Commercial real estate at a community bank covers more ground than a pair of boilerplate terms. Exchange Bank underwrites owner-occupied acquisitions, investor rental properties, and ground-up construction loans with local staff who know the submarkets. This reference walks through the common structures and the underwriting conversation that precedes them.
Most commercial real estate files at Exchange Bank fall into one of three buckets. The first is owner-occupied acquisition, where a business buys the building it already rents or moves into a larger space it will occupy. The second is investor CRE, where a borrower purchases or refinances a rental property — a multi-tenant office, a mixed-use retail building, or a small apartment project — and the rent roll services the loan. The third is construction, where a developer or owner-user funds a ground-up project or a major renovation through a draw-based structure that converts to permanent financing.
Each bucket uses different underwriting math. Owner-occupied files focus on the business cash flow of the occupant, because the business itself pays the rent that services the loan. Investor files lean on the debt service coverage ratio measured against the net operating income of the property. Construction files add a budget review and a fixed-price contract review on top of the eventual takeout analysis.
Pricing on commercial real estate is a function of risk category, loan size, and the interest-rate environment at the time of term sheet. Exchange Bank typically offers fixed-rate periods of five, seven, or ten years with amortization running twenty to twenty-five years. At the end of the fixed period the loan either resets at the then-current index plus spread or the borrower refinances into a new commitment. That pattern is the backbone of how community-bank balance sheets manage interest-rate risk, and it shows up in examinations by the Federal Reserve — background on that supervisory framework is published at federalreserve.gov commercial real estate.
Commercial real estate closings generate tax consequences that extend beyond the purchase itself. Cost segregation studies, bonus depreciation elections, and the treatment of loan origination fees all affect the first two years of tax returns for the entity that owns the property. Bringing the CPA into the conversation before the purchase contract is signed usually saves money — and it keeps the borrower's projections consistent with how the return will eventually be filed.
| CRE program | Property type fit | Down payment range | Amortization |
|---|---|---|---|
| Owner-occupied purchase | Office, warehouse, retail where the business occupies 51% or more | 20%-25% conventional, 10% via SBA 504 | 20-25 years |
| Investor CRE | Multi-tenant office, retail, small multifamily, mixed-use | 30%-35% | 20-25 years, 5/7/10-year fixed |
| Construction to permanent | Ground-up owner-occupied or owner-user renovation | 25%-35% of total project cost | Interest-only during build, 20-25 years after conversion |
| Refinance | Seasoned property with stable cash flow or expiring fixed period | Equity from existing position | Aligned to new term, 20-25 years |
Three documents dominate a CRE file. The rent roll or occupancy schedule tells the underwriter who pays the property and when leases expire. The trailing-twelve-month operating statement shows what the property actually produced, net of real costs, not pro-forma promises. The appraisal establishes market value, market rent, and capitalization rate assumptions tied to comparable sales. A clean set of those three documents plus a borrowing entity that is properly formed usually unlocks a term sheet within two weeks.
CRE borrowers usually bring a full business banking relationship. Deposits sit at business checking and business savings. SBA structures appear on SBA loans, while day-to-day operations run through treasury management and merchant services. For owners' personal finances see home mortgages, personal checking, personal savings, money market accounts, auto loans, and personal credit cards. Digital tools show up on online banking, the mobile banking app, wire transfers, and bill pay. Background pages include about Exchange Bank, leadership, the security center, the Exchange Bank login guide, and the help resources hub.
"Exchange Bank handled the refinance on our mixed-use building with less drama than I expected. The appraisal ordering was quick and the banker explained the fixed-period reset clearly."
Beatrice Ferro Real Estate Agent, Ferro Properties · Bodega Bay, CA
Owner-occupied CRE means the business that borrows the money also uses at least fifty-one percent of the building. Investor CRE is a rental property where tenant income supports the loan. Underwriting differs on cash flow source, guarantor expectations, and debt service coverage ratio targets.
Owner-occupied deals commonly fund at twenty to twenty-five percent down when structured conventionally. SBA 504 structures can reduce that to ten percent. Investor CRE typically sits at thirty to thirty-five percent down because the bank models a vacancy and expense cushion into the coverage test.
Yes. Construction loans at Exchange Bank fund ground-up builds and substantial renovations with interest-only draws during construction, followed by a takeout into permanent amortization. A fixed-price general contractor agreement, full budget, and timeline are required before the first draw.
Commercial real estate loans at community banks typically amortize over twenty to twenty-five years with a five-, seven-, or ten-year fixed-rate period. At the end of the fixed period the rate resets or the borrower refinances. That structure balances monthly payment affordability with the bank's interest-rate risk tolerance.
Refinancing is common, especially when a fixed period ends or when a customer wants to consolidate a second lien. The bank re-underwrites the property, orders a new appraisal, and confirms the rent roll or owner-occupancy percentages before quoting terms.