How to Get a Commercial Loan with No Experience

The Experience Challenge

Commercial lenders prefer borrowers with proven track records. They want to see you've successfully managed similar properties before trusting you with a significant loan.

But everyone starts somewhere. Here's how to break into commercial real estate even without experience.

Strategy 1: Start with DSCR/Investor Loans

DSCR (Debt Service Coverage Ratio) loans focus primarily on the property's cash flow rather than your personal income or experience. This makes them ideal for first-time investors.

Why it works:

• Qualification based on property NOI vs. debt service
• Less emphasis on borrower experience
• Available for 1-4 unit and 5+ unit properties
• No tax returns required in many cases

Requirements:

• 20-25% down payment
• Property DSCR of 1.00x-1.25x minimum (use our DSCR calculator to check)
• 620+ credit score (higher scores = better rates)
• 6+ months reserves

Strategy 2: Partner with an Experienced Investor

Bring in a partner or guarantor with commercial real estate experience.

How to structure:

• Find a mentor/partner willing to sign on the loan
• They provide experience; you provide capital, deal sourcing, or management
• Clearly define roles and profit splits upfront

Where to find partners:

• Local real estate investment groups (REIAs)
• Commercial real estate networking events
• LinkedIn real estate communities
• Existing relationships (attorneys, CPAs who know investors)

Strategy 3: Start Smaller

Begin with properties that have lower barriers to entry:

Good starting points:

• Small multifamily (5-20 units)
• Single-tenant retail with credit tenant
• Small industrial/flex space
• Self-storage facilities

Why smaller works:

• Local/regional banks more flexible
• Lower loan amounts = less scrutiny
• Build track record for larger deals

Strategy 4: Use SBA Loans

SBA 504 and 7(a) loans are designed to help small business owners—including first-time commercial property buyers.

Advantages:

• Lower down payment (as little as 10%)
• More flexible on experience
• Government guarantee reduces lender risk
• Available for owner-occupied properties

Requirements:

• Business must occupy 51%+ of property
• Strong business financials
• Personal guarantee required
• Must demonstrate ability to repay

Learn more about SBA loan requirements and benefits.

Strategy 5: Bring More Equity

Offsetting inexperience with a larger down payment reduces lender risk.

Standard down payment: 20-25% First-timer down payment: 25-35%

The extra equity demonstrates commitment and provides a larger cushion.

Strategy 6: Hire Professional Management

Show lenders you have a plan for competent property management:

• Engage a professional property management company
• Get a letter of intent from the management company
• Include their track record in your loan application

This addresses the "can you manage it?" concern.

Strategy 7: Document Relevant Experience

You may have more relevant experience than you realize:

• Residential investing: Managing rental properties
• Business ownership: Running a company with employees, budgets
• Construction/development: Building or renovating projects
• Professional background: Finance, real estate, law, accounting

Present this experience in a professional resume or experience summary.

Strategy 8: Use Hard Money/Bridge as a Stepping Stone

Hard money and bridge lenders are more flexible on experience:

• Higher rates (10-14%+)
• Shorter terms (12-36 months)
• Asset-focused underwriting
• Build track record, then refinance to permanent debt

Use our bridge loan calculator to model costs.

Building Your Track Record

Once you complete your first deal:

1. Document everything: Keep detailed records of income, expenses, improvements
2. Create a deal summary: Property, purchase price, financing, performance, outcome
3. Get references: Property managers, contractors, lenders
4. Build relationships: Maintain contacts for future deals

Each successful deal makes the next one easier to finance.

What Lenders Want to See

Even without direct experience, demonstrate:

• Financial strength: Strong credit, net worth, liquidity
• Due diligence: Thorough understanding of the property and market
• Realistic projections: Conservative, well-researched pro formas
• Professional team: Attorney, CPA, property manager, broker
• Commitment: Adequate equity and reserves

Red Flags to Avoid

• Overly aggressive projections
• Insufficient due diligence
• Unwillingness to sign personally
• No plan for property management
• Inadequate reserves

Get Started Today

Don't let lack of experience stop you. Our team works with first-time commercial investors every day, matching them with lenders who understand their situation.

Contact us for a free consultation to discuss your deal and financing options.

Helpful Resources:

• Commercial Loan Requirements Guide
• Understanding Interest Rates
• Down Payment Requirements