What is a Commercial Loan?

A commercial loan is a type of loan offered by a financial lender for properties which reside on commercially zoned land or which meet other special eligibility criteria. If you're investing in plexes, this type of loan can also apply when a building with 5 or more units is zoned as commercial.

The borrower is generally a company or business as opposed to an individual and the business may be either a partnership, limited company or incorporated. Because of their high risk nature, these loans are generally harder to obtain, have higher down payments and come with higher interest rates vs other loan types.

Commercial loans are most commonly used when purchasing office or retail space where the primary source of income is from small business commercial use, but can also apply when other conditions are also met.

Commercial loans can also be eligible if any of the following conditions are met.

• Residential only (1-4 units)
• Residential only (5+ units)
• Residential Commercial Mixed building