9 min read
How to Use Commercial or Personal Real Estate to Fund Your Business
By Christopher Chavez, Founder — Northwood Capital Group
If you own a business and a commercial building, rental property or home, that equity can fund the business. A real estate-backed business loan places a first lien on the property and lends against its value, so the amount you can borrow is driven mainly by equity, not just credit score or time in business. Northwood Capital Group LLC offers these loans nationwide to business owners.
The short answer: Northwood programs lend up to 60–70% loan-to-value in 1st lien position, on commercial, investment or primary-residence property, with 2–30 year terms, loan amounts of $500K–$5M, rates typically 10–12% and closings in 3–5 weeks. These are business-purpose loans made to business owners only — the funds must go into the business you own and operate. See the real estate-backed loans program page.
How LTV determines what you can borrow
| Property value | Max loan at 65% | Existing mortgage | Available to business* |
|---|---|---|---|
| $500,000 | $325,000 | $0 | $325,000 |
| $1,000,000 | $650,000 | $250,000 | $400,000 |
| $2,500,000 | $1,625,000 | $900,000 | $725,000 |
| $6,000,000 | $3,900,000 | $1,500,000 | $2,400,000 |
*Before closing costs and fees. Because the loan must be in 1st position, any existing mortgage is paid off at closing. Final LTV depends on property type, condition, location and valuation.
Commercial property vs. personal real estate
Commercial and investment property
Shops, warehouses, office buildings, contractor yards, mixed-use and rental properties are common collateral. Owner-occupied commercial property can also be refinanced long-term through an SBA 504 loan if you can wait 30–90 days; a real estate-backed loan is usually faster and more flexible on credit.
Your primary residence
Using your home is allowed for business-purpose funding. It can unlock a large amount when the business is young or credit is bruised. It also puts your home at risk if the loan isn't repaid, so borrow only what has a clear payback plan.
HELOC vs. a business-purpose equity loan
| Consumer HELOC | Business-purpose real estate loan | |
|---|---|---|
| Qualified on | Personal income and debt-to-income | Property equity and business use |
| Business use | Often restricted or not allowed | Designed for it |
| Lien | Often 2nd position | 1st position (Northwood) |
| Property types | Primary home mainly | Home, rentals, commercial, mixed-use |
| Amounts | Usually smaller | $500K–$5M |
Smart uses of real estate equity
- Consolidating stacked merchant cash advances into one payment (see MCA debt relief)
- Funding expansion, a second location or a large contract
- Buying out a partner or acquiring a competitor
- Equipment and working capital together — compare with equipment financing so the machine carries its own payment
Avoid using long-held equity to cover ongoing losses. If cash flow can't support the payment, the property is on the line.
What lenders review
- Business ownership: you must own and operate the business receiving the funds — these loans are not offered for personal or consumer use.
- The property: value, type, condition, location, title and existing liens.
- Equity: enough to stay within 60–70% LTV after paying off any first mortgage.
- Use of funds and repayment: four months of business bank statements as PDFs show cash flow.
- Credit: reviewed, but equity carries more weight than with short-term loans or a line of credit.
Nationwide, including Texas, Florida and California
We review real estate-backed requests in all 50 states, including Los Angeles, Orange County and the Inland Empire, Houston, Dallas and San Antonio and Miami, Orlando and Tampa.
How to apply
Have the property address, estimated value, current mortgage statement and the last four months of business bank statements (PDF downloads from your bank). Apply online or call (714) 679-8886.