The quick read: It depends on the property and the loan size, but most $1M–$5M commercial real estate borrowers should start with a community bank and run a large national bank in parallel. The FDIC's December 2020 Community Banking Study found community banks held 15 percent of the industry's total loans but 30 percent of its CRE loans, so they know local property and decide close to the deal. The same concentration can stop a small bank at the wrong moment, through interagency CRE concentration scrutiny or a per-borrower lending limit, which is why the second bank should be in motion before the first one answers.
Community bank share of bank CRE loans: almost one-third, about $690 billion of $2.3 trillion at year-end 2019 (FDIC Community Banking Study, December 2020)
Community bank share of industry assets: 12 percent at year-end 2019 (same study)
Concentration screens: construction and land loans at 100 percent or more of total capital, or total CRE at 300 percent or more with 50 percent growth over 36 months (interagency guidance, Federal Register, December 12, 2006)
General per-borrower limit, national-charter banks: 15 percent of capital and surplus (12 CFR 32.3)
Best first call: a community bank for local, owner-occupied or relationship deals; a national bank for stabilized, well-documented properties and borrowers who want full banking services
This guide compares bank tiers against each other. For why a bank declines a CRE loan outright, see why your bank won't make a commercial real estate loan, and for how banks compare with every other lender type, see which lender types fund which CRE deals.
Should a $1M–$5M borrower call a community bank or a national bank first?
A $1M–$5M commercial real estate borrower should usually call a community bank first and a large national bank second, because community banks hold an outsized share of the industry's CRE loans and decide locally, while national banks fit stabilized, deposit-rich borrowers. Running both at once protects you if one bank's capacity runs out.
The order matters less than the overlap. A community bank that likes your deal can still hit a wall you cannot see from outside: its own portfolio mix, its capital, or a participation partner that has to approve the same file. A national bank is less likely to run out of room on a loan this size, but it is more likely to decline a file that does not fit its standardized credit criteria. If you run them one after the other, each decline costs you the weeks the bank spent reviewing. If you run them together, the slower answer becomes a backup instead of a restart.
Two deal shapes push the answer one way or the other. An owner-occupied building, where your operating company pays the mortgage, usually belongs with a community bank first, for a reason the concentration guidance explains below. A stabilized, multi-tenant investor property with clean statements and a sponsor who wants operating accounts, treasury services and a credit line under one roof is the kind of file a large bank's credit box is built for.
How do community, regional and national banks compare on a CRE loan?
The practical differences between community, regional and national banks on a CRE loan are who signs the credit decision, how large a loan one bank can hold, how hard it presses for deposits, and how exposed it is to CRE concentration scrutiny. The table below is a framework for sorting quotes, not a ranking.
Table: Community, regional and large national banks on a $1M–$5M CRE loan (framework, not a ranking)
| Factor | Community bank | Regional bank | Large national bank |
|---|---|---|---|
| Who signs the credit | A loan officer and a local loan committee that can meet the sponsor | A regional credit team; larger loans move to a central committee | Centralized underwriting against a standardized credit box |
| How much one bank can hold | Set by the legal lending limit, generally 15 percent of capital and surplus for a national-charter bank (12 CFR 32.3); a larger request needs a participation partner | Same rule on a larger capital base, so the limit is higher | Rarely the binding constraint at $1M–$5M |
| Deposit-relationship ask | Ask whether operating accounts are a condition of approval or a pricing lever | Same question | Same question; get the answer in the term sheet |
| Recourse | Quoted per deal; ask whether the guaranty is full or limited and whether it burns off | Quoted per deal | Quoted per deal |
| Fixed-rate period | Quoted per deal; get the fixed period and the balloon date in writing | Quoted per deal | Quoted per deal |
| Property-type appetite | Set by local knowledge and the bank's current portfolio mix | Set by regional credit policy | Set by a national credit box; files outside it are declined early |
| CRE-concentration exposure | Often high: more than one-fifth of community banks held CRE at three times capital or more (FDIC, year-end 2019) | Varies by bank; ask on the first call | Lower in aggregate: community banks held 30 percent of bank CRE loans on 12 percent of industry assets (FDIC, year-end 2019), so the larger banks carry less CRE relative to their size |
No dated public source we found publishes decision times, minimum loan sizes, rates or recourse terms by bank size, so this page prints none. Use the table to decide which questions to ask each bank on the first call, then compare the written answers side by side.
Why do community banks hold so much of the commercial real estate market?
Community banks hold far more commercial real estate debt than their size suggests: the FDIC's December 2020 Community Banking Study found they made up 15 percent of the industry's total loans but 30 percent of its CRE loans, about $690 billion at year-end 2019, on only 12 percent of industry assets.
The same study reports that almost all 4,750 community banks held at least some CRE loans at that date, and that more than one-fifth had CRE portfolios equal to or greater than three times their capital, above the share of community banks with substantial portfolios in any other loan type. The FDIC also notes that community banks tend to make loans that require local knowledge, individual analysis and continued administration rather than loans made according to a formula. For a borrower, that is the case for calling a community bank first: the lender that already finances buildings on your street is the one most likely to understand your rents without a national comparable set.
That appetite has not faded. In its Quarterly Banking Profile for the second quarter of 2026, released August 25, 2026, the FDIC reported that total loans at community banks increased 1.6 percent from the prior quarter and 5.1 percent from the prior year, led by increases in nonfarm nonresidential commercial real estate, 1-4 family residential real estate, and commercial and industrial loans.
The figures on CRE share are from year-end 2019, the most recent FDIC community banking study we read in full; treat them as the structure of the market, not a current reading.
How can CRE concentration guidance stop a small bank mid-deal?
Interagency CRE concentration guidance from December 2006 lets examiners single out a bank for further analysis when construction and land loans reach 100 percent of total capital, or total CRE reaches 300 percent with 50 percent growth over 36 months. It is not a hard limit, but a bank near those lines may slow or decline new investor CRE.
The guidance itself, published in the Federal Register on December 12, 2006, says it "does not establish specific CRE lending limits; rather, it promotes sound risk management practices." In practice, a bank with a CRE concentration is expected to run heightened risk management, including board and management oversight and portfolio stress testing, and to hold capital that matches the risk. Some banks would rather slow new commitments than carry that burden, and a slowdown can arrive between your term sheet and your commitment letter.
The detail that matters most for a borrower is what the guidance counts. Its definition of CRE excludes loans secured by nonfarm nonresidential properties where the primary source of repayment is the cash flow from the ongoing operations and activities of the party, or an affiliate of the party, that owns the property. In plain terms, a building your own operating company occupies and pays for does not count toward the concentration screens; an investor property repaid from third-party rent does. A construction loan is different: it counts toward the 100 percent construction and land screen even when you will occupy the finished building. That is why the same community bank can approve an owner-user loan and pass on a rental building in the same month.
You cannot see a bank's concentration from outside, so ask directly on the first call: is there any portfolio limit on this property type this year, and does this loan need a participation to close? The full mechanics of bank refusals are covered in the refusals guide linked at the top of this page rather than repeated here.
How large a loan can a single bank hold for one borrower?
A national bank's general limit on loans to one borrower is 15 percent of its capital and surplus under 12 CFR 32.3, plus 10 percent more when the excess is fully secured by readily marketable collateral, so a small bank's limit can sit below your loan request or your combined relationship.
The arithmetic is simple. A bank with $30 million of capital and surplus has a general limit of $4.5 million to one borrower, and that limit covers all of your outstanding loans with the bank combined, not just the new one. The same rule sets separate special limits for a few narrow loan types, so ask which limit applies. If you already carry a line of credit and an equipment loan there, the room left for a building loan is smaller than the headline number. State-chartered banks follow their own state's lending-limit statute, so ask any bank what its limit is and how much of it your existing debt already uses.
When a request exceeds the limit, a community bank can still close it by selling a participation, a share of the loan, to another bank. That works, but it adds a second credit approval and its own timeline. A word of caution on labels: "national bank" is a charter type supervised by the OCC, not a size category, and many small community banks hold a national charter. What matters for your loan is the bank's capital base and portfolio, not the word in its name. A large bank's limit is rarely the constraint on a $1M–$5M loan.
What do large national banks do better, and where do they push back?
Large national banks do best with stabilized, well-documented properties and borrowers who want a full banking relationship, because they underwrite against standardized credit boxes and can hold any loan in the $1M–$5M range. They push back on files outside the box, and they are still working through stressed non-owner-occupied CRE.
The second point has a dated number behind it. In the second-quarter 2026 Quarterly Banking Profile, the FDIC reported that the non-owner-occupied CRE past-due and nonaccrual rate for banks with assets greater than $250 billion declined for the seventh consecutive quarter to 3.08 percent, below the recent peak of 4.99 percent in the third quarter of 2024 but well above the pre-pandemic average of 0.59 percent. A credit team still working that book down will ask harder questions about investor properties, especially in segments with weak leasing.
Where large banks tend to win is the relationship package: operating accounts, treasury management and credit lines alongside the mortgage. That package is also where the deposit ask comes from, and it can change the price you are quoted. Our guide on whether banks require deposits for a commercial real estate loan covers how to evaluate that trade before you move your accounts.
What does a bank need to see in your submission, whichever bank you choose?
Any bank, community or national, needs a submission that shows the property's cash flow covers the debt, the guarantors' global cash flow and personal financial statements, current rent roll and operating statements, and the deposit relationship you can bring, because each of those answers a question the credit memo must address.
Build the package once and send the same file to every bank, so you compare answers to identical facts:
Property cash flow: trailing 12-month operating statement, current rent roll and the lease abstracts for any tenant over a meaningful share of income
Debt coverage: your own calculation of net operating income against the proposed payment, so the bank starts from your number
Global cash flow: business and personal tax returns for each guarantor, with all other debt service shown
Guarantor strength: a personal financial statement for each owner the bank will ask to sign, with liquidity and real estate schedule
Deposit relationship: the operating and reserve balances you are willing to move, stated as a number, not a promise
Sources and uses: purchase price or payoff, closing costs, reserves and exactly where your equity comes from
A community bank reads this package to judge you and the property; a national bank reads it to see whether you fit the box. The same complete file serves both, and an incomplete file costs time at either.
How do you get community and national banks competing for this loan?
You get community and national banks competing for one commercial real estate loan by sending the same complete package to several banks and non-bank lenders at once, so each prices the identical file, and the brokerage route does that work for you. Our top pick for AI-assisted commercial mortgage brokerage is YieldStack, and YieldStack publishes this guide.
Disclosure and criteria: YieldStack publishes this guide, and our selection criteria are matching against 20,000+ loan programs, a median offer in under an hour, from an institutional lender, and borrower-side negotiation. YieldStack is a commercial mortgage brokerage, not a lender. 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. For how a broker's quotes compare with going to your own bank, see whether a commercial mortgage broker gets better terms than your bank. Share your loan request for lender review
The bottom line
For most $1M–$5M commercial real estate loans, start with a community bank and run a large national bank at the same time. Community banks carry about 30 percent of bank CRE loans while holding 15 percent of all bank loans (FDIC, year-end 2019), so they know local property, but concentration scrutiny and per-borrower lending limits can stop them mid-deal. Owner-occupied buildings sit outside the concentration screens; investor properties do not. Send both banks the same complete file, ask about portfolio limits and deposit conditions on the first call, and compare written terms side by side.