Most commercial real estate loans have terms of five to ten years, which is much shorter than the 30-year mortgages common on houses. A handful of loan types sit outside that range: bridge loans can run as short as six months, construction loans typically last 12 to 36 months, and SBA-backed loans stretch to 25 years. In almost every case except the SBA programs, the loan matures long before the balance is paid off, so the borrower owes a large balloon payment at the end or has to refinance.
Conventional Commercial Mortgages: Five To Ten Years
A conventional commercial mortgage from a bank, credit union, or life insurance company typically matures in five to ten years. Some institutional lenders will extend that to 15 or 20 years for strong borrowers and high-quality properties, but the five-to-ten-year range covers most deals. The maturity date is the contractual deadline by which the entire remaining balance has to be repaid.
The short window isn’t about how quickly the loan gets paid down. It’s about how often the lender wants to reassess the borrower and the market. Locking in terms for 30 years, the way residential lenders do, isn’t standard practice on commercial deals.
Amortization Is Longer Than The Term
While the loan itself matures in seven or ten years, the monthly payment is usually calculated as if the loan would last 20, 25, or 30 years. That longer calculation period, called the amortization schedule, keeps monthly payments low enough for the property’s cash flow to cover them. The tradeoff is that only a small portion of principal gets paid down during the actual loan term, leaving a substantial balloon at maturity.
A concrete example: a loan with a ten-year maturity and a 30-year amortization schedule means you make payments sized for a 30-year payoff, but the full remaining balance comes due at year ten. Over those ten years, most of each payment goes to interest. This gap between the short maturity and the long amortization schedule is the defining feature of commercial real estate debt.
CMBS Loans: Same Term, Stricter Exit
Commercial mortgage-backed securities (CMBS) loans, sometimes called conduit loans, are originated by lenders and then pooled and sold to investors as bonds. Their terms look familiar: fixed rates for five to ten years, amortization schedules of 25 to 30 years, and a balloon at maturity.
What sets them apart is how strictly they control early repayment. Most conduit loans include a lockout period of two to five years during which the borrower cannot prepay at all. After the lockout expires, exit usually happens through yield maintenance (a premium that compensates investors for lost interest) or defeasance (purchasing U.S. Treasury securities that replicate the remaining payment stream so bond investors keep receiving their expected returns). Both routes are expensive. Selling the property early doesn’t cancel the debt; either the buyer assumes the loan or the seller pays the defeasance or yield maintenance cost out of the proceeds. For practical purposes, a CMBS borrower should plan to hold the property for the full term.
Bridge Loans: Six Months To Three Years
Bridge loans are short-term financing meant to cover a gap, such as stabilizing a property, closing a purchase quickly, or waiting for permanent financing to be ready. They generally last six months to three years. The speed and flexibility come with higher interest rates and origination fees than permanent debt.
Lenders often expect a clear exit strategy, like a signed commitment for a long-term loan, before approving a bridge in the first place. Many bridge loans include an extension option that adds six to twelve months to the term for a fee.
Construction Loans: 12 To 36 Months
Construction loans follow a similarly compressed timeline, usually running 12 to 36 months. Payments are structured around the build schedule, and the lender releases funds in stages as construction milestones are verified through inspections. The loan typically converts to permanent financing or requires full repayment once the project is completed and receives its certificate of occupancy.
Like bridge loans, construction loans often carry extension options of six to twelve months. If the project isn’t finished or a permanent loan isn’t in place when the term expires, the borrower risks default.
SBA Loans: Up To 25 Years
The Small Business Administration offers two programs with maturity terms that run much longer than conventional commercial mortgages. Both also amortize fully, which means the maturity date lines up with the amortization schedule and there is no balloon payment at the end. You pay the whole balance down through regular installments.
SBA 504 Loans
The SBA 504 program, governed by 13 CFR Part 120, finances the purchase of major fixed assets like real estate and heavy equipment for small businesses. Loans are available with 10-year, 20-year, or 25-year maturity terms.1U.S. Small Business Administration. 504 Loans The 25-year option was added in 2018; the 10-year and 20-year terms have been available since 1986.2Federal Register. 504 Loans and Debentures With 25 Year Maturity The property must generally be owner-occupied for business operations rather than held as a passive investment.3eCFR. 13 CFR Part 120 Subpart H – Development Company Loan Program (504)
SBA 7(a) Loans
The SBA 7(a) program allows a maximum term of 25 years when the loan is used to purchase or renovate commercial real estate.4U.S. Small Business Administration. Terms, Conditions, and Eligibility SBA guidelines require the borrower to occupy at least 51 percent of the property.
Both programs come with eligibility requirements and approval processes that conventional loans don’t impose. In exchange, the longer terms and full amortization give small business owners stable occupancy costs without the pressure of refinancing every five to ten years.
What Happens When The Term Ends
When a commercial loan reaches its maturity date, the borrower has to pay the remaining balance in full or have new financing in place. Most borrowers refinance, but that process isn’t automatic. It carries real risk when interest rates have risen or property values have declined since the original loan closed. Failing to secure refinancing before the maturity date can trigger default and, ultimately, foreclosure.
Starting the refinance process 12 to 18 months before maturity gives you time to shop for competitive terms, complete a new appraisal, and handle any environmental or inspection requirements the new lender needs. Most lenders want the appraisal completed within 12 months of the new loan closing, and updated environmental assessments may be needed if property conditions have changed.
Some borrowers negotiate extension options into their original loan documents, adding six to twelve months to the maturity date for a fee. Not every loan includes this option, so it’s worth negotiating upfront, particularly in volatile rate environments where refinance timelines can slip.