Commercial real estate loans usually take six to ten weeks to close, though direct, CRE-specialist lenders like Private Capital Investors are nimbler and can complete the process much faster than that.
This guide explains what happens at each stage and what you can do to help keep everything on schedule.
1. Pre-qualification and lender selection
Typical timeline: 2 to 7 business days
The lender will review the proposed loan and decide whether it fits within their lending parameters.
You may choose to approach lenders directly or work with a commercial mortgage broker who can present your deal to several funding sources as well as help you compare their proposed rates and conditions.
What happens during pre-qualification?
During this stage, you’re expected to provide a high-level summary of the transaction — not a complete loan application just yet.
The initial submission may include:
- The property type
- Address
- Current occupancy
- The loan amount you’re requesting
- How you intend to use the funds
- Current rent roll
- Recent property income and expense figures
- Existing loan details if you are refinancing
- Basic information about you or your company (the borrowing entity
The lender will use this information to decide whether it wants to review your request further.
If they do decide to consider the loan further, they may issue a preliminary term sheet, allowing you to review the proposed loan structure before they go into full underwriting and before you pay for reports and legal work.
What does the term sheet include?
- The proposed loan amount
- Interest rate or pricing method
- Loan term and amortization
- Origination fees
- Prepayment restrictions
- Reserve requirements
- Recourse provisions
- Conditions that must be met before closing
2. Application and document collection
Typical timeline: 3 to 10 business days
Once a lender has shown interest in the deal and you’ve decided to work with them based on the preliminary terms, you can begin assembling your full loan file to complete the formal application.
When you submit your application, you’re essentially giving the lender an official written permission to review your deal.
Note that some lenders will require you to sign an initial term sheet or deposit funds toward the appraisal and environmental assessment.
What happens during the application stage?
Wait for the loan officer to send you a document checklist based on the transaction you’re asking them to finance.
Requirements vary by transaction, but most lenders will ask for:
- Property operating statements (recent)
- Historical income and expense records
- Property tax records
- Insurance information
- Information about renovations or capital work you’re planning
If you’re refinancing, you may need to submit an existing loan statement and payoff information. Is the property occupied? The lender may ask for copies of the leases.
The loan officer will usually act as your main point of contact throughout this stage. You may also need information from your accountant and attorney.
You can prevent delays here by checking that your documents cover the requested periods (don’t submit anything outdated) and by using consistent figures (wherever the same information appears). Do two records show different income or expense totals?
Explain the reason. Don’t waste days waiting for the underwriter to ask.
3. Underwriting
Typical timeline: 1 to 3 weeks
When you’ve submitted a complete application file, the underwriter reviews everything.
Their goal is to determine whether the collateral’s income-producing capacity justifies the amount you’re requesting.
Important: For certain CRE loans, federal standards require lenders to review the finances of the borrower and any related business that operates from the property. They may also require an appraisal and an environmental assessment.
What happens during underwriting?
There’s no fixed sequence that every lender follows: in general, the underwriter will review the property’s income and operating costs and then compare the property’s adjusted net operating income with the proposed debt payments.
Most underwriters use a stress scenario to test how the loan would perform if occupancy fell.
You may get questions from the underwriter back through the loan officer as new issues arise.
You might need to explain unusual repair expenses or provide information about the tenant’s renewal plans if a lease is expiring.
If they find less cash flow than the application suggested, the lender may choose to adjust the loan amount or change the amortization period. They may also require additional reserves if the property needs major work.
What must you provide?
Most of the main documents should already be in the file by this stage, but it doesn’t hurt to be prepared to submit the following if the lender asks for them:
- Explanations for large changes in income/expenses
- Updated rent rolls/operating statements
- Evidence related to completed repairs
- Additional ownership or entity records
- Details of tenant arrears
- Information about upcoming lease expirations
Put yourself in the shoes of the lender and think about what might make them question the property’s performance.
Lenders need enough context to understand why the figures changed and whether the issue is temporary or likely to continue.
4. Third-party reports
Typical timeline: 2 to 4 weeks
The lender will now order independent reports from consultants they’ve selected to verify the property’s value and identify any issues that may affect its suitability as collateral.
| Report | What It Will Cover |
|---|---|
| Appraisal |
|
| Environmental Assessment |
|
| Property Condition Assessment |
|
Note that you will likely shoulder the fees for these assessments. You will also need to provide the lender-chosen consultants access to the property, as well as access to the leases and operating records.
5. Approval
Typical timeline: 3 to 6 weeks
Once the lender has completed its underwriting review, your loan application goes to the person or committee with authority to approve it.
The decision can go several ways.
They may:
- approve the loan as requested
- approve a revised structure
- decline it
Note that approval doesn’t always mean that the loan is ready to close.
The lender may still ask you to submit updated documents or set aside extra reserve funds before releasing the money.
You and your attorney should review any commitment letter or final term sheet carefully.
Check that the rate, loan amount, fees, and repayment terms are what you agreed to, and find out what you still need to do before closing.
6. Due diligence and legal review
Typical timeline: 1 to 3 weeks
At this stage, the lender’s attorneys will start checking that the loan documents give them proper rights over the property.
Some lenders start this review before final approval, but most of them avoid spending too much on legal work until the loan looks likely to close.
The lender’s attorney prepares the loan documents, which, depending on the transaction, may include:
- a promissory note
- mortgage or deed of trust
- security agreement
- assignment of leases and rents
The lender’s attorney will also review the borrowing entity (in this case you or your LLC or partnership) to confirm that it has been formed correctly and that the person signing the documents has authority to bind it.
It’s also during this stage that the lender engages a title company to search public records for liens or recorded restrictions that may limit ownership or use.
The lender may require a title insurance policy to protect its interest against covered title defects.
Some lenders will also order a boundary survey to make sure that there are no boundary issues or encroachments.
If you’re refinancing, expect the closing team to request a payoff statement from your existing lender confirming how much is still owed. The closing attorney will arrange for the old lien to be released after payment.
7. Closing and funding
Typical timeline: 1 to 5 business days (after all conditions are cleared)
The closing may take place in person or through electronic documents. You sign the loan documents and pay any cash required from you (any remaining down payment, transaction fees, etc.).
If you’re refinancing, your new lender will wire part of the new loan proceeds directly to your existing lender.
The lender may also deduct closing costs or required reserve deposits from the new loan before releasing the remaining funds to you.
The lender then authorizes the release of funds.
How quickly can you get the funds?
Some transactions fund on the day the documents are signed. Others fund only after the mortgage or deed of trust has been recorded, which can take a few additional business days
What must you provide?
Before funding, you may need to:
- Sign the final loan and entity documents
- Transfer your required cash contribution
- Provide final insurance evidence
- Submit any outstanding certificates
- Confirm that closing conditions have been completed
Sit down with your attorney and check the closing statement before transferring funds. It should show:
- the loan proceeds
- lender fees
- third-party expenses
- any amounts being withheld for reserves
Verify wiring instructions through a known phone number before sending money to protect yourself from criminals who impersonate lenders or title company staff and send false instructions from a compromised email account.
How long does the commercial real estate loan process take?
Straightforward commercial real estate loans close in 6 to 10 weeks.
The individual timelines we talked about in this blog should not simply be added together because several stages run concurrently.
That said, understanding the sequence can go a long way in helping you plan around reporting times.
