Commercial Real Estate Loan Calculator (2024)

How To Use the Commercial Mortgage Calculator

We’ve created this calculator with simplicity and ease of use in mind, so you can crunch the numbers with confidence. Here’s how to get started:

1. Input the loan amount. Begin by entering the total payment amount of the loan you’re considering. This is the principal sum you’ll be borrowing from the lender to finance your commercial property.
2. Enter the annual interest rate. Next, input the annual interest rate associated with your loan. This rate determines the cost of borrowing and plays a significant role in calculating your monthly payments.
3. Specify the amortization period. Select the amortization period, which refers to the total length of time over which you’ll pay off the loan. This shows the duration and size of your monthly payments.
4. Define the number of regular payments. Input the number of regular payments you’ll make over the loan term. This helps determine the frequency of your payments, whether monthly, biweekly, or otherwise.
5. Set the start date. Finally, choose the start date for your loan repayment schedule. This establishes the timeline for your payments and allows you to plan ahead.

Once you’ve entered these, our calculator will generate a detailed breakdown of your loan terms, including monthly payments, total interest paid and more.

What the Results Tell You

Now it’s time to unpack what those results mean for you and your commercial real estate financing journey.

• Monthly payment. This represents the amount you’ll need to pay each month to meet your loan requirements. It directly impacts your cash flow and budget. By understanding your monthly mortgage payment, you can better anticipate and manage your ongoing expenses, making sure your business stays on solid financial footing.

• Balloon payments (if applicable). In some cases, commercial real estate loans may include balloon payments — larger lump-sum payments due at the end of the loan term. These payments can impact your financial requirements and need careful consideration. Understanding the potential for any balloon payments allows you to plan ahead and explore refinancing options if necessary.

• Total payments. This is the sum of all payments made over the course of the loan, including both principal and interest. It provides a view of the overall financial commitment associated with your commercial mortgage.

• Total interest paid. This represents the total amount of interest you’ll pay over the life of the loan. It’s indicated by the overall cost of borrowing and can impact the profitability of your commercial real estate investment. By limiting the total interest paid, you can optimize your financial outcomes.

• Amortization schedule. This lays out the roadmap of your loan payments, showing you exactly how each penny is split between principal and interest over the life of your loan. It’s your go-to guide for watching your loan repayment journey unfold and building equity in your commercial property. Keep an eye on this schedule to celebrate your financial wins and fine-tune your repayment tactics.

Fine-tune your commercial real estate financing strategy to align with your business goals and financial capacity. Whether it's adjusting payment schedules, reducing interest expenses, or considering alternative financing options with Clarify Capital, understanding your options paves the way for long-term financial success and stability.

Use Cases for Getting a Real Estate Loan

Let’s explore some of the most common use cases for securing financing:

Commercial Property Purchase

Whether you’re expanding your business operations or exploring a new market, purchasing a commercial property is a big investment. With a real estate business loan, you can finance the purchase of office buildings, retail spaces, warehouses, or other commercial properties — making a home for your business.

Refinance Existing Loans

If you’re looking to improve your financial position or take advantage of lower interest rates, refinancing your existing mortgage loan can be a smart move. By getting a new loan with more favorable terms, you can lower your monthly payments, shorten the mortgage terms, or access equity for other business purposes.

Fund Construction Projects

Taking on a new construction project requires a lot of working capital, and a real estate loan can provide the financial backing you need to bring your vision to life. Whether you’re building a new office complex, retail center, or multifamily residential development, construction loans offer flexible financing options tailored to the needs of your project.

Acquire Investment Properties

Investing in real estate can be a smart wealth-building strategy and getting a real estate loan can help you capitalize on those opportunities. Whether you’re purchasing rental properties, flipping houses, or investing in commercial real estate, a loan can provide the leverage you need to maximize returns and grow your investment portfolio.

Eligibility Criteria

The process of getting a property loan requires a clear understanding of your eligibility. Here’s what you need to know to increase your chances of securing financing:

• Credit score and history. Lenders typically assess your creditworthiness by checking your credit score and history. A strong credit score shows your able to manage debt responsibly and tells lenders that you’re a low-risk borrower. Maintaining a positive credit history by making on-time payments and minimizing debts is important for loan approval.

• Debt service coverage ratio (DSCR). The DSCR is a key metric used by lenders to assess if you’re able to repay the loan. It compares your property’s net operating income (NOI) to your total debt service, including principal and interest payments. Lenders typically look for a DSCR of at least 1.25 to make sure there is adequate cash flow to cover the loan.

• Loan-to-value ratio (LTV). The LTV ratio measures the loan amount relative to the appraised value of the property. Lenders use this ratio to determine the level of risk associated with the loan. A lower LTV ratio means less risk for the lender and may result in more favorable loan terms. Generally, lenders prefer LTV ratios below 80% to offset risk.

• Underwriting process. The underwriting process involves a thorough review of your financial documents and loan application by the lender. The process also includes assessing your income, assets, liabilities and other relevant financial information to determine your eligibility for the loan. Be prepared to provide detailed documentation, such as your business plan, tax returns, financial statements and property appraisals, to support your loan application.

Meeting the eligibility criteria is important for successful loan approval and securing favorable financing terms. By having strong creditworthiness, adequate cash flow and a solid financial profile, you can increase your chances of getting a commercial real estate loan that meets your business needs.

Other Types of Loans To Consider

When exploring financing options for your business, it’s important to check out a variety of loan types for your specific needs and circumstances. Here are some other types of loans worth considering:

• Term loans. Term loans are a common option for businesses looking to borrow a specific amount of money and repay it over a period of time, typically with a fixed interest rate. You can use these loans for different purposes, such as purchasing equipment, expanding operations, or refinancing existing debt. With set monthly payments and flexible repayment terms, term loans offer stability for budgeting and planning.

• Business lines of credit. A business line of credit offers flexibility and convenience, allowing you to access funds on an as-needed basis up to a certain credit limit. Similar to a credit card, you can borrow and repay funds as necessary, paying interest only on the amount borrowed. Business lines of credit are ideal for managing cash flow, covering short-term expenses, or seizing unexpected opportunities without the need to reapply for financing each time.

• Small Business Administration (SBA) loans. SBA loans are government-backed loans designed to support small businesses with favorable terms and flexible eligibility criteria. SBA loans come in different forms, including 7(a) loans for general business purposes, SBA 504 loans for real estate and equipment financing and microloans for small-scale financing needs. These loans offer competitive loan rates, longer repayment terms and lower down payment requirements.

• Equipment financing. Equipment financing allows businesses to purchase or lease equipment and machinery without tying up capital or collateral. With equipment loans or leases, you can buy essential assets for your business while maintaining cash flow. This type of financing is helpful for businesses in industries with high equipment costs, such as manufacturing, construction, or healthcare.

Explore Your Financing Options With Clarify Capital

While traditional real estate loans like mortgages and SBA loans are common, we understand that they may not always be the best fit for every situation. That’s why Clarify Capital offers alternative loan options, such as term loans, business lines of credit and more.

With our simple application process and personalized approach to funding, we make it easy for you to explore all available options and choose the financing solution that matches your goals.

Don’t let financing hurdles stand in the way of your real estate ambitions. Explore your financing options with Clarify Capital today and take the first step toward unlocking the potential of your property investments.