Commercial Real Estate Loans in California for Investors and Businesses

If you're an investor or business owner in California looking to secure a commercial real estate loan, you're in the right place. California offers a variety of loan options to fit your needs, from short-term bridge loans to long-term fixed-rate financing.

California commercial real estate loans can be secured through various lenders, including banks, credit unions, and private lenders. These lenders offer a range of loan terms, interest rates, and repayment structures to suit different business models and investment strategies.

To qualify for a commercial real estate loan in California, you'll typically need a credit score of at least 650, a debt-to-income ratio of 40% or less, and a down payment of 20% or more.

California Commercial Real Estate Loans are provided by banks and typically approved for creditworthy and profitable businesses. This type of loan is ideal for businesses that want to finance the purchase or refinance of commercial properties.

There are two main types of commercial real estate loans: traditional bank loans and Small Business Administration SBA loans. LBC Mortgage also offers commercial loans for real estate business in California, providing access to commercial capital for all types of commercial properties.

Commercial loans can be used to finance different types of real estate businesses, including apartment buildings, warehouses, and business acquisitions with Real Estate. The terms of CRE loans are typically shorter than residential mortgages, making them a more suitable option for businesses.

California is a vast and diverse state, and its commercial real estate landscape reflects this. From the bustling streets of San Francisco to the sun-kissed beaches of Los Angeles, there are countless opportunities for entrepreneurs and investors alike.

San Francisco's South of Market (SoMa) neighborhood is a hub for tech startups and innovation, with many companies choosing to locate in this area due to its proximity to Silicon Valley.

Los Angeles County has the highest number of commercial properties in California, with over 3,000 properties valued at over $1 million.

The Central Coast region, which includes cities like Santa Barbara and San Luis Obispo, offers a more laid-back and affordable alternative to the tech-driven markets of the Bay Area.

San Diego's downtown area is undergoing significant revitalization efforts, with new office buildings and apartments sprouting up in recent years.

The Inland Empire region, which includes cities like Riverside and Ontario, is a major logistics hub due to its proximity to the Ports of Los Angeles and Long Beach.

Commercial real estate loans are a type of loan that's given to business entities, such as corporations, LLCs, investors, and developers. This is different from residential real estate loans, which are given to individual borrowers.

Commercial real estate loans are typically used to finance the purchase or refinance of commercial properties, and can be used for financing different types of real estate businesses.

Commercial real estate includes any income-producing property used for business purposes, such as office buildings, retail centers, warehouses, and apartments.

Commercial loans can be used for financing apartment buildings, warehouses, business acquisitions with Real Estate, and SBA 7(a) and 504 Loans.

Historically, regional banks have been a primary source of commercial real estate loans, but the 2023 United States banking crisis has led to many regional banks no longer offering these loans.

The down payment for a commercial loan can vary depending on your lender's requirements and the property's cost. You can put down as little as you need to, but keep in mind that a larger down payment will save you more in interest over time.

Griffin Funding offers commercial loans on 1-10 unit investment properties, including DSCR loans for 1-4 unit properties and small balance multifamily loans for 5-10 unit properties. These loans are ideal for purchasing cash-flow producing investment properties or refinancing existing ones for business purposes.

To qualify for a commercial loan, lenders will evaluate your creditworthiness, property value, business performance, and debt coverage service ratio (DSCR). They'll also consider your business credit score to determine your creditworthiness.

Lenders typically seek small business finances before approving a commercial loan, as cash flow problems are a common reason for business failure. They'll use the debt service coverage ratio (DSCR) to evaluate your business's profitability and ability to repay the loan.

Griffin Funding offers commercial loans on 1-10 unit investment properties for business purposes.

Commercial DSCR Loans on 1-4 Unit Properties are available, allowing you to purchase cash-flow producing investment properties.

Small Balance Multifamily DSCR Loans on 5-10 Unit Properties are also offered, catering to larger investment properties.

These loans are best used for purchasing cash-flow producing investment properties or doing a cashout refinance on existing investment properties.

However, you cannot use the funds for personal use, as these loans are commercial.

You can contact Griffin Funding if you were turned down by a regional, mid-size, or large bank for a commercial real estate loan.

The Small Business Administration (SBA) offers a range of loan options that can help small businesses like yours get the funding you need. The SBA has two main real estate loan programs: the 7(a) and the CDC/504 loan programs.

The 7(a) program is a general-purpose business loan that can be used for many different business reasons, including buying and repairing commercial property. The term is 25 years for real estate, and rates are in the range of 7% to 9.5%.

Lenders will evaluate your business finances before approving a commercial loan, so it's essential to have a solid understanding of your business's cash flow. Most small businesses fail due to cash flow problems, which can be caused by poor sales, property damage, or lawsuits.

To qualify for an SBA loan, lenders will consider your debt service coverage ratio (DSCR), which is calculated by dividing the property's annual net operating income (NOI) by the annual debt payment. This ratio will help the lender determine whether your business is profitable and can repay the loan.

Here are the SBA loan programs that can be used for real estate:

Commercial real estate loans, also known as CRE loans, are used to purchase, construct, rehabilitate, or refinance commercial, industrial, and other non-owner-occupied property.

They can be used to buy and develop land on which homes will be constructed and sold, or to purchase office buildings, multi-unit rental buildings, medical facilities, warehouses, hotels, or vacant land.

Unlike buying a home with a residential mortgage, commercial lenders underwrite based on the income and expenses the property will generate.

Business owners who rent a location and qualify for a commercial real estate loan may be better off obtaining financing to purchase their business property.

The underlying asset for a commercial loan is not a primary residence, but rather a commercial property that generates income.

Commercial lenders require borrowers to have a good credit history and a solid business plan in place.

The amount of money you need to put down for a commercial loan depends on several factors, including the lender's requirements and the cost of the property.

Putting down more in the beginning will ultimately save you more in the long run, as you'll have to pay off or accrue interest on less.

Lenders consider your time in business before approving your commercial real estate loan, with a business that has been operating for at least three years having the best chance of qualifying.

Lenders will evaluate your debt service coverage ratio (DSCR) by dividing the property's annual net operating income (NOI) by the annual debt payment, which signifies whether your business is profitable or facing losses.

A DSCR of less than 1 indicates the business is operating with negative cash flow and there's not enough cash to meet the debt obligations.

To qualify for a commercial loan, lenders look at your creditworthiness, the value of the property, business performance, and debt coverage service ratio.

Commercial lenders typically require lower loan-to-value ratios, which means commercial buyers may need to provide a larger down payment than regular homebuyers.

The lender will also consider your business credit score to discern your creditworthiness, with a credit score of 700 or higher being the most preferable for commercial real estate loans.

If you want your loan faster, choosing a commercial mortgage broker can help, but you will pay higher interest rates.

Here are the common types of commercial loans offered by lenders:

A DSCR that's greater than 1 means your business has more than enough profit to make loan payments, which is what lenders usually look for when evaluating your commercial real estate loan qualifications.

Commercial real estate loan rates can vary significantly depending on lender requirements, the current state of the economy, and the borrower's financial health.

Interest rates fluctuate regularly, so it's essential to be in good financial standing when applying for a loan.

Improving your credit score can help you secure a low interest rate, and a good credit score can also provide access to more loan options.

Increasing your net worth and expanding your portfolio can also demonstrate financial stability to lenders, potentially leading to more favorable interest rates.

Providing solid evidence of an income-producing property can also give you an edge when negotiating with lenders.