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Loan type

Commercial Term Loan

A conventional bank loan for property, expansion or acquisitions, with no SBA guarantee.

Run the numbers How to apply

Loan size
Set by the lender; no SBA cap
Term
Commonly 3 to 10 years, often amortized over 20 to 25 for real estate with a balloon at the end
Down payment
Commonly 20% to 30% on commercial real estate
Rate
Fixed or variable; priced to credit and collateral
Prepayment
Penalties are common; read the note
Best for
Strong borrowers, larger deals, speed

What it is

A conventional commercial term loan comes from a bank or credit union with no government guarantee. Because the lender carries all the risk, it usually wants stronger credit, a larger cash flow cushion, and a bigger down payment than an SBA loan. In return, the process can be faster and less paperwork-heavy, and the loan can be any size the lender is willing to carry.

Many commercial real estate loans are written with a 5- to 10-year term but a 20- to 25-year amortization, so the payment is based on the longer schedule and a balloon payment comes due at the end. Plan how you will refinance or pay it off before you sign.

A $750,000 loan on a 20-year schedule with a 10-year term
  • Paid down by year 10$240,998
  • Balloon due at year 10$509,002

Payments are set on the longer 20-year schedule, so a large balance is still due when the 10-year term ends. Plan how you will refinance or repay it.

A good fit if you want

  • Strong credit and cash flow
  • Larger loans than the SBA programs allow
  • Borrowers who want to close quickly

Probably not the right tool if

  • Businesses that need lower down payments or longer terms
  • Startups with limited history

Typical requirements

  • Historical cash flow that supports a debt service coverage ratio of around 1.25x or more
  • Personal guarantees
  • Collateral, usually the property or equipment financed
  • Tax returns, financial statements and a debt schedule

Run the numbers

These calculators run in your browser and are estimates, not offers. Change any number to see the effect.

How to apply

  1. Know your numbersCalculate your DSCR and loan-to-value before you call a lender.
  2. Shop several lendersBanks, credit unions and nonbank lenders price differently. Ask for a term sheet from each.
  3. Compare more than the rateLook at the balloon date, prepayment penalty, covenants and reporting requirements.
  4. Underwriting and appraisalThe lender orders an appraisal and may require environmental and title work for real estate.
  5. CloseReview the loan documents with your attorney.

Need a lender, an SBA district office or a free counselor? Use the national directory.

Common questions

What is a balloon payment?

The remaining balance due all at once at the end of the term, because the payments were set on a longer schedule.

Why do lenders ask for personal guarantees?

They give the lender a claim on the owners if the business cannot pay.

Keep reading

Sources

General information, not financial, tax or legal advice. LoansFlow is not a lender and this is not an offer of credit. Program rules, limits, fees and rates change; confirm current terms with your lender and the issuing agency. SBA figures reflect SBA.gov and the fiscal year 2027 fee notices (effective October 1, 2026).