Understanding Commercial Real Estate Lenders: What You Should Know Before Choosing a Financing Partner

By Makenzie W. Campbell, Assistant Vice President 

In commercial real estate, capital isn’t just a transaction—it’s a partnership. And selecting the right lender is more than comparing rates or reviewing term sheets. It’s about alignment. The right lender should match not only the property and strategy but also your long-term goals as a borrower. 

That’s why working with a seasoned mortgage advisor—someone who understands the full landscape of lending options—is essential. Here’s a breakdown of the key lender types you’ll encounter and what to consider when deciding which is right for your deal. 

Banks 

What works:
Banks can be strong relationship lenders, offering competitive interest rates and flexible terms—especially for clients with deep local ties. They bring market familiarity and, in many cases, a willingness to customize. 

What to watch:
With banks, flexibility comes with caution. Full personal guarantees are often required. Their underwriting can be conservative, and long-term fixed-rate products may be limited or unavailable.  

☑ Pro tip: Bank CRE portfolios are under heavy scrutiny. It is highly recommended to diversify your lending options outside of your typical relationship bank. 

Life Insurance Companies 

What works:
 Life companies shine in long-term, fixed-rate financing—especially for institutional-grade assets. They typically offer low rates, no personal guarantees, and loan terms designed for stability, predictability, and more utility of cash flow. Despite popular belief, life companies can finance small balance $1M to $30M requests, and the most informed advisors in the industry know the players.  

What to watch:
 They’re selective. If your property isn’t high quality, or the Sponsor is less experienced, it may not fit their box. Expect lower leverage, slower approvals, and extensive underwriting processes. 

CMBS Lenders 

What works:
CMBS can offer higher leverage, non-recourse financing, and attractive rates—particularly for well-stabilized assets. For borrowers needing size and scale, this lane can be a good fit. 

What to watch:
These loans come with rigid structures, complex servicing, and heavy prepayment penalties. Once you’re in, flexibility is limited, and servicing is managed by third-party entities—making adjustments more difficult post-close.  

☑ Pro tip: Slatt Capital is a servicer for select CMBS originators, offering a better borrower experience over the life of the loan. Simply call your Slatt advisor for any questions or concerns, we will know the loan or tenant and be able to address it quickly – without a queue.  

Debt Funds & Private Lenders  

What works:
Speed and flexibility are where private lenders excel. They’re ideal for transitional assets, lease-up situations, or when timing is critical. They’ll go where traditional lenders may hesitate. 

What to watch:
Expect higher interest rates and shorter terms—this capital comes at a premium. You’ll likely need an exit plan in place within 2–3 years, either through refinance or sale. 

Credit Unions 

What works:
For smaller transactions, credit unions can be surprisingly competitive. They often offer low rates, flexible underwriting, and a more relationship-based approach. 

What to watch:
They’re generally not built for complex or large-scale CRE deals. Approval processes can move slowly, and loan sizes may be limited.  

Agencies (Fannie Mae & Freddie Mac)  

What works:
If you’re financing multifamily, agencies offer some of the most competitive non-recourse, fixed-rate loans on the market. High leverage and borrower-friendly terms make them a go-to option for many owners. 

What to watch:
They’re not for everyone. Agency loans come with strict eligibility and long underwriting timelines. And like CMBS, they constrain the borrower’s control of cash flow and the prepayment penalties can limit flexibility down the road. 

So, how do you choose? 

Choosing a lender isn’t about picking the lowest rate—it’s about finding the best fit. Here are three guiding principles I use when advising clients: 

• Start with strategy. If you need long-term certainty, life companies or agencies are a strong match. If you need flexibility or speed, consider debt funds or banks. 

• Match the lender to the property. Stabilized commercial assets often fit best with banks or life companies. Transitional deals may require private lenders with a broader risk appetite. Multifamily? CMBS or Agencies are worth exploring. 

• Think about risk. If you want to avoid personal guarantees, prioritize non-recourse options from agencies, CMBS, or life companies. If that’s not a concern, banks and credit unions might offer the relationship advantage you’re looking for. 

In today’s market, the lender you choose can impact not only your financing but your long-term asset performance. It’s more than deal-making—it’s matchmaking capital to vision WITH a certainty of execution. 

Let’s talk about what’s possible for your next deal.
If you’re navigating financing decisions or exploring options, Slatt advisors are here to help you find the right fit. Get in touch and let’s build the capital strategy your investment deserves.