Commercial real estate loans — overview
A commercial real estate (CRE) loan is financing secured by property used for business purposes. Unlike residential mortgages, CRE loans are structured around commercial properties such as warehouses, office buildings, or mixed-use facilities. Lenders evaluate both the property and the borrower’s business when considering credit for commercial real estate.
Common uses for eCommerce businesses
eCommerce companies use CRE loans to support physical operations that complement online activity. Common uses include:
- Purchasing or expanding fulfillment centers and warehouses to increase storage and handling capacity.
- Acquiring last‑mile delivery hubs closer to major customer bases for faster fulfillment.
- Converting retail or industrial space into distribution or returns-processing facilities.
- Buying office space for administrative, customer service, or technology teams that support online operations.
- Refinancing existing commercial property to free up operating capital or consolidate debt (subject to lender review).
Typical eligibility considerations
Eligibility criteria vary by lender and loan product. Common factors lenders generally review include:
- Business financials: revenue history, profitability, and documented cash flow to demonstrate the ability to service debt.
- Property characteristics: location, condition, zoned use, occupancy, and potential for resale or rental income.
- Borrower profile: credit history, ownership structure, experience managing commercial property, and time in business.
- Down payment or equity: amount of borrower equity in the property and overall loan-to-value expectations.
- Collateral and appraisals: independent property valuation and any required environmental or structural reports.
- Lease and tenant considerations: for leased space, strength and term of tenant leases can affect underwriting.
Key risks and considerations
Taking on commercial real estate debt creates operational and financial obligations. Key considerations for eCommerce businesses include:
- Market risk: Changes in local real estate markets can affect property values and resale options.
- Cash flow variability: eCommerce revenue can be seasonal or volatile; fixed property payments may strain liquidity during slow periods.
- Vacancy and utilization: Underused warehouse or retail space can reduce expected income and increase carrying costs.
- Operational costs: Maintenance, property taxes, insurance, and capital expenditures add to total occupancy cost beyond loan payments.
- Regulatory and zoning constraints: Property use may be limited by local zoning, environmental regulations, or permitting requirements.
- Loan terms and covenants: Commercial loans often include covenants or requirements that can limit operational flexibility; it is important to understand any ongoing obligations tied to financing.
- Concentration risk: Large investment in a single property can concentrate business risk in one location or asset class.
Alternative financing options
Businesses that consider alternatives to traditional CRE loans may evaluate several other approaches. These include:
- Short-term bridge or construction loans for property renovation or rapid expansion needs.
- Equipment financing or leasing for handling and fulfillment technology rather than buying real estate.
- Business lines of credit to support working capital and inventory without long-term property debt.
- Sale-leaseback arrangements to convert owned property into operating capital while maintaining occupancy.
- Mezzanine financing or equity partnerships to share risk with investors when large capital needs exceed typical loan structures.
- Crowdfunding or private investment for specific property projects or expansions.
Explore financing options
This link provides general information about financing options.
This content is for informational purposes only and does not constitute financial advice or a loan offer. Loan eligibility, terms, and approval are determined by lenders based on individual review.
Part of our complete guide to commercial real estate loans — compare programs, costs and lender requirements across every industry.