Commercial Real Estate Loans

Frequently Asked Questions

• What is considered a commercial real estate loan?
  

  Any loan to a business for a business purpose where the collateral used is a piece of real estate is a commercial real estate loan.

• What types of real estate can be used?
  

  Almost any piece of real estate can be used as collateral for a commercial real estate loan. Office buildings, warehouses, raw land, etc. If the collateral in question is land or a building, we can probably use it for a commercial real estate loan.

• Does the business have to occupy the building to get a loan?
  

  Nope! We can do loans on several properties at once, on investment properties, or a mixture of the two. As long as the business is the owner of the property, we can use it as collateral.

• What is the typical loan term?
  

  Our most common product is a 10 year/25 year amortization loan with a 5-year reprice. That said, we can change the loan term and the amortization period to meet the needs of the borrower. The maximum loan term is 15 years.

• What are the interest rates on a loan like this?
  

  Interest rates for commercial loans are tied to the 5-year Treasury Bill. As this price index rises and falls day to day, so do our interest rates. Typically, commercial real estate loan rates are locked in 5 years at a time. This means that on a 10 year loan, the interest rate of the 61st payment will adjust to the market rate at that time.

• What is the loan limit on a commercial real estate loan?
  

  The loan limits on these loans are quite high, and we can control risk on loan limits in a different way than most. These loan limits can also change from time to time, so it’s best to reach out to a commercial real estate loan officer for questions about loan limits. In general, first-time borrowers shouldn’t be concerned about loan limits in most cases.

• How long does a commercial real estate loan take to complete?
  

  Most of this depends on the borrower. The sooner they can submit the required documentation and finances, the quicker we can complete the loan. On average, these loans take around 6 – 8 weeks to complete once all required documentation has been received.

• What documents/finances should the borrower prepare to submit with an application?
  

  Every borrower will need to submit 3 years of taxes for each business and business owner involved in the loan. Additional documents will be required, which varies from loan to loan, so it’s best to allow the commercial real estate loan officers to make those determinations with the borrower directly.

• Are personal guarantees required?
  

  Unconditional personal guarantees are required for all commercial real estate loans. Generally, borrowers with at least 20% ownership in the business will be required to guarantee loans. Owners with less than 20% ownership may be required to guarantee loans to have at least 50% ownership represented as guarantors. Partial or waived guarantees may be possible in situations when exceptionally strong mitigating factors exist.

• Are there prepayment penalties?
  

  Chartway does not charge prepayment penalties on any commercial real estate loan, an advantage for financing at your credit union.