You need money to buy a building for your business. Maybe you want to open a restaurant, start a clinic, or grow your company. The good news? Louisville banks want to help you. They have many ways to give you the money you need.
I remember when my friend Mike wanted to buy a small office building near downtown Louisville. He felt lost. Where should he start? Which bank would say yes? How much money did he need?
After weeks of asking questions and meeting with different banks, he found the right fit. He got his loan and bought the building. Today, his business is doing great.
In this guide, I will show you how to get commercial property financing from Louisville banks. You will learn about loan types, interest rates, and what banks look for when they give money to business owners.
What Is Commercial Property Financing?
Let me break this down in simple words. Commercial property financing means getting money from a bank to buy or build a property for your business. This could be an office, a store, a warehouse, or any building you use to make money.
It works differently than getting a home loan. Banks look at your business, not just you as a person. They want to know if your business makes enough money to pay back the loan.
How Commercial Loans Work in Louisville
When you apply for a commercial loan in Louisville, the bank checks several things. First, they look at your business income. Do you make enough money each month?
Second, they check the property you want to buy. Is it worth the price? Will it help your business grow?
Third, they want to see your down payment. Most banks ask for 10% to 30% of the property price upfront. According to a study published by the Federal Reserve, the average down payment for commercial properties is around 20-25% in most U.S. markets.
The bank then decides if they will give you the money. If they say yes, you get the loan. You pay it back over time, usually 5 to 25 years.
Why Local Banks Matter for Your Business
You might wonder, why use a Louisville bank? Why not go to a big national lender?
Local banks know Louisville. They understand the neighborhoods, the business climate, and the local market. When Stock Yards Bank or Republic Bank reviews your application, they can make quick decisions because they know the area well.
I once met a woman who tried three different national banks. Each one took months to review her application. Then she went to a local Louisville bank. They approved her loan in just three weeks. Local banks can move faster because they do not have layers of approval in other cities.
Plus, local banks want to build relationships. They care about helping Louisville businesses grow. This means better service and more personal attention for you.
Top Louisville Banks for Commercial Property Financing
Louisville has several excellent banks that give commercial property loans. Let me tell you about two of the best ones.
Stock Yards Bank & Trust
Stock Yards Bank & Trust started in 1904. They have been helping Louisville businesses for over 120 years. This bank understands what local business owners need.
They offer several types of loans. You can get construction loans if you want to build from scratch. You can get term loans if you want to buy an existing building. They also work with investment properties if you want to rent out space to other businesses.
One thing I like about Stock Yards is their loan terms. They offer 15 to 25-year amortization, which means lower monthly payments. They also work with you on the LTV ratio, which stands for loan-to-value. This means they will lend you up to 80% of the property value.
Stock Yards also handles special loans like tax credit financing. If your property qualifies for historic tax credits or low-income housing credits, they can help you use those benefits to get better loan terms.
Republic Bank
Republic Bank is another strong choice for commercial property financing in Louisville. Their CRE Lending Division has grown a lot in recent years.
They have a special program called the 5-Year ARM. This gives you a fixed rate for the first five years, then the rate can change. You can borrow up to $10 million with this loan. They also offer up to 80% LTV, which means you only need a 20% down payment.
Republic Bank works with both owner-occupied properties and investment properties. Owner-occupied means you use the building for your own business. Investment properties mean you rent out the space to others.
What makes Republic Bank special is its local team. Led by Juan Vassallo, their commercial real estate team has more than 75 years of combined experience. They know the Louisville market inside and out.
Types of Commercial Property Loans Available
Not all commercial loans are the same. Different loan types work for different needs. Let me explain the main types you will find at Louisville banks.
Construction Loans
A construction loan gives you money to build a new building from the ground up. This works if you own land and want to put up a new structure.
These loans usually last 2 to 3 years. During this time, you only pay interest. The bank gives you money in stages as the building goes up. When you finish the building, you can switch to a permanent loan.
Stock Yards Bank offers construction loans with a maximum LTV of 80%. This means if your project costs $1 million, they will lend you up to $800,000. You pay the other $200,000 yourself.
I remember talking to a contractor in Louisville who used a construction loan to build a small shopping center. The bank released money in five different stages. First for the foundation, then for the frame, then for the roof, and so on. This way, the bank makes sure the work is really getting done before they give more money.
Term Loans and Permanent Financing
Term loans are long-term loans you use to buy an existing building. You might also hear people call this permanent financing.
These loans can last 5 to 25 years. You make monthly payments that include both principal and interest. The interest rate might be fixed for the whole time, or it might change after a few years.
Louisville banks offer term loans for all kinds of properties. You can finance an office building, a retail store, a warehouse, or an apartment building. The bank looks at how much rent or income the property makes. They want to see that the property makes enough money to cover the loan payments.
According to the Small Business Administration, most commercial term loans require a debt service coverage ratio (DSCR) of at least 1.20x. This means the property must make 20% more income than what you need to pay the loan.
To keep things simple, if your loan payment is $1,000 per month, the property should make at least $1,200 per month.
SBA 504 Loan Program in Louisville
The SBA 504 loan is a special program from the government. It helps small businesses buy or build commercial property with less money down.
How SBA 504 Loans Work
Here is how it works. Three parties put in money together.
First, a regular bank puts in 50% of the money. Second, a special company called a Certified Development Company (CDC) puts in 40% through the SBA. Third, you put in 10% as your down payment.
Let me give you an example. Say you want to buy a building for $1 million. A local bank gives you $500,000. The CDC gives you $400,000. You pay $100,000 yourself. Together, you have the full $1 million.
In Louisville, Alloy Development Co. works as a CDC. They help process SBA 504 loans for businesses in Kentucky and Ohio.
The best part? The SBA portion has a fixed interest rate for 10, 20, or 25 years. As of December 2025, rates are around 5.65% to 5.88% depending on the term length. These rates are often lower than regular bank rates.
Benefits of SBA Financing
Why choose an SBA 504 loan? There are several good reasons.
First, you only need 10% down. Most regular commercial loans ask for 20% to 30% down. This saves you a lot of money upfront.
Second, the rates are low and fixed. You know exactly what you will pay each month for the whole life of the loan. No surprises.
Third, there are no balloon payments. Some commercial loans make you pay off a big chunk after 5 or 7 years. SBA loans do not do this. You pay the same amount every month until the loan is paid off.
Fourth, the loan term is long. You can stretch payments over 20 or 25 years. This means lower monthly payments, which helps your cash flow.
I know a doctor in Louisville who used an SBA 504 loan to buy a medical office building. She only had to come up with 10% down, which was $50,000. Without the SBA program, she would have needed $150,000 down. That extra $100,000 stayed in her bank account to help run her practice.
Commercial Real Estate Loan Requirements
What do you need to qualify for a commercial loan? Banks look at several things before they say yes.
Down Payment and LTV Ratios
Every bank wants you to have some skin in the game. This means you need to put down your own money.
Most Louisville banks ask for 10% to 30% down. The exact amount depends on the loan type and the property.
For example, if you want to buy a building for your own business (owner-occupied), you might only need 10% to 20% down. But if you want to buy a building to rent out to other people (investment property), the bank might ask for 25% to 30% down.
The LTV ratio is how much the bank will lend compared to the property value. An 80% LTV means the bank gives you 80% of the money and you pay 20% yourself.
Some banks offer 90% LTV for owner-occupied properties. This is great if you do not have a lot of cash saved up.
Credit and Business Requirements
Banks also check your credit score. They want to see that you pay your bills on time. A score of 680 or higher usually helps you get approved.
But here is the thing: commercial loans focus more on your business than on your personal credit. The bank wants to know if your business makes money.
They will ask for your business tax returns from the last two or three years. They want to see profit, not losses. They also look at your business bank statements to see your cash flow.
If you have a new business, it might be harder to get approved. Most banks want to see that you have been in business for at least two years. However, SBA loans sometimes work for newer businesses if you have a solid plan and good experience in your industry.
Interest Rates and Terms in 2025
Interest rates change over time. What you pay depends on when you get your loan and what type of loan you choose.
Current Rate Environment
As of early 2025, commercial loan rates in Louisville range from about 5.5% to 8.5%. The exact rate depends on your loan type, credit score, and property.
SBA 504 loans have some of the lowest rates. As I mentioned before, they are around 5.65% to 5.88% right now.
Regular bank term loans might be a bit higher, usually 6% to 7.5% for borrowers with good credit.
Construction loans often have higher rates because they are riskier for the bank. You might see rates of 7% to 8.5% for construction financing.
According to the Federal Reserve, commercial real estate lending rates have stabilized in 2024-2025 after rising in 2022-2023.Â
Fixed vs Variable Rates
You will also choose between fixed and variable rates.
A fixed rate stays the same for the whole loan term. If you lock in at 6%, you pay 6% for 20 years. This gives you peace of mind because you know what your payment will be.
A variable rate can change over time. It usually starts lower than a fixed rate. For example, you might get 5.5% for the first five years. After that, the rate adjusts based on market conditions. It could go up or down.
Republic Bank offers a 5/1 ARM, which means the rate is fixed for five years, then adjusts every year after that. Stock Yards offers loans that are interest-only during construction, then converted to a fixed rate.
Which one should you choose? If you plan to own the property for a long time and you want stable payments, go with fixed. If you plan to sell or refinance in a few years, a variable rate might save you money in the short term.
How to Apply for Commercial Property Financing
Ready to apply? Here is what the process looks like.
Documents You Need
Banks want to see paperwork. Be ready to gather these documents:
First, your business tax returns for the last two to three years. Second, your business bank statements for the last six months. Third, a list of your business debts and monthly payments. Fourth, information about the property you want to buy, including the purchase price and any inspection reports.
If you are using an SBA loan, you also need a business plan that explains what you do and how you make money.
Having everything ready before you apply speeds up the process. I have seen applications that took six months because the borrower kept forgetting to send documents. Do not let that be you.
The Application Process
The application process usually takes four to eight weeks. Here are the steps.
First, you meet with a loan officer. You tell them about your business and what property you want to buy. They explain what loans are available.
Second, you fill out the application and send in your documents. The bank reviews everything.
Third, the bank orders an appraisal of the property. This tells them what the property is really worth.
Fourth, the bank’s underwriting team checks all the numbers. They make sure you can afford the loan and that the property is a good investment.
Fifth, if everything looks good, the bank approves your loan. You sign the paperwork and close the deal. The money goes to the seller, and you become the new owner.
Local Louisville banks like Stock Yards and Republic can often move faster than big national banks. They promise quick local decisions, which can help you close the deal before someone else buys the property.
Investment vs Owner-Occupied Properties
There are two main ways to use a commercial property. You can use it for your own business, or you can rent it out to others. Banks treat these differently.
Financing Investment Properties
An investment property is a building you buy to make money from rent. You might buy an office building and rent office space to different companies. Or you might buy a retail center and rent storefronts to shops.
Banks look closely at the rental income. They want to see signed leases from good tenants. They check if the rent covers the mortgage, taxes, insurance, and maintenance.
You usually need a bigger down payment for investment properties, often 25% to 30%. The interest rate might also be slightly higher.
But the good news is the rental income counts toward your ability to repay the loan. If the property makes $10,000 per month in rent, the bank sees that as income that can pay the mortgage.
Owner-Occupied Property Benefits
An owner-occupied property is a building you use for your own business. Maybe you run a restaurant and you buy the building. Or you own a medical practice and you buy your office building.
Banks like owner-occupied properties because you have a personal interest in taking care of the building. You are not just a landlord collecting rent. You are there every day running your business.
Because of this, banks often give better terms. You might only need 10% to 20% down. The interest rate might be lower. And you might qualify for SBA loans, which have great rates and terms.
The key rule for SBA 504 loans is you must occupy at least 51% of the building. This means more than half of the space is for your business. You can rent out the other 49% if you want.
Conclusion
Getting commercial property financing from Louisville banks is easier than you think. You just need to understand your options and know what banks are looking for.
Start by deciding what kind of property you want. Are you buying an existing building or building a new? Will you use it yourself or rent it out?
Next, check your finances. How much can you put down? What does your business income look like? Do you have good credit?
Then, talk to local Louisville banks like Stock Yards Bank and Republic Bank. They know the area and can move quickly. If you qualify, look into SBA 504 loans through Alloy Development Co. The 10% down payment and low fixed rates can save you thousands of dollars.
Remember, commercial loans are not scary. Banks want to lend money to good businesses. If you do your homework and come prepared, you can get the financing you need.
I have seen so many business owners in Louisville achieve their dreams by getting the right property. You can be next.
Ready to Find Your Perfect Commercial Property in Louisville?
Once you secure financing, the next step is finding the right commercial property for your business. Whether you’re looking to buy, sell, or lease commercial real estate in Louisville, KY, working with an experienced local agent makes all the difference.
Raphael Collazo is a CCIM-designated commercial real estate agent serving Louisville, Kentucky and Southern Indiana. With expertise in retail and industrial properties, Raphael has helped business owners and investors close tens of millions in commercial transactions.
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FAQs
What is the minimum down payment for commercial property in Louisville?
Most Louisville banks ask for 10% to 30% down. If you use your own business in the building, you might only need 10% to 20%. If you buy a building to rent out, you usually need 25% to 30%. SBA 504 loans only need 10% down, which is the lowest option.
How long does it take to get approved for a commercial loan?
It usually takes four to eight weeks from application to closing. Local Louisville banks can sometimes move faster than big national banks. If you have all your paperwork ready, you might close in three to four weeks. If documents are missing, it can take two to three months.
Can I use SBA loans for investment properties?
No. SBA loans are only for owner-occupied properties. You must use at least 51% of the building for your own business. You can rent out up to 49%, but you cannot buy a building just to collect rent with an SBA loan. For investment properties, you need a regular commercial loan.
What credit score do I need for commercial property financing?
Most banks want to see a credit score of 680 or higher. However, commercial loans focus more on your business than your personal credit. If your business makes good money and the property is strong, you might still get approved with a lower score. SBA loans sometimes work with scores as low as 650 if you have a solid business.
Are Louisville banks better than national lenders?
Local Louisville banks have some big advantages. They know the area, so they can make decisions faster. They also care about building relationships with local businesses. National lenders might have slightly lower rates sometimes, but they often take longer to process loans and require more paperwork. For most business owners, a local bank is the better choice.
