How to Get a Commercial Real Estate Loan

Securing a commercial real estate (CRE) loan is no longer just about having a good idea and a strong balance sheet. In today’s market, borrowers are navigating higher interest rates, tighter bank credit, rising construction costs, and increased scrutiny on cash flows, especially in sectors like hospitality. At the same time, private credit and fintech lenders are reshaping how capital is accessed, making speed, flexibility, and certainty of execution more important than ever.

Whether you are acquiring a hotel, refinancing an existing property, or developing a new commercial project, understanding how modern CRE lending works can mean the difference between closing confidently and missing an opportunity. This guide breaks down what lenders look for, how the process works, and how to position your project for success—so you can move forward with clarity in a complex financing environment.

At AVANA Capital, we specialize in commercial real estate and hospitality financing, combining deep industry expertise with technology-driven underwriting to help entrepreneurs and developers secure capital faster and smarter. Here’s what you need to know to get started.

Understanding Today’s Commercial Real Estate Lending Landscape

Commercial real estate financing has evolved significantly over the last few years. Traditional banks have become more conservative due to regulatory pressure and balance sheet constraints, leading to tighter credit standards and longer approval cycles. As a result, many borrowers today are turning to private credit and fintech lenders for more flexible, responsive capital solutions.

At the same time, interest rate volatility, construction cost inflation, and shifting demand across property types are forcing developers and owners to be more strategic about how and when they secure financing. Sectors like hospitality, mixed-use, and value-add projects often require lenders who understand operational cash flows, not just real estate collateral.

For borrowers, this means success depends on working with lenders who bring:

Deep sector expertise
Creative structuring capabilities
Faster, technology-enabled underwriting
Certainty of execution in competitive deals

Understanding this landscape helps set realistic expectations and ensures you choose the right capital partner before starting the loan process.

What Lenders Look for Before You Apply

Before diving into the steps of getting a commercial real estate loan, it’s important to understand how lenders evaluate your project. While every lender has unique criteria, most focus on four core pillars:

1. The Sponsor (You):

Lenders assess your experience, track record, credit profile, and ability to execute similar projects. Strong sponsors with proven operational expertise, especially in hospitality or development, are viewed more favorably.

2. The Property:

Location, asset type, condition, and market demand matter. Lenders look for properties with stable or improving fundamentals and clear exit strategies.

3. The Cash Flow:

Debt service coverage, projected NOI, and realistic operating assumptions are critical. For hotels and transitional assets, lenders also evaluate ramp-up plans and seasonality.

4. The Capital Stack:

Your equity contribution, total leverage, and contingency reserves signal commitment and risk alignment. Well-structured capital stacks improve approval odds and loan terms.

Preparing these elements in advance not only speeds up the process but also positions your deal for stronger lender interest and better outcomes.

How to Get a Commercial Real Estate Loan

1. Make an Outline of the Project

When applying for any loan, you should have an understanding of why you need that loan in the first place. What kind of project are you undertaking? What are the specific financial needs of this project? Let’s say your project’s goal is to renovate a hotel building that you own. Once you know this goal, you can then delve deeper into the needs of the project. Perhaps you require certain construction materials or machinery to complete your renovations. Another aspect to determine is the overall timeline of your project. Altogether, understanding what your project’s goals, needs, and timeline are will aid you in finding what kind of loan will best fit those needs. Additionally, when you do apply for a loan, you should be able to describe your project to a lender. While they don’t need every detail, being able to outline the structure of your project is a crucial part of successfully applying for a loan, especially when you write up your proposal. This proposal shows a potential lender what your intentions are with your project and how responsible you are as a project manager and, as a result, how capable you would be as a potential borrower.

2. Explore Different Commercial Real Estate Loans

Now that you have a better understanding of what your project requires, you can narrow down your search for a loan. Generally, there are various loans that a commercial real estate project can benefit from. However, each loan is structured for different needs and timelines. The most common types of commercial real estate loans you’ll find are SBA loans. Specifically, these are SBA 504 loans for commercial real estate, SBA 7(a), and Construction loans. Let’s use our example project from before. When looking for the right loan, you would likely want to find one that supports the purchase of necessary equipment. For now, let’s say the timeline for your project would require a loan with a long-term repayment schedule. In this scenario, the best loan would be an SBA 504 loan, as it is specifically structured to assist business owners in purchasing commercial real estate and machinery for their projects. Conversely, you could also consider one of the various types of SBA 7(a) loans that are available. The main differences between SBA 504 vs. 7(a) loans are term length and loan amount. In comparison to the SBA 504 loan, the SBA 7(a) loan tends to have a shorter loan term of 25 years maximum and is often used when a borrower needs a smaller loan amount. The third type of CRE loan that we mentioned is a construction loan. These loans are beneficial to business owners who are looking to expand on an existing property or build out a new franchise location, for example. Overall, a construction loan is beneficial to these types of projects because of how the loan is structured. A construction loan allows a borrower to only pay interest payments for the first two years. This structure allows the borrower’s project to generate value over those two years as well.

3. Assess Lenders to Find a Beneficial Partnership

Once you’ve narrowed down your choice of loans, knowing how to find the right lender is your next critical step. Much like your previous steps, finding the right lender comes down to what your project’s goals are and the kind of loan you require. Simply put, the right lender for your project will be unique to your needs and expectations. In addition to assessing a lender by the loans they offer, you should also consider what a potential partnership with them may offer. Naturally, an ideal lender will be one that understands the industry you’re working in. For example, lenders like AVANA Capital have almost two decades of experience in working with business owners to aid them in growing their companies. A lender like AVANA is appealing because of the unique insights this experience provides its team and its clients. With this experience, AVANA Capital can create loans that are unique to a client’s needs. Additionally, as a partner, AVANA’s team guides clients throughout their projects. In the end, finding the right lender and partner will ensure your project has support and is thriving.

Common Mistakes to Avoid When Securing a CRE Loan

Even well-prepared borrowers can face delays or unfavorable terms if they overlook key aspects of the commercial real estate financing process. Being aware of these common pitfalls can help you stay ahead and improve your chances of a smooth closing:

1. Underestimating total project costs

Many borrowers focus only on acquisition or construction costs while ignoring soft costs, interest reserves, contingencies, and working capital. Lenders expect a fully baked budget that reflects real-world conditions.

2. Providing incomplete or outdated documentation

Missing financials, inconsistent numbers, or outdated rent rolls can slow underwriting and raise red flags. Accurate, organized documentation builds lender confidence and speeds approvals.

3. Overly optimistic projections

Aggressive revenue assumptions or compressed lease-up timelines can weaken credibility. Conservative, data-backed projections are more likely to earn lender support.

4. Choosing the wrong lending partner

Not all lenders understand every asset class. Working with a lender unfamiliar with hospitality, construction, or value-add projects can lead to rigid structures or late-stage surprises.

5. Waiting too long to engage a lender

Bringing in a lender after a deal is already under contract limits structuring flexibility. Early conversations often lead to better terms and faster execution.

Avoiding these mistakes helps borrowers protect timelines, reduce friction, and secure financing that truly fits their project goals.

Conclusion: Partnering for Smarter CRE Financing

Securing a commercial real estate loan is one of the most important financial decisions a developer or business owner will make. In today’s complex market, success requires more than just capital: it demands a lending partner who understands your asset, your industry, and your vision.

At AVANA Capital, we specialize in commercial real estate and hospitality financing, supporting projects across acquisition, construction, bridge, and permanent loan needs. Our technology-driven platform, combined with deep sector expertise, allows us to move quickly, structure creatively, and deliver certainty of execution; so you can focus on building long-term value.

Whether you’re developing a new hotel, repositioning an existing asset, or expanding your commercial portfolio, the right financing can unlock your next phase of growth.

Ready to get started?

Connect with AVANA Capital today to discuss your project and explore customized CRE financing solutions designed around your goals. Our team is here to help you move from opportunity to closing with confidence.