A commercial mortgage loan, also known as a commercial real estate loan (CRE loan), is a loan made to a borrower to purchase or refinance real estate properties that are zoned for commercial use. Commercial real estate serves as the collateral for the loan.
To understand commercial loans better, let’s break the definition down to its key terms:
What is commercial real estate (CRE)?
Commercial real estate is a “property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute the residential real estate.”
The major types of commercial real estate include:
- Multifamily (5 units or more)
- Storage and warehouse
- Hotels and motels
- Mobile home parks
- Vacant land zoned commercial
- Special-purpose properties such as:
- Religious places of worship;
- Spaces for marijuana-related transactions;
- Gas stations and convenience stores;
- Automotive shops;
- Elderly care facilities (assisted living facilities (ALFs); and