10 Different Types of Commercial Real Estate Loans

Structuring a commercial real estate deal is a complex process, especially when it comes to securing financing. Commercial mortgages are structured differently than traditional residential mortgages, which makes it essential to understand the most relevant financing options available today.

In this updated guide, we explore the ten major types of commercial real estate loans, their benefits, and key attributes. We also provide a 2025 market overview to help you navigate the current lending environment with confidence.

The Commercial Real Estate Financing Landscape in 2025

The commercial real estate financing market in 2025 reflects a dynamic mix of opportunities and challenges. Understanding the broader environment can help you choose the right financing strategy and lender for your goals.

Market Overview

Lending activity is showing renewed momentum after a period of tighter credit conditions. While traditional banks continue to be selective, particularly with office properties, other sectors are attracting significant interest. Multifamily remains an active asset class, and industrial, logistics, and specialized property types such as medical offices and self-storage are performing well.

Refinance Pressures

One of the most significant forces shaping 2025 is the volume of maturing debt. Almost a trillion dollars in commercial mortgages are set to mature in 2025. This has fueled strong demand for refinancing options and created opportunities for a variety of lender types. Private credit funds and other non-bank institutions are stepping in to provide flexible terms and faster decision-making, particularly when traditional banks are constrained.

Interest Rates and Loan Terms

Interest rates have stabilized compared to the volatility of recent years, but they remain elevated relative to pre-2022 levels. Loan-to-value ratios are more conservative, often in the 60 to 70 percent range. Borrowers may need to contribute more equity or explore alternative financing structures to close deals in this environment.

Emerging Opportunities

Sustainability continues to gain traction in the commercial lending space. ESG-linked financing is becoming more widely available, offering favorable terms for properties that meet specific environmental, social, and governance benchmarks. Investors who integrate sustainability into their projects can position themselves to access competitive rates and broaden their pool of potential lenders.

By aligning your financing approach with current market conditions, you can better position your investment or business to secure the right type of capital at the right time.

10 Types of Commercial Real Estate Financing in 2025

While there are numerous types of real estate loans you can pursue,  here are 10 that are widely used among commercial real estate investors for the purchase, refinance, or development of a commercial real estate property in the U.S.

1.   SBA Loans (7(a) and 504 Programs)

SBA loans, backed by the U.S. Small Business Administration, remain a top financing option for owner-occupied commercial properties in 2025. These programs allow small business owners to secure competitive interest rates and longer repayment terms than most traditional financing.

The SBA 7(a) loan is the more flexible of the two, allowing funds to be used for a wide range of purposes including purchasing real estate, refinancing existing debt, or funding improvements. The SBA 504 loan is tailored specifically for major fixed asset purchases such as real estate or heavy equipment, offering long-term, fixed-rate financing through a combination of bank funding and SBA-backed debentures.

In 2025, SBA loans are popular due to their relatively low down payment requirements (often as little as 10%), amortization periods of up to 25 years, and competitive rates despite a higher interest rate environment. However, borrowers should be prepared for a thorough application process that can take longer than private or bank loans. Lenders will review the business’s financial history, credit profile, profitability, and the property’s relevance to the company’s operations.

Key Considerations: SBA loans are best for established small businesses purchasing space for their own use. They are not available to passive investors or purely investment-driven acquisitions. To qualify, applicants typically need strong credit, adequate cash flow, and a clear business plan demonstrating how the loan will support growth.

2.   Permanent Loans/Traditional Bank Loans

Permanent loans from traditional banks are designed for stabilized, income-producing properties, offering long-term financing that provides stability and predictable debt service. These loans are a cornerstone of commercial real estate financing, and in 2025, they continue to be a preferred option for borrowers who meet strict underwriting standards.

Loan terms can range from five to twenty years, with amortization schedules often extending longer than the actual loan term, which can result in a balloon payment at maturity. Interest rates may be fixed or variable, and lenders generally require a down payment of 20–30% depending on the asset type and risk profile.

In today’s lending climate, banks have tightened credit requirements, focusing on lower-risk property types and borrowers with strong financials. A successful application will include a proven track record in managing similar assets, a solid business or investment plan, and strong debt service coverage ratios, often 1.20x or higher. Expect to provide detailed documentation, including rent rolls, operating statements, tax returns, and property appraisals.

Key Considerations: Permanent loans are ideal for borrowers looking to lock in long-term financing for stable assets. They typically offer lower interest rates than short-term financing, but require high credit quality, substantial equity, and clear evidence of the property’s consistent income production. Maintaining a strong banking relationship can improve approval chances and potentially yield more favorable terms.

3.   CMBS Loans (Conduit Loans)

CMBS loans are commercial mortgages pooled together and sold to investors as bonds, offering competitive fixed rates and typically being non-recourse. This structure allows borrowers to limit personal liability to the collateral property, which can be an attractive feature for many investors.

These loans are well-suited for stabilized, income-producing properties where the borrower seeks high leverage and long-term fixed rates. In 2025, CMBS loans remain a strong option for borrowers willing to accept less flexibility in exchange for predictable payments and potentially higher proceeds compared to traditional bank financing.

Qualifying involves meeting stringent property performance standards. Lenders and CMBS arrangers will review rent rolls, lease terms, and historical financials to confirm stable cash flow. Third-party reports, including appraisals, environmental site assessments, and engineering evaluations, are standard requirements.

Key Considerations: CMBS loans work best for borrowers who plan to hold an asset for the full loan term, as prepayment is often costly and complex. They are less flexible on loan modifications but can offer more aggressive leverage for well-performing properties.

4.   Bridge Loans

Bridge loans are short-term financing solutions that provide quick access to capital while a borrower transitions to permanent financing or sells a property. They are commonly used to acquire properties that require immediate closing, complete renovations, or improve occupancy before securing long-term debt.

In 2025, bridge loans remain in high demand due to the large volume of maturing commercial debt and the need for flexible capital in competitive markets. These loans are typically interest-only, with terms ranging from 12-36 months, and are primarily asset-based, meaning lenders place more weight on the property’s value and potential than on the borrower’s personal financials.

To qualify, borrowers need a clear exit strategy, whether through refinance, sale, or stabilization. Lenders will assess the property’s current value, projected improvements, and the borrower’s experience managing similar projects. While interest rates are higher than for permanent loans, the speed and flexibility of bridge financing can make it the ideal choice for time-sensitive opportunities.

Key Considerations: Bridge loans are best suited for short-term needs where speed and execution are top priority. They can be an essential tool for investors looking to reposition assets, secure below-market acquisitions, or act quickly in competitive bidding scenarios.

5.   Construction Loans

Construction loans provide financing for ground-up developments or major renovations, funding the project in stages based on a draw schedule tied to construction milestones. These loans are typically short-term, with repayment expected once construction is complete and the property is stabilized or sold.

In 2025, construction lenders are cautious due to rising material costs and supply chain considerations. As a result, they require detailed project budgets, timelines, and feasibility studies. Pre-leasing or presales may also be required for certain property types to demonstrate market demand.

Borrowers must present a comprehensive package that includes contractor credentials, building permits, and contingency reserves. Lenders closely monitor progress with regular inspections before releasing additional funds. Interest is charged only on the disbursed amount, which helps manage cash flow during construction.

Key Considerations: These loans are best for experienced developers with a proven track record and a well-defined project plan. Having a clear exit strategy, whether through permanent financing or sale, is essential to secure favorable terms.

6.   Commercial Refinance & Cash-Out Loans

Refinancing a commercial property allows borrowers to replace an existing loan with a new one, often to obtain a lower interest rate, extend the term, or adjust other loan terms. A cash-out refinance enables the borrower to tap into built-up equity and use those funds for property improvements, debt repayment, or new investments.

In 2025, refinancing is a major activity in the CRE market due to the large wave of maturing loans. Many borrowers are refinancing to avoid higher rates upon maturity or to reposition properties for better performance.

Qualifying involves demonstrating strong property performance, supported by rent rolls, historical operating statements, and a favorable loan-to-value ratio. Lenders will order an updated appraisal and may require proof of capital improvements if the property has been recently renovated.

Key Considerations: Refinancing can improve cash flow and free up capital but comes with transaction costs and potential changes to terms. A cash-out refinance can be a powerful tool for growth, provided it aligns with long-term investment objectives.

7.   Private Credit & Hard Money Loans

Private credit and hard money loans are short-term, asset-based financing options provided by non-bank lenders. They prioritize the property’s value and marketability over the borrower’s credit profile, making them an accessible option for investors who may not meet traditional bank requirements.

In 2025, private credit has become a mainstream part of the CRE financing landscape, particularly as traditional lenders remain cautious. These loans often close quickly, sometimes within days, and can be tailored to unique property situations or unconventional deal structures.

While rates and fees are higher than conventional loans, the trade-off is speed, flexibility, and fewer documentation requirements. Borrowers typically need to demonstrate a viable exit strategy, such as refinancing into a permanent loan or selling the property.

Key Considerations: Ideal for time-sensitive acquisitions, properties needing significant work, or situations where a borrower’s financials don’t meet traditional underwriting standards. They work best as a bridge to more permanent financing.

8.   Blanket Loans

Blanket loans consolidate multiple properties under one mortgage, allowing investors to manage their portfolio more efficiently and potentially reduce overall borrowing costs. This structure enables cross-collateralization, where equity in one property can support the purchase of another.

In 2025, blanket loans are popular among active portfolio investors who want to leverage their holdings for rapid growth. They are offered by both banks and private lenders, though terms can vary widely.

Qualifying requires presenting the combined financial performance of all properties, supported by rent rolls, income statements, and property valuations. Lenders will want to see strong occupancy rates and consistent cash flow across the portfolio.

Key Considerations: While blanket loans can simplify management, defaulting can place all properties in the portfolio at risk. They are best suited for experienced investors with stable, well-performing assets.

9. Multifamily Loans (5+ units)

Multifamily loans finance properties with five or more units and are structured as commercial loans, focusing heavily on the property’s income potential. Lenders evaluate net operating income, occupancy rates, and location strength when underwriting these loans.

In 2025, multifamily remains one of the most resilient asset classes, supported by steady rental demand. Lenders may offer higher leverage for well-located, stabilized properties, though they will scrutinize management experience and tenant retention rates.

Borrowers should expect to provide detailed operating statements, rent rolls, and a record of property performance. For value-add deals, lenders may require a clear renovation and leasing plan to support projected income growth.

Key Considerations: Multifamily loans are ideal for investors seeking stable cash flow and long-term appreciation. Strong location fundamentals and experienced management are key factors in securing favorable terms.

10. Vacant Land Loans

Vacant land loans provide financing for the purchase of undeveloped property. Because land generates no immediate income, these loans are considered higher risk, leading to shorter terms, higher rates, and larger down payment requirements.

In 2025, lenders remain selective, favoring parcels in prime locations with clear development potential. Private lenders often dominate this space due to the higher risk profile.

Qualifying typically requires providing a survey, zoning information, and a detailed development or resale plan. Lenders want to understand the exit strategy, whether it involves building on the land, selling it to a developer, or holding it for appreciation.

Key Considerations: Best suited for investors with a clear plan and the financial capacity to carry the land until development or sale. Down payments of 40–50% are common.

Choosing the Right Commercial Loan Type

Selecting the right loan type requires careful consideration of your investment strategy, property characteristics, and timing. Short-term options like bridge or hard money loans work well for quick acquisitions, repositioning projects, or transitional assets. Long-term financing from banks, CMBS lenders, or the SBA may be more appropriate for stabilized, income-producing properties.

Key factors to evaluate include interest rate structure, repayment flexibility, prepayment penalties, and the lender’s expertise with your property type. In today’s market, aligning your financing with both short-term objectives and long-term goals is critical. Partnering with an experienced advisor ensures you can navigate lender requirements and secure favorable terms.

Frequently Asked Questions 

How do I know which commercial loan type is right for me?

Clarify your property’s current status, investment timeline, and financial profile. Stabilized properties with strong cash flow are better suited to long-term financing. Transitional or distressed assets often require short-term funding first.

When should I consider a short-term loan such as a bridge loan over a permanent loan?

If timing is critical or the property is not ready for permanent financing due to occupancy or condition, a bridge loan can be the best solution.

Should I get a fixed rate or floating rate?

Fixed rates offer predictable payments and protection from interest rate increases. Floating rates can work if you expect to refinance or sell in the short term. Fixed rates are typically higher,  but offer a consistent payment. Floating rates often offer a lower introductory period but are susceptible to increases if benchmark rate rises.

What type of commercial loan is best for foreign nationals?

Private credit, hard money loans, and bridge loans are most accessible, as they rely more on property value than U.S. credit history.

What's the most flexible commercial loan type if I need time to assess the market for my long-term plans?

Bridge loans and certain private credit products allow you to hold an asset for a few years while evaluating market conditions before committing to long-term financing.

Partner with Vaster for Your Florida Commercial Financing Needs

At Vaster, our team of experienced professionals is ready to help you navigate the 2025 lending environment, evaluate your options, and secure the right loan for your South Florida commercial project. Visit our commercial loans page to learn more about our offering and recent commercial deals we've funded.

 Ready for a quick quote? Get connected with one of our loan originators today to explore your financing opportunities and take the next step toward your investment or business objectives.

 Sources:

 Loans | SBA.gov

commercial mortgage-backed securities (CMBS) | Investopedia

Blanket Mortgage: How It Works And Who Should Use It | Bankrate