Is 100% Creative Financing for Commercial Real Estate Possible?
Is 100% Creative Financing for Commercial Real Estate Possible?
Short answer: true 100% financing on CRE—no cash in, no collateral outside the deal—is almost never real. Someone takes first-loss risk. If it isn’t the senior lender, it’s you, a seller, a mezz fund, a preferred equity investor, or a public program stepping in with strings attached. That said, there are ways to get close to full coverage when the asset, tenant profile, and sponsor strength justify it.
How lenders actually size your deal
- LTV / LTC: senior term loans commonly 55%–70% LTV; construction 55%–65% LTC; bridge 60%–75% of cost depending on business plan and rate cap.
- DSCR & Debt Yield: pro forma DSCR typically 1.20x–1.35x+; debt yield 8%–10%+ depending on asset and market.
- Recourse: non-recourse with carve-outs for stabilized institutional assets; partial/full recourse more common for transitional or smaller assets.
- Rate reality: in a high-rate environment, “negative leverage” kills max proceeds. NOI has to pull its weight.
Can you reach 90%–100%? Sometimes—here’s the toolbox
| Instrument | Typical Slice | Where it helps | Caveats |
|---|---|---|---|
| Senior loan (bank, debt fund, agency where eligible) | 55%–70% LTV (bridge up to ~75%) | Core, value-add with credible plan, or lease-up | Proceeds capped by DSCR/debt yield; rate caps needed on bridge |
| Mezzanine debt / B-note | +5%–15% of cost/value | Adds proceeds above senior limits | Intercreditor needed; pricier coupon; tight cash sweep triggers |
| Preferred equity | +5%–20% of cost/value | Fills true equity gap without voting control (usually) | Hard pay; remedies can force a take-over on underperformance |
| Seller financing / earn-outs | +5%–20% of price | Aligns interests; smooths appraisal gaps | Subordinated to senior; rate and maturity must match business plan |
| C-PACE (energy improvements) | 10%–30% of cost | Retrofits and ground-up with qualifying measures | Senior to mortgage via tax assessment; senior lender consent is mandatory |
| Tax credits / incentives (HTC, NMTC, TIF, abatements) | Up to 10%–25%+ of capex in eligible deals | Historic, low-income, catalytic sites | Complex closes; timing risk; legal fees mount fast |
| Credit-tenant lease (CTL) / ground lease structures | Debt sized to long IG lease; leasehold loans can push 85%–100% of cost | Single-tenant, long-term, investment-grade credit | Narrow use case; covenant heavy; re-tenanting risk is brutal if credit leaves |
| Cross-collateral / cash collateral | Varies | Strong sponsors pledging outside assets | It’s still equity—just coming from a different pocket |
Bare minimum a sponsor/acquirer needs
- Cash equity: plan on 5%–20% of cost from the sponsor group even in “high-leverage” stacks. Yes, exceptions exist; no, they’re not common.
- Liquidity after close: at least 6–12 months of carry and contingencies on transitional assets. Lenders check post-close cash.
- Net worth & track record: rule of thumb many lenders use: net worth ≈ loan amount, liquidity ≈ 10% of loan. Smaller loans may be more flexible; construction less so.
- Real guarantees: limited or full recourse on bridge and construction; warm-body carve-outs on non-recourse. Pretending otherwise wastes time.
- Third-party reports funded: appraisal, ESA, PCA, zoning, surveys. No one is fronting these for you.
- Rate cap / hedging for bridge debt: budget it. Caps aren’t optional in most term sheets.
- Clean story: business plan, lease-up path, capex scope, comp set, and exit. If NOI doesn’t step up, the stack collapses.
Two paths that actually get near 100%
- Credit-tenant + leasehold loan: investment-grade, long-term net lease; lender sizes to rent, not market cap rates. Add a small sliver of pref or seller carry to cover costs and you can be close to full coverage. Narrow box, heavy diligence.
- Bridge + mezz/pref + C-PACE + seller note: senior to 65%–70% LTV, C-PACE funds energy scope, mezz/pref to ~85%–92%, seller note for the last 5%–10%. This can work on value-add with clear upside. It’s complex, pricier, and very covenant-driven.
Red flags that kill “100% financing” pitches
- Unrealistic rent or exit cap assumptions to force DSCR.
- No skin in the game and no outside collateral.
- Vendor “letters” that aren’t binding or transferrable.
- Ignoring intercreditor mechanics—senior/mezz/pref must live together on paper.
- Calling C-PACE “free money.” It’s senior to the mortgage and lenders treat it accordingly.
How we help bridge funding caps (sales bit)
We’re a credit structuring and placement team. Our work is simple to say and hard to do: build a lender-grade file, size max senior proceeds, and stack the right mix of mezzanine, preferred equity, C-PACE, seller carry, and incentives—so the numbers clear the tests and the documents hang together. We coordinate approvals with senior lenders, junior capital, and counsel. If the asset and sponsor qualify, we close the gap between what the bank will fund and what the deal needs. All of it is subject to underwriting and market terms—no gimmicks, no “guaranteed” money.
Have a gap to fill?
Send the deck, trailing financials, business plan, and a clean sources/uses. We’ll tell you straight if the stack is viable and what it will cost.
Bridge the Funding GapThis article is informational. Terms vary by lender, asset, and market conditions. Any placement depends on full underwriting, third-party reports, and executed intercreditor and security documents.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
Trade Finance
Tap into solutions like letters of credit, bank guarantees, and payment facilitation. We address the challenge of global transaction risk through structured strategies that foster cross-border growth. Complete the form to unlock streamlined funding aligned with your commercial objectives.
Submit a RequestProject Finance
Access non-recourse funding for infrastructure, renewable energy, or other capital-intensive ventures. We mitigate capital constraints by isolating project assets and focusing on risk management. Provide your details to receive a structure that drives growth and maximizes returns.
Submit a RequestAcquisitions
Secure financing for business or real estate acquisitions. We ease transaction hurdles by reviewing cash flow, synergy opportunities, and exit plans. Complete the form for a customized proposal that supports your strategic investment objectives.
Submit a RequestFor Banks
Financely assists banks facing Basel III pressures by distributing trade finance deals and providing collateral for letters of credit. We reduce capital burdens while preserving client relationships and fostering service expansion. Submit your request to optimize your trade finance offerings.
Submit a RequestOnce we receive your submission, our team will review your information to determine feasibility. If eligible, you will receive a proposal or term sheet within 1–3 business days. Visit our FAQ and Procedure pages for more information.
Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.
