Where do I find distressed commercial notes for sale?

Banks sell through note sale advisors (Mission Capital, DebtX, Beal Financial). CMBS special servicers liquidate through their disposition process. Private funds sell through secondary market platforms. The volume of available notes increases as loans mature and borrowers default, 2026 is expected to be a peak year.

What due diligence is needed for a note purchase?

Review the loan documents, collateral files, payment history, borrower financials, and an independent property valuation. Inspect the collateral property. Assess the legal position (foreclosure timeline, state laws, junior liens). Budget 30-60 days for diligence on a typical note acquisition.

How much equity do I need for a note purchase bridge loan?

Bridge lenders typically require 35-50% equity on note purchases (50-65% LTV on note face value). If you're buying at 50 cents and the lender goes to 60% LTC, you need 40% of the purchase price in cash. The deeper the discount on the note, the better the leverage.

What is the typical return on a distressed note investment?

Returns vary widely, 15-30%+ IRR is achievable on well-executed note workouts. The key variables are acquisition discount, workout timeline, and exit price. Notes purchased at 40 cents and worked out to 80 cents recovery produce substantial returns, even after bridge loan interest.

Published: March 31, 2026·Last updated: May 16, 2026·By Ed Freeman, Capital Advisor. PeerSense

What is the best financing for distressed debt / note at 50-65% (of note face value) LTV?

Bridge loans for distressed note purchases fund the acquisition of non-performing or sub-performing commercial mortgage notes at a discount to unpaid principal balance. At 50-65% of note face value, bridge rates range from 10-14% for 12-24 month terms. The strategy: buy the note at a discount, negotiate a workout or foreclose, then sell or refinance the collateral at full market value.

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder

Prime: 6.75% 10-Yr Treasury: 4.25% Est. Bridge Loan Range: 10% - 14%as of Mar 19, 2026

Distressed Debt / Note

Distressed Note Purchase, Bridge Capital for Non-Performing CRE Debt

Bridge financing for distressed commercial real estate note purchases. Acquire non-performing or sub-performing notes at a discount, work out the asset, and capture the spread.

Minimum 30-35% equity required. Experienced note investors and workout specialists with a track record of resolving non-performing commercial loans.

Discuss Your Distressed Debt / Note Deal Call (317) 452-6990

KEY TERMS

Deal Parameters at a Glance

LTV Target

50-65% (of note face value)

Est. Rate Range

10% - 14%

Term

12-24 months

Recourse

Full recourse

DSCR

N/A (note purchase)

Closing Speed

14-30 days

Min Loan Size

$2M

Loan Products

Bridge Loan

Indicative only, as of August 1, 2026. Not a quote, commitment or offer of credit. Final pricing, leverage and terms are determined by the lender at underwriting, after full transaction materials are reviewed. PeerSense does not lend and does not set pricing. What these terms mean.

FIT ASSESSMENT

When Is This the Right Fit?

Use this when acquiring non-performing or sub-performing commercial mortgage notes from banks, CMBS special servicers, or other note sellers. The 2026 maturity wall ($936B in CRE loans maturing) is creating a significant supply of distressed notes. Experienced investors can acquire these at 40-60 cents on the dollar and work out the underlying collateral for substantial returns.

Want the full program overview, current rate sheet, and underwriting matrix? See the Bridge Loans guide →

ADVANTAGES

Key Benefits

Acquire non-performing notes at 40-60 cents on the dollar

Bridge capital funds the purchase, you don't need all cash

Interest reserve can be built into the loan for notes without current cash flow

Multiple exit strategies: workout, foreclosure + sale, foreclosure + refinance

Profit on the spread between acquisition cost and collateral value

ALTERNATIVES

Strategic Alternatives

Bridge Loan for Value-Add Acquisition

If you're buying the property directly rather than the note

Learn more

Private Credit

If you need longer-term capital for a portfolio of notes

Learn more

Bridge-to-Permanent

If you plan to foreclose and hold the property long-term

Learn more

Frequently Asked Questions

A distressed note purchase is buying a non-performing or sub-performing commercial mortgage loan from the current lender (bank, CMBS special servicer, fund) at a discount to the unpaid principal balance. You become the lender and can negotiate a workout with the borrower, accept a deed in lieu, or foreclose to take the property.

See Related Rates by Program

PeerSense covers the full commercial capital stack. Indicative levels that lenders in our network have been pricing across these programs, as of August 1, 2026.

SBA 7(a) & 504

5.50–11.75%

Up to $5M acquisition / real estate / equipment, 10% down

See current rates

CMBS Conduit

5.60–7.10%

10-yr non-recourse fixed, $5M–$500M+, fully assumable

See current rates

DSCR Investor

5.95–8.50%

30-yr fixed rental, qualifies on property cash flow

See current rates

Equipment Financing

5.50–12.00%

Loan, lease, SBA 504, vendor, captive. Section 179 eligible

See current rates

Hotel Financing

5.85–11.75%

CMBS + SBA 504 + bridge + PIP across all flags

See current rates

Private Credit

7.80–18.00%

Non-bank flexibility, unitranche, recap, transitional

See current rates

Invoice Factoring + ABL

0.5–3.5% / 30d

B2B receivables, trucking / staffing / construction / govt

See current rates

No-Doc CRE

7.50–11.50%

Limited-doc commercial, asset-based underwriting

See current rates

Foreign National

7.50–11.00%

Non-US borrower CRE + bridge, no SSN required

See current rates

Connect with PeerSense, Direct Capital Advisory

PeerSense pre-underwrites every deal before presenting it to our institutional capital sources. With a curated network of lender relationships and live market rate intelligence, we match your distressed debt / note deal with the right capital source, right now.

Scan Your Deal (30 sec)Tell Us About Your Deal Call (317) 452-6990

Fee at closing only · Complimentary initial consultation

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated March 2026.

Disclaimer: The information on this page is provided for educational purposes only and does not constitute financial, legal, or investment advice. Rates, terms, and availability are subject to change based on market conditions, property characteristics, and borrower qualifications. The rate ranges cited reflect approximate market pricing as of March 2026 and may not reflect current conditions at the time of reading. PeerSense is a capital advisory firm, not a lender. We do not originate, fund, or service loans. All financing is provided by third-party lenders subject to their own underwriting criteria and approval processes. Borrowers should consult with qualified financial and legal professionals before making any financing decisions.