Small-Balance Commercial Refinance
Equity-based underwriting for small business owners who own their building. We look at the appraised value of your real estate — not your credit score. Refinance hard-money 12-14% IO into amortizing 9-11% range with cash-out for working capital.
Sources: Asset-Based Lending Hub
Who is small-balance commercial refinance designed for?
Small business owners who own the commercial building they operate from — auto repair shops, motorcycle dealerships, restaurants, salons, daycares, machine shops, retail storefronts, light-industrial buildings — and who got stuck in 12-14% interest-only hard-money loans with damaged credit. Equity-based underwriting against the building's appraised value. 50% LTV when credit is challenged, scaling to 65-70% with stronger profiles. Typical outcome: rate drops from 13% IO to roughly 10% range amortizing, with $100K+ cash-out for working capital.
— PeerSense Capital Advisory · 2026-05-01
The borrower archetype
Auto repair shop owner, motorcycle dealership, restaurant owner, salon owner, machine shop, retail storefront — you own your building, you're stuck in a hard-money loan at 12%+ interest-only, your credit isn't where it needs to be for a bank, and you're not paying the loan down.
If that's you, this program is the path out. Underwriting starts with what your real estate is worth — not your credit score.
Program details
| Loan size | $250,000 – $25,000,000+ (PeerSense recently placed a $13.8M deal in this program category) |
| LTV (challenged credit) | Up to 50% of appraised value |
| LTV (stronger profile) | Up to 65-70% of appraised value |
| Term | 10-25 years amortizing (no more interest-only) |
| Rate | 9-11% range (May 2026, market dependent) |
| Documentation | Bank statements / asset-based — no full tax returns |
| Property types | Auto, motor service, retail, restaurant, salon, daycare, machine shop, mixed-use, light industrial, flex, small office, self-storage |
| Owner-occupancy | Required (51%+ owner-occupied) |
| Recourse | Full recourse + personal guarantee |
| Cash-out | Yes — unrestricted use for working capital |
| Underwriting basis | Appraised value of the real estate |
| Close timeline | 30-45 days from complete file |
What we look at
- ✓ Appraisal of the building (the heart of the underwrite)
- ✓ Property condition report
- ✓ Bank statements showing the business operates + deposits revenue
- ✓ Title work confirming clean ownership
- ✓ Insurance + entity docs if owned via LLC
What we DON'T look at
- ✗ Personal credit score (deciding factor)
- ✗ Personal tax returns
- ✗ DTI ratio
- ✗ W-2 documentation
- ✗ Trailing P&L statements
Frequently asked questions
What is a small-balance commercial refinance?+
An equity-based small-balance commercial refinance is for owner-occupied commercial real estate ($250K-$25M+ loan range). Underwriting is primarily based on the appraised value of the real estate — not the borrower's credit score. Common borrowers: small business owners stuck in 12-14% hard-money loans with damaged credit who own their building.
Can I refinance a hard money loan with bad credit?+
Yes — through equity-based small-balance commercial programs. Trade is straightforward: accept lower LTV (50% when credit is challenged) in exchange for the lender looking past your credit. Designed for the small business owner who got into hard money to close fast and now needs out.
What's the rate?+
Typically 9-11% range (May 2026), a meaningful drop from 12-14% IO hard money. Pricing depends on LTV, property type, borrower profile, market.
What property types qualify?+
Auto/motor service, retail storefronts, restaurants, salons/spas, daycare centers, machine shops, mixed-use, light industrial, flex space, small office, self-storage. Owner-occupied required. Excluded: passive investment-only, heavy industrial, special-purpose without strong sponsor.
Can I get cash-out for working capital?+
Yes. Cash-out is unrestricted — inventory, equipment, payroll, marketing, debt consolidation, business expansion. Worked example: $700K appraisal at 65% LTV = $455K loan, pays off $400K note, $50K cash-out (plus closing costs).
Why is amortization important?+
Interest-only loans don't reduce principal. Amortizing loans pay down balance over time, building real ownership. $500K at 13% IO = $5,417/mo all interest. Same $500K amortizing 9.5% on 25-yr = $4,373/mo (lower payment AND principal reduction).
How fast can I close?+
30-45 days from complete file. Bank refinances on damaged credit (when they happen) often take 60-90+ days.
What documents are required?+
Appraisal, property condition report, bank statements showing business ops, title work, insurance, entity docs if LLC, payoff demand for existing note. NOT required: personal tax returns, DTI, full credit-bureau review.
Get a Term Sheet — Equity-Based Refi
Stuck in hard money? Damaged credit? Own the real estate? Need working capital? This is exactly the deal we close every month.
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