A commercial loan maturity date is a fixed deadline, and refinancing takes longer than most borrowers expect. The owners who get through it smoothly start early, know how a new lender will see the property, and have the paperwork ready before they ask for terms. Here is what to prepare, in the order it tends to matter.
Start with the maturity date, not the property
Pull your current loan documents and write down four things: the maturity date, the payoff amount, any prepayment penalty or yield maintenance that applies if you pay off early, and whether the loan has an extension option. Many borrowers assume an extension is available and discover late that it carries conditions, such as a minimum debt service coverage ratio, a fee, or lender consent. If your lender will not extend, you need to know that months before the deadline, not weeks.
Then count backward. A commercial refinance commonly takes 30 to 60 days or more from a signed term sheet to closing, and appraisals, environmental reports, title work and entity documents can each add time. If your loan matures in under 90 days, the useful question is not “what is the best structure” but “what can realistically close in time.” Short-term bridge financing exists for that situation, and it can be a sensible way to buy time to reach longer-term financing. See our commercial bridge loans page for how those programs generally work.
The document package lenders ask for first
Almost every commercial lender starts with the same core package. Having it assembled and current is the single biggest thing you can do to shorten the process.
- Current rent roll showing each unit or suite, tenant, lease start and end dates, monthly rent and deposits
- Trailing 12-month operating statement (and often the prior two years) with income and expenses by category
- Current loan statement and a copy of the note and any modifications or extensions
- Leases for larger tenants, especially anyone whose rent is a meaningful share of income
- Schedule of real estate owned with balances, values and ownership for each property
- Entity documents for the borrower: operating agreement or bylaws, ownership chart, and good standing
- Insurance and property tax bills, plus a capital-expenditure history for the last few years
- Personal financial statement and bank statements for guarantors or sponsors
Send these as organized PDFs, not a stack of photos. Lenders move faster on clean files, and a clean file also tells them something about how you run the property.
Know the numbers a lender will calculate
Before you ask for terms, run the same math a lender will. Three measures come up on nearly every deal.
- Net operating income (NOI): income minus operating expenses, before debt service. Lenders often adjust your numbers, for example by normalizing a vacancy factor, a management fee and replacement reserves.
- Debt service coverage ratio (DSCR): NOI divided by annual debt service. Lenders set a minimum that varies by program and property type.
- Loan-to-value (LTV): the new loan divided by the appraised value. Maximums differ by property type, borrower and program.
A fourth measure, debt yield (NOI divided by loan amount), is used by some lenders as a quick screen because it does not depend on the interest rate or amortization.
Illustrative example. Not an offer or a completed transaction.
Assume a 12-unit apartment building with a $1,800,000 loan maturing in 75 days. The owner estimates the value at $2,700,000, and the trailing 12-month NOI after adjustments is $168,000.
- LTV on the existing balance: $1,800,000 ÷ $2,700,000 = 66.7%
- Debt yield: $168,000 ÷ $1,800,000 = 9.3%
- If a lender in this example required a 1.25 DSCR, NOI of $168,000 could support annual debt service up to $134,400 ($168,000 ÷ 1.25)
That last number is the useful one. It tells the owner the largest annual debt service the property can carry under that assumed requirement, which in turn limits how large a new loan can be. If debt service on a $1,800,000 loan would exceed it, the owner learns now that the refinance may need to be smaller, that a different program may fit better, or that the property needs to improve before it qualifies. The ratios, values and requirements here are assumptions for illustration; actual terms depend on the lender and the property.
Fix what you can before you apply
Lenders underwrite the property as it is documented, so small clean-ups can matter. A few worth checking:
- Rent roll against bank statements. If reported rents do not match deposits, expect questions. Reconcile them first.
- Expenses that look low. Underwriters often substitute their own figures for management, repairs and reserves when yours look unusually light.
- Delinquent property taxes or open violations. These can stop a refinance or force payoff from proceeds, so surface them early.
- Lease rollover. If several large leases expire within the first year of the new loan, a lender may size the loan more conservatively. Renewals signed before you apply help.
- Deferred maintenance. Visible problems can lead to repair escrows or a lower value.
Choose the loan type that matches the property’s situation
The right refinance depends on whether the property is stabilized and what you want to do next.
- Stabilized, income-producing property with solid occupancy often fits a permanent commercial mortgage. See commercial mortgage loans in California for how those programs generally work.
- Transitional property that is under-leased, in lease-up or needs work may fit a bridge loan first, with a plan to refinance into permanent financing once it stabilizes.
- Owner-occupied property may qualify for programs that look at the operating business as well as the real estate. See owner-occupied commercial loans.
- Multifamily and mixed-use are underwritten with their own guidelines. See multifamily and mixed-use loans.
Questions to settle before you pick a lender
- What is the full cost of the payoff, including any prepayment charge, so you know how much the new loan must cover?
- Is the new loan recourse or non-recourse, and what carve-outs apply?
- What are the prepayment terms on the new loan, in case you plan to sell or refinance again?
- What reserves, escrows or holdbacks will be required at closing?
- Which third-party reports are needed (appraisal, environmental, property condition), who orders them and how long do they take?
- What happens if the appraisal comes in below your estimate?
A realistic timeline
Working backward from maturity, a workable plan often looks like this: gather documents and run your own numbers (weeks 1 to 2), get scenario feedback and term sheets from lenders (weeks 2 to 4), choose a lender, sign and order third-party reports (weeks 4 to 6), underwriting and conditions (weeks 6 to 9), then closing. If that schedule does not fit before your maturity date, ask about a short extension from your current lender or a bridge loan while you finish the permanent refinance. The earlier you start the conversation, the more of these options remain open.
Frequently asked questions
How early should I start refinancing a maturing commercial loan?
Many borrowers start four to six months before maturity. Commercial refinances commonly take 30 to 60 days or more once terms are agreed, and third-party reports can add time.
What if my lender will not extend the loan?
You still have options, such as a permanent refinance or a short-term bridge loan to cover the gap. The key is to learn early whether an extension is available, so you are not choosing under deadline pressure.
What documents do I need to refinance a commercial property?
Typically a current rent roll, a trailing 12-month operating statement, the current loan statement, leases, entity documents, a schedule of real estate owned and personal financial information for guarantors.
If you have a commercial loan coming due, send us the property address, the current balance and maturity date, the rent roll and the operating statement through the form below, and we will review financing options. For more on how we handle these requests, see commercial mortgage loans.
Send us your scenario
Tell us about the property, the loan and your timeline and a loan advisor will respond within one business day. A term sheet is not an approval.
Blue Fox Capital Corporation lends on select DSCR, fix-and-flip and construction programs and arranges other financing as a mortgage broker through third-party lenders. CA DRE 01527288 | NMLS 1840487. Daniel Eckhouse, NMLS 217328 | CA DRE 01977403. This article is general information, not an offer, a rate quote, a loan approval or advice for your situation. Examples are illustrative only and are not completed transactions. Programs, terms and availability vary by property, borrower and lender and are subject to qualification and lender approval. Not all applicants will qualify. The business-purpose loans discussed are not available for a home you live in or plan to live in. Equal Housing Opportunity. 66350 Pierson Blvd, Suite A, Desert Hot Springs, CA 92240 | (310) 756-3619 | dan@bluefoxcapital.com