into longer term finance. Some products will provide some finance towards the purchase price and renovation budget.
The lender will look at the property, your renovation plans, budget and experience. We provide these loans to investors throughout NJ, NY & FL. We can advise on the best products based on the terms and overall cost.
Can You Finance a Mixed-Use or Multifamily Building?
Yes! Mixed use buildings are a combination of commercial and residential. Often found in New York City and cities in New Jersey like Newark, Jersey City and Elizabeth. They are underwritten based on the rental income from both the commercial and residential.
Our loan officer Joe St. Rose has 30 years’ experience in real estate and is a licensed real estate broker in NYS. He previously managed around 250 apartments in New York City before becoming an expert in multifamily property management and commercial mortgage origination. View our page for a mortgage broker in New York.
What Is the Difference Between a Commercial Loan and a Residential Loan?
A commercial loan finances property used for business or investment, and a residential loan finances a home you live in. The two differ in how they’re underwritten, their terms and their costs.
| Feature | Commercial loan | Residential loan |
|---|---|---|
| Property | Investment, mixed-use, retail, land, business property | A home you live in |
| Main underwriting focus | Property income and borrower strength | Your personal income and credit |
| Typical down payment | Often 20% to 30% | As little as 3% to 3.5% |
| Typical term | 5 to 10 years, with a longer amortization | 15 to 30 years, fully amortizing |
| Prepayment | Often has a prepayment penalty | Rarely |
| Timeline | Often 45 to 90 days | Often 30 to 60 days |
For residential options, see our home loans page.
How Do You Apply for a Commercial Loan?
You apply by sharing your goals and property details, submitting documents, choosing a program, and moving through appraisal, underwriting and closing.
- Talk to us: tell us about the property, your plan and your timeline.
- Submit documents: upload the items in the checklist below.
- We compare programs: we match your deal to lenders and loan structures.
- Appraisal, due diligence and underwriting: the lender values the property, reviews third-party reports and verifies your file.
- Closing: you sign and the loan funds.
What Documents Do You Need for a Commercial Loan?
Requirements vary by program, lender and property.
- Business and personal tax returns, commonly the last two to three years
- Personal financial statement and a schedule of real estate owned
- Business financial statements and a profit-and-loss statement
- For income properties: a rent roll, leases and operating statements
- Purchase contract and details about the property
- Entity documents, such as articles of organization and operating agreements
- For construction, rehab and fix and flip: plans, scope of work, budget and contractor information
- Photo ID and bank statements
Can You Get a Commercial Loan in New Jersey, New York or Florida?
Yes. We arrange commercial loans in all three, as well as Pennsylvania, Indiana, California and Texas. Local factors shape every deal.
- New York - Mixed-use buildings and multifamily are common, and New York mortgage recording tax applies to most financed purchases. See our New York page.
- New Jersey - Mixed-use and multifamily properties in urban cities are common, and New Jersey does not charge a mortgage recording tax. See our New Jersey page.
- Florida - Insurance, flood zones and condo rules can affect underwriting, and documentary stamp tax and intangible tax apply to the loan. See our Florida page.
Who Is American Capital Mortgage Inc.?
American Capital Mortgage Inc. is a mortgage broker and banker headquartered in Orange, New Jersey, licensed as a mortgage broker in Florida and several other states. Sunny Jain, our founder and CEO, has been in the mortgage business since 1996, with prior experience at Bank America Mortgage and Bank of NY. You can verify licensing for our loan officers at NMLS Consumer Access.
- Sunny Jain, CEO (NMLS ID 13710): residential and commercial originations, 30+ years of experience
- Rajiv Jain, Vice President (NMLS ID 16291): 20+ years in the mortgage business
- Joe St. Rose, Loan Officer (NMLS ID 1473569): multifamily and commercial mortgage origination
FAQs:
Commercial purchases often require 20% to 30% down. SBA programs can require less, and some bridge and fix and flip programs finance part of the purchase and rehab. The amount depends on the property and lender.
Lenders commonly look for a debt service coverage ratio of 1.25 or higher, which means the property’s net operating income is at least 125% of its debt payments.
Commercial loans often take 45 to 90 days from application to closing, depending on the property, appraisal and due diligence. Bridge and fix and flip loans can close faster.
Often, yes, with a stated or lite doc program, usually with a larger down payment or a higher rate. Availability depends on the property and the lender.
A bridge loan is short-term financing, often 6 to 36 months, used to close quickly or stabilize a property. A commercial mortgage is longer-term financing, and typically has lower costs.
Yes. We arrange SBA loans for qualifying business acquisitions and owner-occupied property. The SBA’s 7(a) program offers loans up to $5 million, and the business generally has to occupy a majority of the property.
Yes. We arrange mixed-use purchase loans for buildings with both commercial and residential units, and lenders underwrite them using the income from both.
Often, yes. Many commercial loans include a prepayment penalty or a step-down fee schedule if you pay off early. Ask for the terms in writing before you commit.
Ready to Discuss Your Commercial Loan?
Get your free quote today Contact us or Call: 516-327-6000
Email: sunnyjain@amcaps.com
Address: 439 Main Street, Suite 102, Orange, NJ 07050