Sponsors rarely have just one financing option for a deal — the question is usually which of several viable structures fits best. A stabilized multifamily acquisition, a value-add office repositioning, and an owner-occupied warehouse purchase each point toward a different corner of the CRE lending market, and picking the wrong one costs time, leverage, or basis points that add up fast.
This guide compares the seven loan types sponsors and brokers encounter most often in commercial real estate: bank, agency, CMBS, bridge, SBA, hard money, and mezzanine debt. Each has a distinct rate range, term, leverage ceiling, and ideal use case — laid out side by side below.
What are the main types of commercial real estate loans?
The seven main commercial real estate loan types are bank loans, agency loans (Fannie Mae/Freddie Mac), CMBS loans, bridge loans, SBA loans (504 and 7(a)), hard money loans, and mezzanine debt — each suited to a different combination of asset type, stabilization status, sponsor profile, and speed requirement. No single loan type is "best"; the right choice depends entirely on where the specific deal sits on the risk and timeline spectrum.
| Loan Type | Typical Rate (2026) | Typical Term | Typical LTV/LTC | Best Use Case |
|---|---|---|---|---|
| Bank loan | ~6.5–8.5% | 5–10 yrs (25–30 yr am.) | 65–75% LTV | Stabilized property, relationship banking, moderate leverage |
| Agency (Fannie/Freddie) | ~5.5–7% | 5–30 yrs | Up to ~80% LTV | Stabilized multifamily, non-recourse, long-term hold |
| CMBS | ~6–8% | 5, 7, or 10 yrs (25–30 yr am.) | 65–75% LTV | Larger stabilized deals across any asset class, fixed rate |
| Bridge loan | ~8–12% | 6–36 months | 65–80% LTV/LTC | Value-add, lease-up, acquisitions needing speed |
| SBA 504 / 7(a) | ~6.5–9% | Up to 25 yrs | Up to 90% LTV | Owner-occupied small business real estate |
| Hard money | ~10–14%+ | 6–24 months | 55–70% LTV | Distressed timelines, credit issues, fastest close |
| Mezzanine debt | ~10–15% | Matches senior loan | Fills gap to ~85–90% total stack | Boosting leverage above senior loan's max LTV/LTC |
Rates shift with the broader rate environment, so treat these as relative bands, not fixed numbers — the ranking between loan types (bridge and hard money pricing above bank/agency execution, for example) is more durable than the specific percentages.
How do bank and agency loans compare for stabilized properties?
Bank loans and agency loans both target stabilized, income-producing properties, but agency loans (through Fannie Mae or Freddie Mac, multifamily only) typically offer higher leverage, longer amortization, and non-recourse terms, while bank loans are available across all commercial asset types and often close faster with more flexible underwriting for a strong existing relationship. A multifamily sponsor refinancing a stabilized asset for a long hold will often find agency execution hard to beat; a sponsor buying a stabilized retail strip or industrial building doesn't have that agency option and defaults to bank or CMBS financing.
Agency loans commonly require minimum underwritten DSCR near 1.25x and cap leverage around 80% LTV on standard products, tightening at certain loan tiers — tight enough that a marginal deal may need to be sized down to qualify, whereas a bank may show more flexibility (at a cost in rate or recourse) for a sponsor it already knows.
When does CMBS make sense versus bank or bridge debt?
CMBS financing makes sense for larger, stabilized commercial properties across any asset class — office, retail, hotel, industrial — where the sponsor wants a fixed-rate, non-recourse permanent loan and can accept less flexibility than a bank relationship provides once the loan is securitized and sold to bondholders. CMBS loans are pooled and sold as securities, which is why loan servicing after closing is more rigid than a balance-sheet bank loan — modifications, payoffs, and even minor waivers typically route through a master or special servicer rather than a relationship banker.
CMBS loans are not the right tool for a transitional or heavily leased-up property; the fixed underwriting standards and typical 5-10 year non-recourse structure assume in-place, stabilized cash flow from day one, which is exactly where a bridge loan fills the gap instead.
What's the difference between a bridge loan and a hard money loan?
Bridge loans and hard money loans both provide short-term, asset-secured financing for deals that don't yet qualify for permanent debt, but bridge loans are typically underwritten with more emphasis on the sponsor's business plan and track record at somewhat lower rates, while hard money loans prioritize speed and loan-to-value above almost everything else — including sponsor credit — at a higher rate and lower leverage ceiling. A sponsor with a strong track record and a credible value-add plan will usually get better pricing from an institutional bridge lender than from a hard money lender, but a borrower with credit issues or an extremely compressed timeline may find hard money the only realistic option.
Worked comparison: On a $2M loan, a bridge lender at 9.5% with 2 points costs roughly $190,000 in interest plus $40,000 in points over 12 months ($230,000 all-in). A hard money lender at 12% with 3 points on the same loan and term costs roughly $240,000 in interest plus $60,000 in points ($300,000 all-in) — a difference of $70,000 for a faster, less document-intensive close.
When do SBA and mezzanine financing fit into a CRE deal?
SBA 504 and 7(a) loans fit owner-occupied commercial real estate for small businesses (the business itself must occupy a majority of the property), offering leverage up to 90% LTV that no conventional lender matches, while mezzanine debt fits behind a senior loan on investment properties to push total leverage higher than the senior lender's maximum LTV or LTC alone would allow. These two loan types solve opposite problems — one is about qualifying for high leverage as an owner-occupant, the other is about stacking additional leverage on top of an already-sized senior loan.
- SBA 504: Fixed-rate, long-term financing for owner-occupied real estate and major equipment, funded through a bank first-lien loan plus a Certified Development Company second-lien debenture.
- SBA 7(a): More flexible use of proceeds (real estate, working capital, business acquisition), generally at a somewhat higher rate than 504 but with fewer occupancy restrictions.
- Mezzanine debt: Subordinate to the senior mortgage, secured by a pledge of ownership interests rather than the real estate itself, priced at equity-like rates (10-15%+) because it sits in a much riskier position in the capital stack.
How should a sponsor choose between these seven loan types?
A sponsor should choose a loan type by matching the property's stabilization status and asset class, the required closing speed, and the sponsor's own occupancy status (owner-user vs. investor) against each loan type's sweet spot — then shop multiple lenders within that category rather than assuming the first quote reflects the whole market. The same $5M value-add deal might be a poor fit for agency or CMBS financing today but a strong fit for a bridge loan now and an agency refinance in 18 months once stabilized.
Because pricing and appetite vary so much lender-to-lender even within a single loan type, running a deal through a marketplace like YieldStack — which matches deal parameters against bank, agency, debt fund, and other lender types simultaneously — turns a sequential, weeks-long shopping process into a single comparison of term sheets. For the full mechanics of how that matching works, see how CRE loan marketplaces match lenders.
The bottom line
Bank, agency, CMBS, bridge, SBA, hard money, and mezzanine financing each serve a specific slice of the commercial real estate market, distinguished mainly by asset stabilization, closing speed, leverage ceiling, and rate. Matching the loan type to the deal — not just chasing the lowest advertised rate — is the first decision that shapes every term sheet that follows. For the underlying mechanics common to all seven, see how commercial real estate loans work, and for the process of actually closing one, see how to get a commercial real estate loan.