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What is a Commercial Real Estate Blanket Loan?

A commercial real estate blanket loan is a loan that covers multiple pieces of commercial real estate. These loans are ideal for investors and developers because you can manage multiple properties without having to manage multiple mortgages. Since blanket loans are not tied to one piece of property, they offer much more flexibility for frequent buying and selling of property. We’ve broken down some of the critical elements of commercial real estate blanket loans to see if they could work for you.

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Interest rates for commercial real estate blanket loans tend to be slightly lower than conventional commercial real estate loans. This is because blanket loans have multiple pieces of property to use as collateral, which makes them more stable as collateral since the odds of multiple pieces of property losing its value is much lower than a single piece of property losing its value.

Credit Requirements

While commercial blanket loans are assessed on a case by case basis, they generally have a higher standard than other commercial real estate loans. Blanket loans are rarely given to anyone with a business or personal credit score of less than 620. Most lenders ask for higher down payments for borrowers with lower credit scores. The lowest down payment on a blanket loan is 25%, and most lenders require that you must have a FICO credit score of at least 680.

Lenders often reject applications for commercial bank loans even when the borrower meets all of the basic requirements. Since they are such large loans lenders only grant them when the situation is ideal.

How to Get a Commercial Real Estate Blanket Loan

Like with any loan, getting a commercial blanket loan, first of all, requires getting all your financial documents in order. This includes income tax reports, bank statements, credit reports, etc. Since this is a type of business loan, lenders will also be interested in your business’ financial history, as well as its future. Buying multiple commercial properties is an investment for you, as well as your lender, and the success of your investment will help determine theirs, so it’s important to assure them that you know what you’re doing. This means a strong, well-thought-out business plan, detailing how you plan to put your commercial properties to work.

Other than that, the trick to getting approved for your loan is patience and dedication. Finding the right lender can take time, but it’s time well spent since the right investment is something well worth the effort.

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