How to get loans under 500k for commercial properties?

Question

I own some commercial properties. I can't find any lenders who will lend under 500k, so I always have to package properties together to get them over 500k to get a loan.

Now that rates are going up, I don't want to do that..

How do people finance commercial properties under 500k if all the banks and lenders I talk to have either a 500k or 1M minimum? It is oddly frustrating.

No problem getting loans on non commercial or multifamily, but true commercial on the other hand is killing me. I'm about to walk away from a deal I like simply because I don't want to refi my other properties.

Any advice appreciated!

Heather Easterbrook · Answer

There are numerous options available for commercial loans under $500k. I have several lenders available that specialize in them. Please PM me with details and I can give you an idea of rage/term.

Chris Connery · Answer

Hmm... that really sucks. I’d tell you to just keep calling around but I’m sure you’ve already done that. It always annoys me when the banks place these minimums, and it really makes no sense why they do it.

Andrew Postell · Answer

@Brooks F. have you tried the commercial forum?  This might be a better topic for that forum.  You might get more responses there.

Brooks F. · Answer

I'll try that too. I also found this, so I know I'm not alone on the commercial loan under 500k issue:https://www.biggerpockets.com/forums/49/topics/158...

Brooks F. · Answer

I concur.. especially when they seem to have no problem doing a $35k single family.. haha. (I know there's more gov't protections for single families)It comes with the territory though. I will continue calling around, and I've spoken to a lot of lenders... there's more to call though, and always will be. I thought I'd ping on here though and see if anyone can refer, which I've fortunately already got two referrals, which is great. That's what I was looking for.For one of the specific niches that I'm involved in however, the properties tend to fall in the 250-400k range in general business and Agg zones (but 250-350 loan amounts). Most lenders want to push the sub 500k comms into SBA, but this isn't really SBA-territory (even though the first property I bought was via an SBA 504). I both want to avoid SBA loans now and getting SBA for non owner occupied is kind of a grey area. I got around it by having a partial ownership claim to the business renting the property. The SBA loan terms sound nice, but by the time you eat the SBA fees and deal with their extensive disclosure and payoff requirements, they become less appealing quickly. In addition, the minute I don't own the company renting the property, it becomes an even greyer area (My lender said- "As long as you keep making your payments, the SBA won't care", yet at the same time the SBA requires financial statement disclosures...) I packaged that SBA loan with another one to get over the 500k threshold though so I got out of the SBA world. Thanks for weighing in, and thanks to others for the referrals!

Brooks F. · Answer

The only lenders I've found that will do multifamilies (up to 200 units) but under $500k will not do non-residential properties. I have a lender I've been using a lot that counts multifamilies as commercial, but does 500k minimum, forcing me to take rate hits on refi's without even doing cash out just to get over 500k. I didn't lose sleep when the rates were close, but now that they are going up a bit I don't want to be forced to refi properties I just refied 6-12 months ago, going through the hoopla of expenses and rate hikes. I've spoken to other lenders with a 1M minimum on all commercial.

For what it is worth!

Chris Connery · Answer

your commercial lenders discrimate between Multi-family (over 4 units) and true commercial properties?

Or were you referring to multi family as 2-4 units?

Brooks F. · Answer

Of course not! I wasn't sure if it was better to post it here (under lending and mortgages) or under Commercial (since I didn't see a specific forum about commercial), but I can post over there too. Thanks!

How to get loans under 500k for commercial properties?

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