How Commercial Loan Rates Work in Texas
Commercial loan rates in Texas u2014 and nationwide u2014 are not published the way mortgage rates are. You won’t find a “commercial loan rate” on Bankrate or in the newspaper. Instead, rates are negotiated based on the specific deal, the borrower, the property, and the lender. Understanding how rates are set gives you leverage in the negotiation.
What Drives Commercial Loan Rates
The Index Rate
Most commercial loans are priced off an index u2014 a benchmark rate that moves with the market. Common indexes used in Texas commercial lending:
- Prime Rate: The rate banks charge their best customers, currently tied to the Fed Funds Rate. Used for SBA 7(a) loans and many variable-rate bank loans
- 10-Year Treasury: The benchmark for long-term fixed-rate commercial mortgages, CMBS, and insurance company loans
- 5-Year Treasury: Used for 5-year fixed commercial mortgages
- SOFR (Secured Overnight Financing Rate): Replaced LIBOR as the floating rate benchmark u2014 used in construction loans and some bridge facilities
The Spread
Lenders add a spread (margin) on top of the index to cover their cost of funds, overhead, and profit. The spread reflects risk: better deal, lower spread. The total rate = Index + Spread.
Current Texas Commercial Loan Rate Ranges (2026)
Note: Rates change constantly. These are general ranges, not quotes. Contact us for current pricing on your specific deal.
- SBA 7(a) u2014 variable: Prime + 2.75% to 4.75% (currently approx. 10.25u201312.25%)
- SBA 504 u2014 fixed (SBA debenture portion): Tied to 10-year Treasury + approx. 1.5u20132% spread
- Conventional commercial mortgage (5-year fixed): 6.5u20138.5% depending on LTV and property type
- Conventional commercial mortgage (10-year fixed): 6.75u20139% depending on asset class
- CMBS: 6u20138% fixed, non-recourse, 10-year term u2014 best for larger stabilized assets
- Hard money / bridge: 9u201313% interest-only, short-term
- Stated income commercial: 7.5u201310.5% depending on LTV and credit
- Construction loans (private): Competitive rates, interest-only on draws
Factors That Move Your Rate Up or Down
- LTV: Lower LTV = lower rate. At 50% LTV you get a better rate than at 75% LTV
- DSCR: Higher debt service coverage = lower rate. 1.50x DSCR is better than 1.20x
- Property type: Multifamily and industrial are viewed favorably; hotels and restaurants carry higher risk premiums
- Occupancy: Stabilized, fully leased properties get better rates than vacant or transitional assets
- Credit score: Personal FICO below 650 typically adds 0.5u20131.5% to the rate
- Loan size: Larger loans often get better rates u2014 more volume for the lender to spread fixed costs
- Recourse vs. non-recourse: Non-recourse loans carry a higher rate premium (0.25u20130.75%)
- Fixed vs. variable: Fixed rates provide certainty but may start higher than variable
Points and Fees: The Full Cost of a Commercial Loan
The interest rate is only part of your cost. Factor in:
- Origination points: 0.5 to 3 points (1 point = 1% of loan amount) u2014 paid at closing
- Appraisal: $2,500 to $10,000+ depending on property size and complexity
- Environmental (Phase I): $1,500 to $3,500
- Title and escrow: Varies by loan size u2014 typically $1,500 to $5,000
- Legal: Lender’s attorney fees, if applicable
- Prepayment penalty: Most commercial loans have step-down prepayment penalties or defeasance requirements u2014 know your exit cost before you commit
How to Get the Best Rate on Your Texas Commercial Loan
- Lower your LTV: Bring more equity to the table
- Improve your DSCR: Demonstrate stronger property cash flow
- Shop multiple lenders: Rates vary significantly between banks, credit unions, CMBS, and private lenders
- Lock early: In rising rate environments, lock your rate as soon as you have a firm commitment
- Use a direct lender: Cutting out the broker eliminates a layer of fees u2014 we are a direct lender with no middlemen
Get a Rate Quote for Your Texas Deal
Submit your deal details and we’ll give you a real rate range within 24 hours u2014 not a generic estimate, but pricing based on your actual property, LTV, and exit strategy.
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