The quick read: Yes, a CMBS loan under $5 million exists, but it is the exception inside a pool built around much larger loans. Two multi-borrower CMBS term sheets filed with the SEC in 2026 averaged $18,963,204 and $20,219,066 per loan, and their smallest balance bands began at $4,000,000 and $3,700,000. No public, dated source states a market-wide conduit minimum, so the practical floor is set by costs that do not shrink with the loan.
This guide shows what those filings say, explains why fixed costs and defeasance weigh hardest on a small balance, and lays out the alternatives by lender type with only the figures their own pages publish. For the product overview, see how CMBS loans work.
Can you get a CMBS loan under $5 million?
Yes, a CMBS loan under $5 million is possible, because at least one 2026 conduit pool filed with the SEC held at least one loan below that size, but its smallest balance band was only 1.4% of that pool, and no public, dated source states a market-wide conduit minimum.
A conduit loan is originated to be pooled with dozens of other commercial mortgages and sold to bond investors as commercial mortgage-backed securities. The lender that closes your loan is usually not the party that holds it, which is why the terms are standardized and why every loan, large or small, has to carry the documentation the securitization requires.
That structure answers the question more precisely than any quoted minimum. A lender can close a conduit loan under $5 million if it fits the pool, but the borrower pays for the same legal, reporting and servicing framework as a borrower with a loan several times larger. Whether that is worth it depends on the property, the hold period and what the alternatives offer.
What do 2026 conduit pools show about loan size?
The two 2026 conduit term sheets reviewed for this guide show loan sizes averaging far above $5 million: a January pool averaged $18,963,204 per loan and a March pool averaged $20,219,066, and in both the smallest balance band began near $4 million.
These are two pools, not a market survey, so read them as evidence that small loans get securitized, not as a rule for what any lender will do.
Pool A term sheet date: January 16, 2026 Pool A size: 44 loans, $834,380,978 Pool A smallest band: $4,000,000 to $9,999,999, 14 loans, 11.0% of the pool Pool A smallest band weighted mortgage rate: 6.66460%, against 6.39483% for the whole pool Pool A smallest band underwritten NCF DSCR: 1.68x, against 1.96x for the whole pool Pool A smallest band cut-off LTV: 63.3%, against 59.6% for the whole pool Pool B filed with the SEC: March 23, 2026 Pool B size: 29 loans, average $20,219,066 Pool B smallest band: 3,700,000 to 6,000,000, 2 loans totalling $8,400,000, 1.4% of the pool
Illustrative (our arithmetic): two loans totalling $8,400,000 average $4,200,000, so at least one loan in Pool B's smallest band was $4,200,000 or less, which is under $5 million.
In Pool A, the smallest band carried a higher weighted rate, lower coverage and higher leverage than the pool as a whole. The pattern is not a straight line, though: the $15,000,000 to $19,999,999 band showed lower coverage (1.41x) and higher leverage (65.2%) than the smallest band, and the smallest band mixes loans up to $9,999,999, so it cannot tell you what a $3 million loan would price at.
Why do fixed costs make small CMBS loans expensive?
Small CMBS loans are expensive because many origination and securitization costs are roughly fixed per loan, including legal documentation, third-party reports, rating-agency review and loan-level servicing setup, so the same dollars divided over a smaller balance become a larger percentage of the loan.
No public, dated source publishes those costs, so we will not quote them. The mechanism is still easy to see. A conduit loan typically requires a single-purpose borrowing entity, lender and borrower counsel, an appraisal, environmental and property-condition reports, and the loan-level data every bond investor receives. A master servicer and a special servicer then administer the loan under the pool's servicing agreement for its full term, rather than a local loan officer.
Illustrative (our arithmetic): take a hypothetical fixed cost of $100,000 per loan, a round placeholder rather than a quote. It equals 2.0% of a $5,000,000 loan, 1.0% of a $10,000,000 loan and 0.5% of a $20,000,000 loan. The dollars are identical; the percentage doubles each time the loan halves.
The question to ask any conduit lender on a small loan is the total cost to close in dollars, including lender legal fees, third-party reports and any reserves, alongside the rate. A conduit rate that looks competitive can still lose to a bank or agency quote once those dollars are divided over a $3 million or $4 million balance.
How does CMBS prepayment work on a small loan?
Loans in the March 2026 conduit pool reviewed here were built not to be paid off early: 53.7 percent of the balance was lockout followed by defeasance until the open period, and every loan carried defeasance or yield-maintenance protection that a borrower pays to exit.
Pool B's full call-protection table, by share of the initial pool balance:
| Prepayment provision | Loans | Share of pool |
|---|---|---|
| Lockout, then defeasance, then open | 12 | 53.7% |
| Lockout, then greater of 1% or yield maintenance, then open | 8 | 20.9% |
| Lockout, then defeasance or greater of 1% or yield maintenance, then open | 5 | 13.7% |
| Lockout, then greater of 1% or yield maintenance, then defeasance or greater of 1% or yield maintenance, then open | 3 | 7.5% |
| Greater of 1% or yield maintenance, then open | 1 | 4.2% |
The same term sheet reports a weighted average remaining term to maturity of 118 months, so, weighted by balance, the pool was written to stay in place for roughly a decade.
Defeasance replaces the loan's collateral with a portfolio of government securities that reproduces the remaining payments, so the bondholders are made whole and the property is released. It requires the securities purchase plus legal, accounting and successor-borrower work, and that work does not get cheaper because the loan is smaller. On a small balance, the fixed part of the exit is again a larger share of the loan.
If you may sell or refinance within a few years, ask each lender type for its prepayment options in writing. Freddie Mac's Conventional Small term sheet, dated April 2026, sets a standard provision of yield maintenance until securitization, then a two-year lockout and defeasance, and says step-down and yield maintenance without defeasance are available at an additional cost.
What do borrowers under $5 million use instead of CMBS?
Borrowers under $5 million can compare CMBS against banks, credit unions, agency small-loan programs for apartments, SBA 504 when the property is not a rental investment, life companies and debt funds, and only the agency and SBA programs publish loan-size limits on their own pages.
The table below states a figure only where the program's own page states it. Where no public, dated source exists, the cell says so and turns into a question to ask lenders.
| Lender type | Published loan-size figure | Source and date | Ask the lender |
|---|---|---|---|
| Conduit CMBS | No public, dated minimum; smallest bands in two 2026 pools began at $4,000,000 and $3,700,000 | SEC-filed term sheets, January 16 and March 23, 2026 | Total cost to close in dollars; defeasance or yield-maintenance terms |
| Agency small loans (Fannie Mae, multifamily) | A Small Mortgage Loan has an original amount of $9 million or less | Fannie Mae Multifamily Guide, Chapter 9, effective September 28, 2026 | Which prepayment options apply at your loan size |
| Agency small loans (Freddie Mac, multifamily) | Conventional Small: generally $2 million to $10 million | Freddie Mac Optigo Conventional Small term sheet, dated April 2026 | Which prepayment option applies: standard, step-down, or yield maintenance without defeasance |
| SBA 504 (not for rental investment) | Maximum 504 loan amount $5.5 million; 10-, 20- and 25-year terms | SBA 504 loans page, no date shown, accessed September 28, 2026 | How the first-lien lender and the CDC portion are split |
| Credit union | No per-loan minimum published; a federally insured credit union's aggregate net member business loan balances are capped at the lesser of 1.75 times its net worth or 1.75 times required net worth, with statutory exemptions | 12 CFR 723.8, revised as of January 1, 2025 | How much business-lending room the credit union has left |
| Bank | No public, dated minimum; set by each bank's credit policy | None | Hold size, recourse and deposit expectations |
| Life company | No public, dated minimum | None | Smallest loan it will quote and its prepayment terms |
| Debt fund | No public, dated minimum | None | Rate, fees, term and extension options in writing |
The agency rows apply to apartment buildings. For a small retail, office or industrial property, the realistic comparison is conduit against bank, credit union, life company and debt fund, plus SBA 504 when the building is not a rental investment. For a broader map of where small deals fit, see small commercial property financing and which lender types fund which CRE deals.
None of these is automatically cheaper. A conduit loan may still win on leverage or non-recourse structure for a stabilized property, and a bank loan may cost less to close but carry recourse. The only reliable comparison is written terms on the same deal.
How do you get lenders competing for a loan under $5 million?
You get lenders competing for a loan under $5 million by sending one complete file to several lender types at once, so a conduit desk, an agency small-loan lender, a bank and a debt fund each price the same deal and you compare total cost, not headline rate.
YieldStack is a commercial mortgage brokerage, not a lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed. YieldStack arranges commercial real estate financing nationwide.
Bring: rent roll, trailing twelve months of operating statements, purchase contract or payoff letter, sponsor schedule of real estate owned. Tell the lender: your expected hold period, because it decides whether defeasance or a declining prepayment schedule costs you more.
Submit your sub-$5 million deal to see which lender types want it.
The bottom line
You can get a CMBS loan under $5 million, but you will be one of the smallest loans in a pool built around much larger ones: two 2026 conduit pools averaged $18,963,204 and $20,219,066 per loan. Fixed closing, servicing and defeasance costs weigh heaviest on a small balance, and no public, dated source states a conduit minimum. Compare it in writing against agency small-loan programs, SBA 504, banks, credit unions, life companies and debt funds.