What is a commercial real estate (CRE) loan?
Commercial real estate loans are mortgages secured by commercial property liens relative to residential real estate. Commercial real estate (CRE) refers to any real estate that can generate income for commercial purposes; for example, offices, retail stores, hotels and apartments.
Key points
CRE loans are mortgages secured by liens on commercial real estate.
CRE loans are usually provided to investors (such as companies or organizations) who own and operate commercial real estate.
CRE loans are provided by banks, independent lenders, insurance companies, pension funds, private investors, and other sources of capital (such as the 504 loan program of the US Small Business Administration).
The lender will consider the nature of the collateral (property purchased), the borrower’s credibility and financial ratio when evaluating commercial real estate loans.
CRE loans are often more expensive than residential loans.
Small businesses seeking to purchase, expand or refurbish their sites may seek CRE loans. CRE loans are usually provided to investors such as companies, developers, partnerships, funds, trusts and real estate investment trusts or REITs (real estate investment trust).
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