833-FL-BRAVO
786-429-3521
Commercial Bank Loans
Conventional commercial loans are versatile financing options offered by banks, credit unions, and savings institutions. Ideal for both new and seasoned investors, these loans can serve as first-lien financing for a wide range of commercial properties—providing dependable funding with flexible terms.
Contact us to know more
Conventional Bank Loan Highlights
| Eligible Properties: | Multifamily, Office, Retail, Warehouse/Industrial, Hospitality, Medical/Healthcare, Self-Storage |
|---|---|
| Loan amount range: | Minimum $1,000,000 |
| Interest Rate: | Fixed rates vary. Floating Rates from 2.30% over LIBOR. See current LIBOR Rates. |
| Loan Term: | 3 to 15 years |
| Amortization: | 10 to 30 years. |
| Maximum LTV: | 80% |
| Minimum DSCR: | 1.20x |
| Minimum Debt Yield: | 7-8% |
| Recourse: | Can be non-recourse, limited-recourse or full recourse. |
| Prepayment: | Can be no prepay penalty, step-down, or flat-rate. |
Advantages / disadvantages of Conventional Loans
Advantages:
Conventional commercial loans features create several advantages that make the loans attractive in various situations:
-
Finance Distressed Properties:
Because these loans are often underwritten based on both the property and the borrower’s personal guarantee, they may be used to finance properties that need improvements or repositioning.
-
Accessible to Financially Strong New Borrowers:
Even borrowers without prior commercial real estate experience can qualify especially if they have strong personal finances and are willing to provide a personal guarantee.
-
Smaller Loan Sizes Available:
Conventional loans are well-suited for lower-cost properties that don’t require large borrowing amounts, making them more accessible to a wider range of buyers.
-
Faster Underwriting Process:
Compared to government-backed loans, conventional loans typically offer quicker approval times since they don’t require federal agency review making them ideal for time-sensitive transactions.
Disadvantages:
Even with their many advantages and overall flexibility, there are some disadvantages that come with conventional commercial loans. Some of the more noteworthy disadvantages are that:
-
Stricter Financial Requirements:
Borrowers are generally expected to have strong credit scores, substantial post-closing liquidity, and a healthy net worth to satisfy personal guarantee conditions.
-
Personal Liability:
These loans are often full- or partial-recourse, meaning borrowers may be personally liable in the event of a default.
-
Shorter Fixed Rate Terms:
Conventional commercial loans often come with shorter fixed-rate periods compared to alternatives like CMBS loans, which may impact long-term rate stability.
Commercial Bank Loans FAQ’s
Conventional commercial loans serve as a primary lien on a financed property and typically offer medium- to long-term financing options. These loans are considered straightforward and are issued by banks or credit unions—without backing from any government agency such as the FHA, USDA, or VA.
Because they don’t involve federal programs or special terms, conventional loans are known for their simplicity, flexibility, and broad accessibility to both new and experienced investors.
Despite their name, conventional loans are highly versatile. They can be used to finance a wide variety of commercial properties, including:
- Multifamily properties
- Single-family rental portfolios
- Retail spaces
- Office buildings
- Hotels and hospitality assets
- Industrial and warehouse facilities
They are also suitable for inexperienced borrowers, thanks to their relatively simple application process. In some cases, these loans can even be used to finance distressed properties, especially when supported by a personal guaranty.
Terms for conventional commercial real estate loans vary by lender and property type, but here’s what you can generally expect:
- Loan-to-Value (LTV): Up to 75–80% of the property value
- Loan Term: Commonly 5 to 10 years, though refinancing is often done before maturity
- Fixed Rate Period: Interest is typically fixed for a few years, after which the rate may adjust or a balloon payment may apply
- Loan Amounts: Can range from smaller amounts to multimillion-dollar transactions, making them suitable for a variety of project sizes
Conventional commercial loans come with many features, but there are three prominent ones that borrowers should be aware of:
1.Personal Guaranty
Most conventional loans require a personal guaranty, meaning the borrower is personally liable if the loan defaults. The borrower’s net worth and creditworthiness are often key factors. Loans may be:
- Full-recourse
- Partial-recourse
- Non-recourse (less common, and usually for borrowers with exceptional financial profiles)
2.Prepayment Penalty
These loans usually include prepayment penalties, which may be:
- Flat-rate penalties
- Step-down (declining over time), which are common on shorter-term loans Longer-term loans may offer more flexible prepayment structures.
3.Loan Assumption
Many conventional commercial loans are assumable for a fee, meaning a new buyer can take over the existing loan when purchasing the property. This can:
- Help avoid prepayment penalties
- Provide access to better interest rates than those available in the current market
If you’re seeking a flexible, familiar, and straightforward financing option for a commercial property whether you're a first-time investor or an experienced owner, a conventional loan may be a strong fit.
At Bravo Mortgage, we help you understand your options, compare terms, and choose a solution that supports your investment goals. Let’s make your next move with confidence.
Get In Touch With Us
We understand that every dream is unique and personal. If you're ready to take the next step or simply have questions.
