HOW OWNERS USE CASH-OUT
6 Ways to Use Cash-Out Equity
Cash-out refinancing replaces your mortgage with a larger one. You pocket the difference.
Want only a lower rate, a fixed rate or a new maturity, without taking cash? That is a rate-and-term commercial refinance — see how to refinance step by step and the requirements by loan type.
Business Expansion
Open a second location, hire, invest in equipment — without giving up equity to investors.
Tenant Improvements
Upgrade your building to attract better tenants, increase rents, or meet compliance.
Consolidate Debt
Pay off high-cost short-term debt or credit lines by rolling them into a 6.5–8.75% mortgage.
Acquire Another Property
Use equity from Property A as down payment for Property B. Build your portfolio.
Working Capital
Create a cash cushion for seasonal slowdowns or unexpected expenses.
Partner Buyout
Access capital to buy out a business partner without liquidating assets.
COMPARE OPTIONS
Cash-Out Refinance by Loan Type
The right structure depends on property type, equity, and rate preference.
| Loan Type | Max LTV | Rate | Term | Best For |
|---|---|---|---|---|
| Conventional | 65–75% | 6.5–8% | 5–10 yr | Strong financials |
| SBA 504 | Up to 90% | 6.25–7.25% | 20–25 yr | Owner-occupied |
| DSCR | 65–75% | 6.75–8.75% | 5–30 yr | No tax returns |
| Bridge | 65–80% | 6.25–8.25% | 12–36 mo | Speed needed |
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
NET PROCEEDS
Example: How Much Cash You Actually Receive
The headline cash-out figure is before costs. Here is one case run through our cash-out equity calculator.
Example: a property appraised at $2,000,000 with a $1,000,000 loan balance, refinanced at 75% loan-to-value. Assumptions for illustration only: a 7.0% rate on a 25-year amortization for both the old and new loan, and closing costs of 2% of the new loan — your lender’s term sheet and the title company’s estimate give the real figures.
| Amount | |
|---|---|
| New loan (75% × $2,000,000) | $1,500,000 |
| Pay off the existing loan | −$1,000,000 |
| Gross cash-out | $500,000 |
| Closing costs (assumed 2% of the new loan) | −$30,000 |
| Cash to you, before any prepayment penalty or mortgage tax | $470,000 |
| Monthly payment: old loan → new loan | $7,068 → $10,602 |
The $470,000 costs $3,534 a month more, and the property now carries 75% leverage, so the lender will check that the net operating income covers the larger payment at its minimum DSCR. Two costs can shrink the check further: a prepayment penalty on the loan being paid off, and a mortgage recording tax in the states that charge one (see the state box below).
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
COSTS
Closing Costs on a Commercial Cash-Out Refinance
Every cash-out refinance pays for the same set of items. The amounts vary by lender, loan size and state, so compare them line by line on each term sheet rather than looking at the rate alone.
| Cost | Who sets it | What to check |
|---|---|---|
| Origination fee | The lender | Quoted in points (1 point = 1% of the loan); compare it with the rate |
| Appraisal | Ordered by the lender, paid by you | A lower value lowers the cash-out at the same LTV |
| Third-party reports | The lender’s requirements | Environmental (Phase I) and property condition reports on many loans |
| Lender legal fees | The lender’s counsel | Often capped on request; ask before you sign the term sheet |
| Title insurance and recording | Title company, county | A new lender’s title policy is required on the new loan |
| Mortgage recording tax | State or county | Charged in only 12 of 51 jurisdictions — see the state table |
| Prepayment penalty on the old loan | Your current loan documents | Yield maintenance or defeasance can be the largest single cost |
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
IMPORTANT
What to Know Before You Cash Out
Cash-out refinancing is powerful but not risk-free.
Higher Payments
Your new mortgage is larger. Make sure cash-out proceeds generate enough return to justify the increase.
LTV Limits
Most lenders cap at 65–75%. If your property is $2M and balance is $1M, you may access $300K–$500K.
Appraisal Required
If the property appraises lower than expected, your cash-out amount drops proportionally.
Prepayment Penalties
Check your existing loan for yield maintenance, defeasance, or other early payoff costs.
ALTERNATIVES
Cash-Out Refinance vs. Other Ways to Raise Capital
A cash-out refinance is one of three common ways to turn a building into cash. The right one depends on how much you need, for how long, and whether you want to keep owning the property.
| Cash-out refinance | Business line of credit | Sale-leaseback | |
|---|---|---|---|
| What you get | A lump sum at closing | A revolving limit you draw and repay | The sale price, less costs |
| You keep the building | Yes | Yes (it may secure the line) | No — you become the tenant |
| Interest | On the whole new loan from day one | Only on what you draw | None; you pay rent instead |
| Your existing loan | Paid off and replaced | Stays in place | Paid off from the sale |
| Best when | A large one-time need and a rate you can accept on the whole balance | Short-term or recurring needs; the current mortgage has a low rate or a large prepayment penalty | You want the most cash and do not need the future appreciation |
See business lines of credit for how revolving limits are underwritten.
REQUIREMENTS
Do You Qualify?
THE PROCESS
How CRE Cash-Out Works
Estimate Available Equity
Current value minus existing balance. Most lenders allow cash-out up to 65–75% of appraised value.
Submit to BestLoanUSA
Share property address, current balance, estimated value, and planned use of proceeds.
Advisor Review
Dedicated advisor determines the best structure and identifies lenders most likely to approve your cash-out amount.
Lender Matching
We collect term sheets from matched lenders. Compare rates, LTV, fees, and cash-out amounts side by side.
Appraisal & Underwriting
Lender orders appraisal. You submit tax returns, P&L, rent roll, bank statements, and payoff statement.
Close & Receive Funds
New lender pays off your existing mortgage. The difference is wired to you. Typically 30–45 days for a conventional loan, 60–90 days for SBA 504.
Free tools
Run the numbers
The same metrics a lender checks — free, instant, no signup. Each result links straight into an application.
- Cash-Out Equity Calculator Calculate how much equity you can pull from your commercial property. See your maximum cash-out amount, new loan terms, and the impact on monthly payments.
- LTV Calculator Calculate your Loan-to-Value ratio or find the maximum loan amount for your commercial property. See which programs you qualify for at your LTV.
FAQ
Frequently Asked Questions
What is a CRE cash-out refinance?
It replaces your existing mortgage with a larger loan. The difference is paid to you in cash at closing for any business purpose.
Can you do a cash-out refinance on commercial property?
Yes. Banks, credit unions, DSCR lenders, CMBS lenders and SBA 504 (for owner-occupied buildings) all offer commercial cash-out refinances. The new loan pays off the old one and the rest comes to you at closing. Lenders look at the appraised value, the property’s net operating income against the new payment, your credit and how long you have owned the property.
What is a commercial equity loan?
It is borrowing against the equity in a commercial property. There are two ways: a cash-out refinance, which replaces your mortgage with a larger one, and a second-position loan or equity line that leaves the first mortgage in place. A second lien avoids disturbing a low-rate first mortgage or triggering its prepayment penalty, but it usually costs more and needs the first lender’s consent.
Can you get a line of credit on commercial property equity?
Yes, from some lenders — mostly banks and credit unions. A commercial equity line is a revolving limit secured by a lien on the building, usually behind the first mortgage, so the first lender may have to consent. You pay interest only on what you draw and the existing loan stays in place, which suits short-term or recurring needs, or a first mortgage with a low rate or a large prepayment penalty. A cash-out refinance instead replaces the mortgage with one larger loan and pays a lump sum. Availability, limits and pricing vary by lender, so ask for both quotes.
Is the cash from a cash-out refinance taxable?
Loan proceeds are borrowed money, not income, so receiving them is generally not a taxable event. Whether the interest on the new loan is deductible depends on how you use the cash — the IRS traces the use of borrowed funds (Treas. Reg. §1.163-8T). Confirm the treatment with your CPA before closing.
How much can I pull out?
Conventional and DSCR lenders usually cap the new loan at 65–75% of the appraised value; subtract your current balance and closing costs to get the cash. For an owner-occupied building, an SBA 504 refinance can reach 90% of value, including eligible business expenses paid in cash (SBA rule effective November 15, 2024). Example: a $2,000,000 property with a $1,000,000 balance at 75% LTV yields $500,000 before costs.
Does it affect my rate?
It can. Some lenders price a cash-out refinance slightly higher than a rate-and-term refinance, or allow a lower maximum LTV, so ask each lender to quote both. If your current rate is higher than today’s, you may still end up with a lower rate overall.
Can I cash-out on an investment property?
Yes. Investment properties with stable NOI are eligible through conventional, DSCR, or CMBS. LTV limits are typically 65–75%.
How long do I need to own the property?
Most lenders require 6–12 months seasoning. Some bridge lenders may waive this requirement.
What documents do I need?
Payoff statement, 2 years tax returns, YTD P&L, rent roll, bank statements, and a lender-ordered appraisal.
Related on BestLoanUSA
Related financing
All loans →- CRE Refinancing A commercial real estate refinance replaces your existing mortgage with a new loan — to lower the rate, replace a maturing balloon, move from floating to fixed, or take cash out. To refinance, check your current loan’s maturity and prepayment penalty, get the property appraised, show that its net operating income covers the new payment at the lender’s minimum DSCR, compare term sheets and close — the new lender pays off the old loan, usually in 30–60 days. Bank, SBA 504, CMBS and DSCR lenders price refinances at about 6.25–8.75%. Cash-out refinanceRefinancing
- Hard Money Takeout A hard money takeout refinance replaces a short-term hard money or bridge loan with a long-term loan once the property is renovated, leased or stabilized. Bank, SBA and DSCR lenders typically lend up to 75% of value at about 6.25–8.75%, compared with 9–13% for hard money. RefinancingLoan-to-value
- Retail A retail property loan finances storefronts, strip centers, shopping centers and single-tenant net-lease buildings. Investors use bank, DSCR or CMBS loans, sized on the leases and tenant quality; a business that occupies its storefront can use SBA 504 with as little as 10% down. RefinancingLoan-to-value
- Office An office building loan finances the purchase or refinance of office property, from a single-tenant building to a multi-tenant complex. A business that occupies the space can use SBA 504 with as little as 10% down; investors use bank or DSCR loans, typically up to 75–80% of value. RefinancingLoan-to-value
Guides & articles
All articles →- Cash-Out Refinance on Commercial Property: Accessing Equity How a cash-out refinance on commercial property works: how much equity you can take out, what lenders require, the costs, and when it makes sense. Cash-out refinanceRefinancing
- Commercial Real Estate Refinancing: When and How to Qualify When refinancing a commercial mortgage makes sense, your options before a balloon comes due, and what lenders need to approve the new loan. RefinancingCash-out refinance
- DSCR Loans: How Investors Qualify Without Tax Returns How DSCR loans let real estate investors qualify on a property's rental income instead of tax returns — requirements, rates, down payment and trade-offs. Cash-out refinanceRefinancing
Glossary
All terms →More calculators
All calculators →- SBA 504 Loan Calculator Estimate your SBA 504 loan structure — see the three-part split (borrower, CDC, bank), monthly payments for each portion, and total project financing. SBA 504SBA loans
- Refinance Break-Even Calculator Find out exactly how many months until your refinancing savings cover the closing costs. Make a data-driven decision on whether to refinance your CRE loan. RefinancingFees & closing costs
- Yield Maintenance Calculator Estimate your prepayment penalty before refinancing or selling. Understand the true cost of exiting your commercial loan early and compare penalty structures. Prepayment penaltyRefinancing