The commercial lending market is poised for a significant rebound in 2025, presenting a “once-in-a-generation opportunity” for businesses seeking to expand, acquire property, or refinance existing loans. This resurgence comes after a period of sluggish transaction volume in the commercial real estate (CRE) sector, which saw activity drop to about half of its pre-pandemic levels. However, with the Federal Reserve implementing rate cuts and a positive economic outlook on the horizon, the commercial lending landscape is ripe with potential.
Commercial Lending Landscape in 2025
The commercial real estate (CRE) market is entering a period of recovery after facing challenges such as high interest rates and the rise of remote work. The Federal Reserve’s rate cut in September 2024, along with anticipated cuts in the summer of 2025, is expected to stimulate growth and boost confidence in the sector. These rate cuts will lower borrowing costs for investors, leading to decreased mortgage rates and more favorable financing conditions. As a result, property values are likely to increase, and existing property owners will have the opportunity to refinance their loans and enhance their cash flow.
This positive trend is further bolstered by the growth of small and medium-sized enterprises (SMEs), which play a crucial role in driving demand for commercial loans. SMEs are increasingly seeking financing to adapt to market changes, invest in new technologies, and expand their operations.
However, the commercial lending landscape also faces some challenges. A significant amount of CRE loans, totaling $1.8 trillion, are set to mature before the end of 2026. This “wall of maturities” could pose difficulties for borrowers facing higher interest rates and potentially lower property values compared to when they initially secured their loans.
Furthermore, there are “wild cards” that could impact the market, such as rising operating costs, particularly in property insurance, and the potential for slowing consumer spending. These factors could affect the ability of businesses to qualify for loans and maintain their financial stability.
Despite these challenges, the overall outlook for commercial lending in 2025 is optimistic. Banks, which hold a significant portion of U.S. CRE mortgage debt, are expected to play a key role in the market’s rebound. Their renewed interest in CRE lending, coupled with falling interest rates and government incentives, creates a favorable environment for businesses seeking financing.
Commercial Lending Trends in 2025
One of the key trends shaping the commercial lending landscape in 2025 is the increasing adoption of technology, particularly in the retail lending sector. Artificial intelligence (AI) and generative AI (GenAI) are being utilized to enhance customer experiences, improve loan turnaround times, and streamline decision-making processes. However, lenders also face challenges in implementing these technologies, such as concerns about costs, data quality, and security.
Special Programs and Incentives Offered by Commercial Lenders
To attract borrowers and promote economic development, many commercial lenders offer special programs and incentives. These can include:
- Reduced interest rates: Lenders may offer lower interest rates to borrowers with strong credit scores or those who make large down payments.
- Extended repayment terms: Borrowers who need more time to repay their loans may be offered longer repayment terms.
- Flexible loan structures: Lenders can customize loan structures to meet the specific needs of individual borrowers.
- Green financing programs: With a growing emphasis on sustainability, lenders are incentivizing environmentally responsible real estate solutions by offering preferential rates for green buildings and eco-friendly property investments. These programs often provide benefits such as below-market interest rates, higher loan-to-value ratios, and access to specialized financing options.
- Government incentives: Government agencies, such as the Great Lakes Commercial Finance (GLCF), offer incentives to lenders to encourage economic development and program growth. For example, GLCF provides an incentive equal to 50% of the lender’s fee, up to $5,000, for SBA 504 loans approved before September 30, 2025. These incentives benefit both lenders and borrowers by making financing more accessible and affordable.
- Alternative financing options: The demand for alternative financing options, such as invoice factoring, is on the rise, particularly among small and medium-sized enterprises (SMEs). Invoice factoring allows businesses to access immediate working capital without taking on additional debt, providing a flexible solution for managing cash flow and supporting growth.
Top Commercial Lenders in the United States
Based on loan volume, interest rates, and customer reviews, here are some of the top commercial lenders in the United States in 2025:
| Rank | Lender | Loan Volume | Interest Rates | Customer Reviews |
|---|---|---|---|---|
| 1 | JPMorgan Chase Bank NA | $173.84 Billion | 7% – 14% APR | Not Available |
| 2 | Wells Fargo Bank NA | $137 Billion | 7.65% – 8.96% | Not Available |
| 3 | Bank of America NA | $86.57 Billion | Not Available | Not Available |
| 4 | U.S. Bank NA | $54.17 Billion | Not Available | Best for CRE or SBA Financing |
| 5 | PNC Bank NA | $48.18 Billion | Not Available | Not Available |
| 6 | Flagstar Bank NA | $46.76 Billion | Not Available | Not Available |
| 7 | Capital One NA | $46.05 Billion | Not Available | Not Available |
| 8 | Truist Bank | $40.74 Billion | Not Available | Not Available |
| 9 | Citibank NA | $37.49 Billion | Not Available | Not Available |
| 10 | Manufacturers and Traders Trust Co. | $34.11 Billion | Not Available | Not Available |
Note: Interest rates can vary based on the type of loan, the borrower’s creditworthiness, and market conditions. Customer review data was limited for these specific lenders.
An analysis of the loan volume data reveals the dominance of certain lenders in the market. JPMorgan Chase and Wells Fargo, for example, hold a significant market share, indicating their strong presence and influence in the commercial lending sector.
Types of Commercial Loans Offered by Lenders in 2025
Commercial lenders offer a diverse range of loan products to cater to the various needs of businesses. Some of the common types of commercial loans include:
- Commercial Real Estate Loans: These loans are used to finance the purchase, refinance, or renovation of commercial properties, such as office buildings, retail spaces, and apartments.
- Term Loans: These are traditional loans with a fixed interest rate and a set repayment term. They can be used for a variety of purposes, such as purchasing equipment, expanding operations, or refinancing debt.
- SBA Loans: These are government-backed loans that offer favorable terms and conditions to small businesses.
- Lines of Credit: These provide businesses with access to a revolving line of credit that they can use as needed.
- Equipment Financing: These loans are used to finance the purchase of new equipment.
- Bridge Loans: These are short-term loans that provide businesses with funding while they wait for long-term financing.
- Working Capital Loans (Merchant Cash Advances): These are cash advances that provide businesses with funds for their operational expenses. Repayment is typically based on a percentage of future credit and debit card sales.
Eligibility Criteria for Commercial Loans
The eligibility criteria for commercial loans can vary depending on the lender and the type of loan. However, some common requirements include:
- Good Credit Score: Lenders assess a business’s creditworthiness to determine its ability to repay the loan. While some lenders may require a minimum credit score of 660 , others may have lower requirements, with some accepting scores as low as 500. A higher credit score generally improves the chances of loan approval and can result in more favorable interest rates.
- Strong Financial History: Businesses need to demonstrate a history of profitability and strong cash flow to assure lenders of their ability to make regular loan payments. This typically involves providing financial statements, such as income statements and balance sheets, for the past few years.
- Collateral: Many lenders require collateral, such as real estate or equipment, to secure the loan. Collateral provides the lender with a form of security in case the borrower defaults on the loan.
- Down Payment: Borrowers may be required to make a down payment, which is a percentage of the loan amount paid upfront. Down payments for commercial loans typically range from 20% to 30%.
- SBA Eligibility: For SBA loans, businesses must meet additional criteria set by the Small Business Administration (SBA). These include being a for-profit business located in the U.S., demonstrating creditworthiness, and exhausting financing options from non-government sources.
- Guarantor’s Financial Situation: It’s important to note that lenders often assess not only the business’s credit but also the personal financial situation of the guarantor. A guarantor is an individual who agrees to be personally liable for the loan if the business defaults. Lenders may require the guarantor to provide proof of assets and income to demonstrate their ability to repay the loan in case of business losses.
Interest Rates and Fees in Commercial Lending
Interest rates and fees on commercial loans are influenced by various factors, including the lender, the type of loan, the borrower’s creditworthiness, and prevailing market conditions.
Here’s an overview of interest rate ranges for different types of commercial loans:
- Bank Business Loan: 7% – 14% APR
- Commercial Real Estate Loan: 3.5% – 10.75% APR
- Equipment Financing Loan: 2% – 25%
- Business Line of Credit: 7.43% – 9.78% APR
- Online Business Loans: 9% – 75% APR
- Merchant Cash Advances: 1.04 to 1.5 Factor rate
As of January 10, 2025, the average interest rate for a 5-year commercial mortgage loan is around 5.5%, while the average rate for a 10-year commercial mortgage loan is approximately 6%. For other types of business financing, the average interest rates are as follows:
- Fixed-rate term loans: Around 8%
- Variable-rate term loans: Around 8.7%
- Fixed-rate lines of credit (LOC) from urban banks: 7.65%
- Variable-rate LOC from urban banks: 8.19%
- Fixed-rate LOC from rural lenders: 8.19%
- Variable-rate LOC from rural lenders: 8.96%
It’s important to analyze the projected trend of interest rates when considering a commercial loan. With the Federal funds rate projected to drop to 3.9% by late 2025, interest rates on commercial loans are likely to remain elevated but may gradually decline. This trend could affect borrowers’ ability to secure favorable terms and manage their repayment obligations.
In addition to interest rates, commercial loans often involve various fees, such as:
- Origination fees: These fees cover the administrative costs associated with processing the loan.
- Appraisal fees: Lenders may charge appraisal fees to assess the value of the property being financed.
- Closing costs: These costs include expenses related to closing the loan, such as legal fees and title insurance.
Customer Service Ratings of Commercial Lenders
Customer service plays a vital role in the lending industry, as building strong relationships with clients is essential for business success. Borrowers often seek lenders with excellent customer reviews, as these reviews reflect the quality of service and support provided.
Reliable customer service helps establish trust and confidence during financial transactions. Proactive loan officers who provide guidance, answer questions, and offer relevant solutions contribute to positive customer experiences.
Experts suggest that the use of AI in customer service is becoming increasingly prevalent in the lending industry. AI-powered tools can streamline the loan acquisition process, provide quick and efficient support, and enhance the overall customer experience.
Importance of Selecting the Right Lender
Choosing the right commercial lender is a critical decision for business owners. The right lender can provide tailored financing solutions to support business goals, while the wrong lender can lead to financial difficulties.
When selecting a commercial lender, consider the following factors:
- Interest rates and fees: Compare the interest rates and fees offered by different lenders to find the most competitive terms.
- Loan terms: Evaluate the repayment term, loan amount, and other loan terms to ensure they align with your business needs and financial capabilities.
- Customer service: Choose a lender with a reputation for providing excellent customer service and support.
- Special programs and incentives: Consider any special programs or incentives offered by the lender that could benefit your business.
- Impact of hybrid and remote work: If you’re considering financing for office space, it’s crucial to understand the impact of hybrid and remote work on office space demand. The shift towards flexible work arrangements has led to a decline in demand for traditional office buildings, particularly Class B and Class C properties. Lenders are likely to adjust their terms based on a property’s location, class, and tenant profile, so it’s essential to choose a lender who understands these market dynamics.
Commercial Loans and Mortgages
A commercial loan is a broad term that encompasses various types of loans used for business purposes. These loans are debt instruments issued by banks or other financial institutions, requiring borrowers to repay the principal loan amount, interest, and any applicable fees over a specified period.
A commercial mortgage, also known as a commercial real estate loan (CRE loan), is a specific type of commercial loan used to purchase, refinance, or renovate commercial properties. Like residential mortgages, commercial mortgages are repaid in installments with interest over a set period. However, they are specifically designed for business owners and investors seeking to acquire or improve commercial real estate.
Key Differences Between Personal and Commercial Loans
| Personal Loans | Commercial Loans |
| Typically smaller loan amounts | Typically larger loan amounts |
| Lower interest rates | Higher interest rates |
| Longer repayment terms | Shorter repayment terms |
| May not require collateral | Usually require collateral |
| May not require personal guarantees | Often require personal guarantees from the business owner |
Conclusion
The commercial lending landscape in 2025 presents a mix of opportunities and challenges. While factors such as the “wall of maturities” and rising operating costs could pose difficulties, the overall outlook is positive, driven by falling interest rates, increased demand from SMEs, and the growing adoption of technology.
For business owners seeking commercial financing, it’s crucial to carefully consider their options and choose the right lender. Factors such as interest rates, loan terms, customer service, and special programs should be evaluated to find a lender who can provide tailored solutions and support business growth.
By understanding the current market dynamics, the different types of loans available, and the eligibility criteria, businesses can make informed decisions and navigate the commercial lending landscape effectively. With careful planning and the right financing partner, businesses can leverage the opportunities presented in 2025 to achieve their goals and thrive in a competitive market.
FAQ
What are the different types of commercial loans available?
Commercial lenders offer a variety of loan products to meet diverse business needs. These include commercial real estate loans, term loans, SBA loans, lines of credit, equipment financing, bridge loans, and working capital loans (merchant cash advances). Each loan type has unique features and requirements, so it’s essential to choose the one that best suits your specific needs.
What are the eligibility requirements for a commercial loan?
While specific requirements vary by lender and loan type, common factors include a good credit score (often 660 or higher, though some lenders accept lower scores), a strong financial history, sufficient collateral, and a down payment. SBA loans have additional eligibility criteria set by the Small Business Administration.
How are interest rates and fees determined for commercial loans?
Interest rates and fees depend on several factors, including the lender, loan type, borrower’s creditworthiness, and market conditions. Generally, commercial loans have higher interest rates than personal loans. Fees may include origination fees, appraisal fees, and closing costs.
What is the difference between a commercial loan and a commercial mortgage?
A commercial loan is a broad term for any loan used for business purposes. A commercial mortgage, or commercial real estate loan, is a specific type of commercial loan used to finance the purchase, refinance, or renovation of commercial properties.
Why is it important to choose the right commercial lender?
Selecting the right lender is crucial for securing favorable loan terms, receiving excellent customer service, and accessing potential special programs or incentives. The right lender can provide tailored financing solutions to support your business goals and help you navigate the complexities of commercial lending.