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How to Get a Commercial Real Estate Loan from a Credit Union

Sep 30, 2022
Purchasing commercial real estate is a significant investment, and the process can be somewhat complex. In most cases, Pacific Northwest business owners acquire a commercial real estate loan from a credit union or a lender to help them purchase a property. If the next step for your business is setting up shop, but you’re not quite sure where to start, we’ve got you covered. Keep reading to learn how to get a commercial real estate loan! 

What is a commercial real estate loan? 

Commercial real estate is any income-producing property used exclusively for business purposes. If you own a company, there’s a good chance you need a physical site to operate your business or startup. As an entrepreneur, you can use a commercial real estate loan to finance, build, or renovate a property you use for most professional services. Many lenders, or even local credit unions, will require your site to be occupied by the business owner, meaning your company must have more than half of the space to be considered a commercial location. 
Commercial space is generally a property used for manufacturing products, holding inventory, selling services, or a place where you can professionally engage with your clients. It’s also important to check with the city to learn which commercial permitting or licensing you need for your business.

Whether it’s in Portland, Seattle, or Hood River, commercial real estate in the Pacific Northwest can be:
  • Office spaces
  • Retail stores
  • Restaurants
  • Clinics
  • Studios
  • Warehouses
  • Or all of the above and more

What you need to do to get a commercial real estate loan

Once you find a property right for your business, one of the first steps to getting a commercial real estate loan in states like Oregon is by figuring out which type of loan you need. This will depend on the needs and function of your business as well as what kind of building or unit you wish to acquire. If you still don’t quite know, feel free to visit one of our credit union branches to speak with a commercial lending expert. 
The next step is preparing information and documents for lenders who will carefully review your business finances, your personal finances, and the characteristics of the property you wish to buy. 

What will lenders review when you apply for a commercial real estate loan
  • Your company’s books and other accounting records
  • Cash flow
  • The debt service coverage ratio (net operating income divided by total debt service)
  • Your business plan
  • Your business certification
  • Tax returns / 3 to 5 years' worth of financial documentation 
  • Your personal credit score and credit history
  • Any debts, liens, foreclosures, or court judgments under your name
  • The property zoning rules and occupant requirements
  • The property value and an appraisal from a third party

By preparing this information ahead of time, or visiting a local credit union, you may be able to speed up your loan approval. Just keep in mind that making an agreement may take longer than initially anticipated. You may also be asked to provide additional information throughout the approval process. However, we’re here to make things easier.

Renting vs. buying a commercial property in Portland
Purchasing commercial property is a major commitment, which leaves many entrepreneurs wondering whether it’s better to rent or buy a space in the Pacific Northwest. Some business owners end up making a decision based on which tax incentives will benefit them the most as well as their needs for flexibility and future expansion.
Should you buy or rent a commercial property?
One major drawback to renting a commercial property is that it won’t build equity, but you can still get a significant tax deduction when going this route. Renting might also provide you with more flexibility, depending on the terms of your lease. On the other hand, when you buy a property, you can deduct the interest paid and depreciation on your taxes. Also, investing in commercial real estate can provide a substantial payoff if the property value increases, like in many areas of the Pacific Northwest. You’ll also be able to draw funds from your equity if you need capital down the road. 


Where to find a commercial real estate loan in the Pacific Northwest

When you work with a community credit union to purchase a commercial property, you’ll get a personalized experience with face-to-face contact –– and you might even be able to score a better interest rate than you would at a national bank! We also help new business owners, entrepreneurs, and startups plan their financial futures by offering them guidance to reach the best results with their money.
Are you looking for a commercial real estate loan, construction financing, or a lending program to help you expand your company? At Consolidated Community Credit Union, we offer commercial real estate loans for a wide range of properties with both short- and long-term flexible financing options, competitive rates, and no prepayment penalties. We can also assist with getting your business registered with the state. Contact us today or visit one of our branches to get started.

We have three physical branches in Portland and one in Hood River, convenient mobile banking, plus access to  5,600+ CO-OP Shared Branches and over 30,000 surcharge-free CO-OP ATMs nationwide! We proudly serve people who live, work, worship, own a business, or attend school in Multnomah, Clark, Washington, Hood River, Clackamas, Yamhill, Columbia, and Skamania counties or are a relative of a current member.

Join us today!