What Are the Different Types of Commercial Real Estate Lenders and Which Is the Best One?

Commercial real estate is a complex industry with many types of different real estate. The same goes for commercial real estate lenders, which is precisely what we wanted to talk about today. We'll discuss all the lenders that are worth considering and help you find the best ones. In addition, we'll cover the most important things you need to look out for here.

The Most Common and Useful Types of Commercial Real Estate Lenders

• Banks 

These are the first and most obvious lenders for real estate and almost all other financial needs. Nearly all banks have massive, low-cost pools of capital they are willing to lend for a wide range of different commercial real estate projects. The only thing that you need to do is consider which one is the best for your specific needs. 

In general, most local and regional banks are a good option only in their immediate geographic area. While national banks work in every region, they do have specific criteria you need to meet. 

• Government-sponsored Entities (GSEs)

GSEs are organizations the government sanctions to work with commercial real estate investors and landlords. They don’t offer direct loans, but they enable certain institutions to offer low-cost loans in accordance with specific financial criteria. 

The most notable and recommended GSEs for commercial real estate loans are Fannie Mae, Freddie Mac, and the Federal Housing Administration. However, you should know that they all exclusively lend on multi-family real estate. 

• Marketplace Lenders

These online lenders work by matching you with an appropriate loan product that an investor like you needs. The most commonly used and the largest marketplace lender is Lendio. 

• Life Insurance Companies

Life insurance companies have long-term sources of capital that they are always willing to lend on projects with expected returns. This makes them perfect for commercial real estate projects, in most cases. As long as you have a low-risk project, they will likely be willing to give loans that range from 10 to 30 years amortization.

• Bond Markets

Bond markets are lenders who tie bonds to commercial real estate loans and usually reduce them to smaller pieces that can be sold to investors. Independent rating agencies rate these markets, which gives investors objective data on which they can base their decisions. 

The Best Commercial Real Estate Lender

Naturally, it depends on your specific needs and the current offers each lender has.  There are even specific lenders that lend in specific property asset classes.   We would recommend that you talk to a few different lenders and ask what they typically lend on, make sure it is for the asset class that you are looking for a loan.   Another option would be to consider talking to a Commercial Real Estate Loan Broker, one that has many options and can help to find the best loan for your needs.

You will need to take a look at each of the options and consider which are the most important aspects of the loan to you. Each lender has a minimum and a maximum amount, rate, minimal annual revenue they need you to have, and more. So, it's all about finding the best middle ground for your current needs and situation you're in. 

If you need any more help with choosing the right lender, feel free to reach us at info@cbicommercial.com