Using Commercial Equity Loans to Finance Renovation

Commercial equity loans are lines of credit that allow borrowers to unlock the equity in their commercial property without the added expense of traditional loans (which involve multiple fees, including appraisal, title, and environmental). Commercial equity loans, also called commercial real estate lines of credit, do not have such fees and are unlike other types of equity loans. Since they are actually lines of credit, the borrower must only pay interest on the amount that they use. And like other lines of credit, the borrower has access to the money at any time, up to the maximum amount. Many borrowers use commercial equity loans to finance building renovation.

Time To Renovate!

Do you own a commercial property in need of renovation? If the answer is yes, consider a commercial equity loan. This loan helps borrowers renovate, remodel, and improve commercial real estate. For example, let’s suppose you find a run-down building in a perfect location. You need to renovate it so that it presentable and attractive to customers, and also to make it fit the style and purpose of your business. Commercial equity loans help business owners convert and renovate properties so that they are right for their particular business.

Extra Savings

If you plan to renovate your building into a green, energy-saving facility, you can save even more through a commercial equity loan. The Small Business Administration’s 504 program offers incentives for a building and/or renovation that:

  • reduces energy costs at least 10%
  • is an energy producing facility
  • is a green or non-green manufacturing facility

The 504 program allows green businesses to finance up to 90% of the purchase or renovation cost at lower rates than traditional loans. If your commercial renovation incorporates the use of alternative or renewable energy, you’ll also receive significant tax incentives for “going green,” helping the environment, and setting an example for other business owners.


Commercial equity loans are generally difficult to obtain and require borrowers to have an excellent credit score. This is because commercial equity loans are often for very large sums of money. Borrowers must prove that, after renovations, the finished product is worth more than construction costs. This is called a Profit Test. Commercial equity loans also help borrowers create liquidity, as there are fewer fees and relatively low interest rates as compared to traditional loans.