The quick read: A financing contingency on a commercial property should run until the date your lender can realistically issue a written commitment, plus a cushion for the conditions that letter still leaves open. There is no single market-standard number for commercial deals. Set the length from the slowest step of the loan type you will actually use, confirm that step with the lender in writing, and have your attorney prepare the clause.
Decision rule: contingency deadline = the lender's realistic commitment date + a cushion for open conditions
What sets the length: the loan type's slowest step (an SBA decision, a committee date, an agency review, an appraisal)
What it is not: the due-diligence period, and not the closing date
Who drafts it: your real estate attorney, not your lender or broker
Residential rules of thumb: do not transfer to commercial contracts
This page is about purchase-contract timing. For how long each loan type takes from engagement to funding, see how long a commercial mortgage broker takes to close a deal; for the documents a lender issues along the way, see the term sheet entry.
What is a financing contingency in a commercial purchase contract?
A financing contingency is a purchase-contract clause that makes the buyer's obligation to close conditional on obtaining a loan by a stated date, so a buyer who cannot get financing in time can exit and recover the earnest money. Its value depends entirely on the deadline and the loan terms it names.
Corporate Finance Institute (October 26, 2019) defines it as a clause expressing that the offer is contingent on the buyer securing financing, and notes that if the buyer cannot secure funding in time, the contingency requires the held earnest money to be refunded. Cornell's Legal Information Institute (reviewed June 2021) describes the same clause, in a home-purchase context, as giving buyers a set time period to secure a loan, after which they can recover the earnest payment and exit without penalty.
Two details matter more on a commercial deal than on a house. First, the clause usually names loan terms: amount, leverage, rate or maximum rate, amortization and recourse. A lender can approve you on worse terms than the clause names, and whether that lets you walk is a contract question for your attorney. Second, commercial sellers often push for a short window or none at all, so the length is negotiated, not defaulted.
How long should the financing contingency be?
The financing contingency should be long enough to reach a written loan commitment from the lender type you will actually use, plus a cushion for open conditions, and no longer than you need. Count backward from the lender's realistic commitment date, not from the closing date, and not from a residential template.
There is no dated, allowlisted source that sets a commercial market standard, so this article does not give one. What it can give is the sourced pace of each lender type's slowest step, which is what the deadline has to clear.
Commercial path to a lender decision by loan type (figures read 2026-10-07):
| Loan type | Path to a lender decision (source, date) | Slowest step to plan around | Where to set the contingency |
|---|---|---|---|
| Bank | "Several weeks or even months to qualify" for a traditional bank loan, a business-loan generalisation rather than a CRE figure (NerdWallet, updated March 10, 2026) | Appraisal and credit committee calendar | After the committee date the loan officer gives you in writing |
| SBA 7(a) | About two to three months from application to closing, and sometimes longer (NerdWallet, October 1, 2025); SBA turnaround on a Standard 7(a) loan, $350,001 to $5 million, is 5-10 business days (SBA, read 2026-10-07) | Whether the lender approves under delegated authority or sends the file to the SBA | After the lender's commitment, which follows SBA approval on a non-delegated file |
| SBA 504 | No sourced day count; a Certified Development Company originates with a senior lender (SBA, read 2026-10-07) | Coordinating two lenders and the CDC's SBA authorization | After both the senior lender's commitment and the CDC's authorization |
| Agency multifamily | No published target; under Freddie Mac's standard delivery option, terms are set after it receives and approves the full underwriting package (Freddie Mac Guide ch. 27, 08/25/26) | Third-party reports and the agency's own review | After the Letter of Commitment, not the lender's quote |
| CMBS | No allowlisted sourced day count | Third-party reports and the conduit's credit approval | After a signed commitment or application with conditions you can meet |
| DSCR | No allowlisted sourced day count; timelines are lender-specific | Appraisal and rent schedule | After the lender's written approval following appraisal |
| Bridge or debt fund | No allowlisted sourced day count | Valuation and the lender's investment committee | After investment committee approval |
| Hard money | For hard money business loans generally, some lenders approve within 24 hours and fund in as little as one to two business days (NerdWallet, updated March 10, 2026) | Title and the lender's valuation | Short, but still past the valuation and title review |
The table gives no day count where no allowlisted source states one. That is deliberate: a contingency set from a number nobody can stand behind is just a guess with a refund attached.
Is a financing contingency the same as the due-diligence period?
No, a financing contingency and a due-diligence period are separate clauses with separate deadlines: the due-diligence period lets the buyer investigate the property and walk for almost any reason, while the financing contingency protects the deposit only if the loan fails. Treating them as one window is the most common timing mistake.
Here is how the three dates usually relate on a commercial purchase:
- Due-diligence or inspection period. The buyer reviews leases, financials, title, survey, environmental and physical condition. Many contracts let the buyer terminate for any reason inside this window. When it ends, some or all of the deposit often stops being refundable.
- Financing contingency deadline. The buyer must have a loan commitment, or give notice, by this date. It often runs past the end of due diligence, because lenders need the same third-party reports the buyer is ordering.
- Closing date. Funding happens here. A commitment is not funding, so closing has to sit after the commitment plus the time to satisfy its conditions.
How these interact in your contract is a legal question. The sequence above is a general description, not advice on your clause.
What does a loan commitment still leave open?
A loan commitment is the lender's written agreement to make the loan, but it is conditional: it usually still requires satisfactory title, survey, insurance, entity documents, final reports and no material change in the property or the borrower before funding. A contingency that ends at the commitment date leaves those conditions uncovered.
Freddie Mac's multifamily guide shows the structure clearly. Under its standard delivery option, Freddie Mac sets the proposed terms and conditions only after it receives and approves the full underwriting package, and the rate is locked after the Letter of Commitment is issued and accepted (Freddie Mac Multifamily Seller/Servicer Guide, Chapter 27, 08/25/26). A quote from the originating lender is not that letter.
Practical points to raise with your attorney and lender:
- Ask what document the lender will issue and when: a quote, a term sheet, an approval, or a commitment letter.
- Read the commitment's conditions list against your contract dates. A condition you cannot meet before the contingency expires is your risk, not the lender's.
- Check the commitment's own expiry. A commitment that lapses before your closing date protects nothing.
When does the deposit go hard?
The deposit usually goes hard, meaning it becomes non-refundable, when the due-diligence period or a contingency deadline passes without the buyer terminating. After that point, a buyer who cannot close often forfeits the deposit unless another contract right applies. The exact trigger is written in your contract, so read it.
Corporate Finance Institute (January 31, 2020) notes that a buyer who fails to source funds can recover the earnest money provided it is noted in the contract, and that when a deal collapses through no fault of the seller, the deposit is often non-refundable. That is the whole argument for a contingency long enough to clear your lender's slowest step.
Three timing traps to discuss with counsel:
- Staged deposits. Some contracts add a second deposit or make the first non-refundable in stages. Map every stage against your lender's calendar.
- Extension rights. An extension that costs an extra deposit can be cheaper than a forfeited one. Ask whether the seller will grant one if a commitment is delayed through no fault of yours.
- Waiver by silence. Many clauses treat a missed notice as a waiver. Calendar the notice date, not just the expiry.
How do you set the right length for your deal?
You set the right length by working backward from the loan you will actually use: identify its slowest step, get the lender's written estimate for that step, add a cushion for the commitment's conditions, then negotiate the contract so the deposit stays refundable until that date. Do this before you sign the letter of intent.
A working sequence:
- Pick the loan type first. An SBA 7(a), an agency loan and a bridge loan move at different speeds. A contingency written before you know which one you are using is set blind.
- Ask the lender for dates in writing. When will the appraisal be ordered, when does committee or the SBA decision happen, and what document will you receive?
- Order third-party reports early. Appraisal, environmental and property condition reports are on the critical path for both your diligence and the lender's approval.
- Add a cushion for conditions. The commitment still has to be satisfied before funding.
- Have your attorney draft it. The clause language, notice mechanics and loan-terms definition are legal drafting. This article does not provide contract language.
If you are still choosing a loan type, the deal readiness check helps you see what a lender will ask for before the clock starts. For SBA purchases, the SBA 504 entry explains why two lenders are involved.
Negotiating a purchase contract right now?
If you are negotiating a purchase contract now, the useful move is to get real lender terms before the financing contingency is fixed, so its length reflects an actual lender's path rather than a template. YieldStack is a commercial mortgage brokerage, not a lender, and can put your deal in front of lenders while the contract is open.
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The bottom line
A financing contingency on a commercial property has no universal right length. It should run to the date your chosen lender can issue a written commitment, plus a cushion for that commitment's conditions, and it should be read alongside the due-diligence period and the date the deposit goes hard. Choose the loan type first, get the lender's dates in writing, and have your attorney prepare the clause.