Commercial property loans are commercial loans made which use real estate as collateral.
Unlike residential property loans, a building will be used in order to secure repayment to the lender rather than a residence. A business will usually take on a commercial property loan, not an individual borrower.
The borrower may be a partnership, incorporated business, or limited company, so assessment of the creditworthiness of the business can be more complicated than is the case with residential mortgages.
Some commercial property loans are nonrecourse, meaning that in the event of default in repayment, the creditor can only seize the collateral, but has no further claim against the borrower for any remaining deficiency. This is a contrast to the norm with residential property loans, in which a lender can usually seize other assets of the borrower in the event of non-payment.
In some cases, a loan can possibly be supplemented with a personal guarantee. This guarantee can make the debt payable in full even if foreclosure on the mortgaged collateral does not satisfy the outstanding payment due.
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