Commercial Real Estate Loans: What You Need to Know

Commercial Transactions are Different than Personal Loans

This is an article from the Bank’s financial education series Connections: Life & Money

By Bob Addoms, Vice President Commercial Banking, Mars Bank

Applying for a commercial real estate loan is vastly different from applying for a personal loan such as a residential mortgage, home equity loan or even a credit card. In order to approve a commercial real estate loan, a bank analyzes real estate properties using unique tools. These tools take into account:

  • market rent and sales data,
  • sensitivity to fluctuations in interest rates, and
  • pro forma calculations which consider local real estate market dynamics.

The result of this process ensures the right loan structure.

Commercial Loan Details

Commercial real estate terms can be intimidating and leave applicants confused. Examples of such terms:

  • absorption rate,
  • cap rate,
  • common area maintenance,
  • income appraisal approach,
  • highest and best use,
  • debt coverage ratio,
  • ground lease,
  • net operating income,
  • operating expenses, and
  • vacancy rate.

These are commonly used terms which require understanding in order to facilitate communication between bank and borrower. Good communication and understanding will ensure a sound business decision for both.

Mars Bank Commercial Banking Officers have the experience and training to guide business owners smoothly through the loan application process to the closing table.

Photo of Robert V. Addoms

Robert V. Addoms
Vice President
Commercial Banking
Mars National Bank
145 Grand Avenue
P.O. Box 927
Mars, PA 16046-0927
724.625.1555 Ext. 266
724.822.4104 (Cell)
724.625.9400 (Fax)
raddoms@marsbank.com

Bob Addoms is an experienced commercial banker who can help you prepare for a commercial real estate transaction. Contact him via email or call 724.625.1555 ext. 266. Read Bob’s bio.

Miss Our Cybersecurity Summit for Business?

If you missed our informative lunch and learn about the current cyber landscape, how to protect your business, and what to do after an attack… please contact us to receive the follow up materials.

Now is the time to protect your business! Learn more.

Make an Appointment

  • This field is for validation purposes and should be left unchanged.

Locate a Branch

image of google maps of Mars Bank launches

Contact a Banker

Contact one of our knowledgeable bankers, email us. We can answer your questions about loans, cash management, merchant services… any of your business banking needs!

Online and Mobile Business Banking

If you’re a current online banking customer, click here to login. Enroll in online banking, click here.

Access our business banking app for Android or Apple by clicking here.

Beneficial Ownership 

Important Information for commercial customers.