Commercial Real Estate vs. Line of Credit: Compare Business Funding
CRE loans vs. business line of credit — when to use long-term property financing versus revolving working capital access.
Commercial Real Estate Loan: Commercial real estate loans finance the purchase, renovation, or refinance of income-producing or owner-occupied commercial property. Business Line of Credit: A revolving business line of credit lets you draw funds as needed up to a set limit and only pay interest on what you use.
Commercial Real Estate Loan vs. Business Line of Credit — side by side
| Commercial Real Estate Loan | Business Line of Credit | |
|---|---|---|
| Typical amount | $250,000 – $25,000,000 | $10,000 – $500,000 |
| Typical term | 5 – 30 years | Revolving (12 – 24 month draw period) |
| Rate | 6% – 12% APR | 8% – 36% APR |
| Minimum time in business | 2 years | 6 months |
| Minimum credit score | 650+ | 580+ |
Which is right for your business?
- Commercial Real Estate Loan tends to fit best when you need purchase or renovation.
- Business Line of Credit tends to fit best when you need ongoing cash flow or seasonal inventory.
Frequently asked questions
What is a commercial equity line of credit?
A CELOC is a revolving line secured by equity in a commercial property you own. It works like a HELOC for business property — draw against equity, repay, and draw again. Rates are lower than unsecured lines because real estate is the collateral.
Can I use a line of credit as a CRE down payment?
Most CRE lenders require equity contributions from the borrower's own funds, not borrowed sources. Using a line of credit as a down payment typically disqualifies the deal. Confirm with your lender early.
