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What is Real Estate Financing?

A commercial real estate (CRE) loan can be defined as financing secured by a lien on a commercial property as opposed to a residential property. These types of properties (CRE) usually relate to an income-producing entity that is used for business purposes. An example can be one of the following: offices, retail, hotels, and apartments. These types of loans are usually looked at by a small business that is looking to purchase, renovate, or even expand a new or existing site. CRE loans are typically made to these types of entities: partnerships, developers, funds, trusts, corporations, and real estate investment trusts (REITS).

In most instances, owning and operating commercial real estate are done through business entities designed for that exact reason. The company set up for this sole purpose buys the property and leases it out to obtain rent payments from other businesses that use the same for commercial use. Real estate loans are obtained by the entity to finance the initial operation to acquire, develop, and build properties for this use.