What Are The Commercial Real Estate Refinancing Rates?

You might see published rates as low as 2.2%, and some lenders might give you a large range like 2% to 18%. Variation is dependent on lending variables like credit score, years in business, property value, debt-to-income, etc.

Some lenders will even publish the ideal rate—a rate for someone with perfect credit and no other negative factors. The goal is to get you to start an application. You think you are getting a deal, and they get a lead. Once you start the application, the rate changes. They know you'll probably stick with them even if the rate is a little higher.

No lender can offer you a rate until they have run your credit and performed some due diligence.

Protect yourself, and ask a bank or loan originator if the following factors will affect your "published" rate.

• Does My Zip Code Affect My Mortgage Rate?
• How Does My Credit Score Affect My Rate?
• How Does My Loan Type Affect My Mortgage Rate?
• How Does The Size Of My Loan Affect My Rate?
• How Will The Terms Of My Loan Affect My Rate?

We start our commercial refinancing applications with these questions in mind. Our goal is to match your circumstances to the best product—getting you the best rate and the best terms possible.

How Can I Refinance A Commercial Loan?

The easiest way to refinance your commercial prosperity is to start an application. Once you submit the initial application, we will contact you over the phone to get more information about your goals. Sometimes refinancing is the best option, sometimes it's not. Here are some of the reasons you might want to refinance your commercial loan.

• To lower your monthly payment
• To get better loan terms
• To avoid a hefty balloon payment 
• To borrow money tax-free with a cash-out refinance

Not all commercial loans can be refinanced; however, there are lots of options for commercial real estate investors. One of our experts can review you accounts and help you make the best financial decision.

What Commercial Real Estate Refinancing Loans Are Available?

There are lots of options when it comes to refinancing your commercial property. However, there are three general categories for borrowers to consider.

Government loans are backed by a government agency like the SBA or the USDA. The SBA backs loans up to $5.5 million, as does the U.S. Department of Agriculture (USDA).

The refinancing process works like any other, except in this case, the SBA and USDA agree to guarantee a portion of the loan amount if the borrower defaults, which means they fail to repay it. This guarantee makes it easier for lenders to offer borrowers more flexible qualifying standards.

In order to refinance into an SBA loan, you must have a documented on-time payment history for the last 36 months. Notably, you may be denied for an SBA loan refinance if you do so for a reason the SBA deems ineligible, such as avoiding a balloon payment. For a USDA loan, the business must be located in a rural area and the business owner must be a U.S. citizen or have permanent residency status.

This type of commercial refinancing is simply not backed by the federal government. Conventional commercial mortgages are the most common type of commercial refi loan, and typically comes from a traditional bank or mortgage lender. While commercial loans don’t have specific loan limits, lenders typically allow you to borrow a certain percentage of the value of the property that acts as collateral. They typically allow a loan-to-value ratio of 65% to 75%.

With this option, the loan terms are usually similar to those of the original loan, except for a different interest rate, type of interest (fixed versus adjustable) or loan term.

Typically, conventional commercial lenders have stricter qualifying requirements, including larger collateral requirements, a demonstrated ability to repay their debts and significant time in business. Conventional commercial loans are geared toward more established business owners who can meet the more stringent borrowing requirements.

A cash-out refinance commercial loan allows you to replace your existing mortgage with a new one by borrowing more money than you currently owe on the property.

Once you’re approved for a cash-out refinance commercial loan, the difference between the new loan amount and how much you owe on the property is paid to you, in cash, at closing. You may be able to use the cash as you see fit, though some lenders restrict the use of funds.

This type of refinance loan is best suited for those who have built up a substantial amount of equity in the property. For example, commercial lender CommercialRealEstate.loans requires at least 25% equity.