Commercial Real Estate Loan

Conceptually, a commercial real estate loan isn't much different than what you'd expect. Like getting a home mortgage, it involves borrowing money to buy a property, while using that property as collateral for the loan.

The type of property involved in the deal represents the main departure from a typical mortgage. Instead of a home that you intend to live in, the commercial property is for business (See: Commercial Real Estate). You might operate your own business out of the place. Or you can rent it out to other businesses...if you bought, say, an office complex or a strip mall.

While the general concept of a commercial real estate loan resembles that of a home loan, some details are different. The loan is generally made to a business entity (a corporation or an LLC), although, depending on the situation, the lender might require a personal guarantee as well. Also, the laws and regulations that apply to commercial real estate loans differ from those for home loans.