The short answer
An owner-occupied loan package has four parts: the operating business's financials, the owners' personal financials, the property documents, and the third-party reports the lender orders. The lender repays itself from the business's cash flow, so three years of business returns and a debt schedule matter more than the rent a tenant would pay. Federal rules require an appraisal for most commercial property loans above $500,000.
What the lender is deciding
An owner-occupied loan is a business loan secured by a building. The lender’s first question is whether the business earns enough to make the payment. The building is the second way out. That order shapes the package: business financials first, property second.
Lenders hold $751B FDIC call reports and NCUA 5300, of these loans. They are reported on their own call report line, which is why this site can show which banks hold them.
Before you start: one line and three numbers
Write the request in one line: owner-occupied purchase or refinance, amount, property type, county and state. Then work out three numbers, because the lender will:
- Loan to value. Loan amount divided by the lower of price or appraised value. Use the LTV calculator.
- Debt service coverage. The business’s cash available for debt service divided by all its annual loan payments, including the new one. Use the DSCR calculator.
- Global coverage. The same test with the owners’ personal income and debts added. See global cash flow.
A bank’s minimums for these are in its loan policy. They are not published and they differ. Ask.
Part 1: the operating business
- Three years of federal business tax returns, all schedules
- Year-end financial statements for the same years, if they exist apart from the returns
- An interim income statement and balance sheet, dated within the last 60 to 90 days, and the same period a year earlier
- A business debt schedule: lender, balance, payment, rate, maturity and collateral for every loan and lease
- Accounts receivable and payable agings, if the business carries them
- A short history of the business: what it does, how long, who owns it, who runs it
- Organization documents: articles, operating agreement or bylaws, and a current certificate of good standing
- A list of owners with their percentages
The lender builds cash flow from the returns: net income, plus depreciation, amortization and interest, with adjustments for one-time items. The current rent is added back, because the new loan payment replaces it. If the business has been paying $9,000 a month in rent and the new payment is $11,000, the lender is really asking whether the business can absorb $2,000 more a month.
Part 2: the owners
- A personal financial statement for each owner the lender names, signed and dated
- Three years of personal federal tax returns for each
- A schedule of real estate owned, with values, loans and payments
- A list of other businesses each owner holds and any loans each has guarantied
Most banks ask for a personal guaranty from each significant owner. Where the line is drawn is each bank’s policy. SBA programs set their own line in the SOP, covered in the 7(a) checklist.
Part 3: the property
- Purchase contract with all amendments, or for a refinance the current note, payoff letter and original closing statement
- Legal description and the most recent tax bill
- A site plan or survey, if one exists
- Photographs
- For a building with any tenants: the rent roll and every lease
- Property insurance declarations
- A description of any work planned, with bids
- Environmental history: prior reports, and what the site was used for before
When a separate company owns the building. Many owners hold the real estate in one company and run the business in another. The lender then needs the lease between the two, and both companies’ financials. The rent in that lease should cover the loan payment, taxes and insurance, and the lease should run at least as long as the loan or renew automatically. The operating company usually guaranties the loan. SBA calls the property company an eligible passive company and has its own rules for it.
How much of the building the business uses. A building the business fills is plainly owner-occupied. A building where the business uses one floor and leases two to others may not be. The call report instructions put the line at repayment: if rental income from outside tenants is less than 50 percent of the source of repayment, the loan is owner-occupied. A bank’s policy may be stricter. If outside rent is a large part of the picture, read the investor checklist too.
Looking for a lender now? Find lenders for this in your state or see Owner-Occupied CRE lenders state by state.
Part 4: reports the lender orders
You do not order these. The lender does, usually after it issues a term sheet and collects a deposit. Knowing what is coming helps you plan time and cost.
Third-party reports and the rules behind them
| Report | What the rule says | Source |
|---|---|---|
| Appraisal | Required for real estate-related transactions unless an exemption fits. Exempt: a commercial real estate transaction of $500,000 or less, and a business loan of $1 million or less that does not depend on the sale of, or rental income from, real estate as the primary source of repayment | 12 CFR 323.3(a)(5), (a)(13) |
| Evaluation | For a transaction exempt under those paragraphs, the bank “shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices” | 12 CFR 323.3(b) |
| Flood determination and insurance | A bank may not make a loan secured by a building in a special flood hazard area unless the building is covered by flood insurance for the term of the loan, in an amount at least the lesser of the loan balance or the maximum coverage available | 12 CFR 339.3(a) |
The citations are to the FDIC’s rules for the banks it supervises. The OCC and the Federal Reserve have their own parallel rules for theirs.
Other reports are the lender’s policy and not a federal mandate in every case: a Phase I environmental site assessment or a shorter environmental screen, a survey, a property condition report on an older building, and title insurance. Ask which the lender will require and who chooses the vendor. An appraisal you ordered yourself is rarely accepted, because the bank must engage the appraiser.
Sources and uses
Every package needs one table showing where the money comes from and where it goes.
Worked example (hypothetical). A dental practice is buying its building for $2,000,000 and will spend $150,000 on improvements. Closing costs and reports are estimated at $50,000.
Uses. $2,000,000 plus $150,000 plus $50,000 is $2,200,000.
Sources. A bank loan of $1,600,000 and owner cash of $600,000, which is $2,200,000.
Loan to value. $1,600,000 divided by the $2,000,000 price is 80 percent. If the appraisal comes in at $1,900,000, the same loan is 84 percent ($1,600,000 divided by $1,900,000), and the bank will likely cut the loan or ask for more cash.
Coverage. The practice’s cash available for debt service, after adding back its current rent, is $260,000 a year. The new loan payment is $138,000 a year and its other loan payments are $42,000, for $180,000. Coverage is $260,000 divided by $180,000, which is 1.44.
The lender will check that the owner’s cash is really there. Expect to show account statements.
When SBA 504 or 7(a) is the better lane
Because the business occupies the building, SBA programs are open to it, and for a borrower short on cash they often fit better than a conventional loan.
- SBA 504. A bank loan at least as large as the SBA share, usually about 50 percent of the project, with a certified development company providing an SBA debenture of up to 40 percent and the borrower contributing at least 10 percent, or more for a new business or a special purpose property. See the 504 checklist and the 504 structure calculator.
- SBA 7(a). One loan with an SBA guaranty, usable for real estate together with equipment or working capital. See the 7(a) checklist.
- Which one. 7(a) or 504: which fits compares them.
SBA does not require you to use an agent or broker.
What the public record can and cannot tell you
A bank’s call report shows the balance it holds in owner-occupied loans, item 1.e.(1) of Schedule RC-C. A large and growing balance tells you the bank makes these loans. It does not tell you the bank’s loan to value limit, its rate, whether it wants a dental practice or a machine shop, or whether it will take this one. SBA files do list individual 504 and 7(a) loans by lender. No public file lists a bank’s conventional owner-occupied loans one by one.
Want a person to check the public record for a loan on a building your business occupies? Request financing from The Lender Report’s operator. A person replies by email, usually naming lenders that have made loans like yours. It is free, it covers business and investment property loans only, and nothing is sent to a lender.
Questions to put to the bank
- Do you treat this as owner-occupied if the business uses this share of the building?
- What coverage and loan to value does your policy call for on a loan like this?
- Will you need an appraisal or an evaluation, and what else will you order?
- Whose guaranty will you require?
- Would you look at this as a 504 project as well?
Terms used here
- Owner-occupied commercial real estate: Commercial property where the loan is repaid mainly by the business that occupies it, not by rent from unrelated tenants.
- Appraisal: A written, independent opinion of a property's market value as of a specific date, prepared by a qualified appraiser.
- Phase I environmental site assessment: A study of a property's records, history and visible condition by an environmental professional to identify likely contamination, done without sampling soil or water.
- Title insurance (lender's policy): A policy that protects a lender against loss if its mortgage turns out not to have the lien priority it expected, or if title to the property is defective.
- Global cash flow: The combined cash flow of a borrower, its owners and their other businesses, set against all of the debt payments those same parties owe.
- Debt schedule: A table of every loan a business or borrower owes, showing for each the lender, balance, payment, maturity date and collateral.
- Personal guaranty: A signed promise by an individual, usually an owner, to repay a business or real estate loan personally if the borrowing company does not.
- Debt service coverage ratio (DSCR): Net operating income, or business cash flow, divided by the loan payments due in a year. It shows how many dollars come in for each dollar of debt service.
- Loan-to-value ratio (LTV): The loan amount divided by the value of the property securing it. A $700,000 loan on a property valued at $1,000,000 is 70 percent loan to value.
- Eligible passive company (EPC): A separate company that owns the real estate or equipment and leases all of it to the operating business, allowed under SBA rules when strict conditions are met.
- SBA 504 loan: A fixed-asset financing in which a bank lends 50 percent or more, a certified development company funds up to 40 percent through an SBA debenture, and the borrower puts in at least 10 percent.
Sources
Every rule and outside figure above comes from one of these, opened on . Dates are the source's own. Figures from this site's data carry their own source and date beside them.
- 12 CFR 323.3, Appraisals required; transactions requiring a State certified or licensed appraiser (FDIC), retrieved .
- 12 CFR 339.3, Requirement to purchase flood insurance where available (FDIC), retrieved .
- FFIEC 051 instructions, Schedule RC-C, item 1.e.(1), owner-occupied nonfarm nonresidential properties (hosted by the FDIC), dated .
- SBA SOP 50 10 8.1, Lender and Development Company Loan Programs (504 project structure), dated .
Next step: check the record
- Lenders for owner-occupied commercial real estateBanks and credit unions by the owner-occupied loans they hold, from their own filings.
- Loan Comps for an owner-occupied purchaseLenders that hold loans like this one in a state, and SBA 504 first liens of similar size.
- Build a one-page deal summaryPrints the cover page a lender reads first. Nothing you type is sent or saved.
Keep reading
- DSCR calculator: Cash flow over debt service. Type the cash flow and the loan terms, see the ratio and the cushion before it falls to 1.00x.
- LTV and LTC calculator: Loan to value and loan to cost, the equity a lender will ask for, and the federal supervisory limit for the property type.
- Maximum loan calculator: The loan each test allows: DSCR, LTV and debt yield side by side, and which one binds.
- SBA 504 structure calculator: Bank loan, debenture and down payment for a project, and the fees that sit around them.
- Deal summary builder: Turn the facts of a deal into a clean one-page summary you can copy or print. Nothing is saved or sent.
- What a lender-ready loan package looks like: A lender decides in minutes whether to keep reading. A package that answers the first five questions on one page, and backs each answer with a document, gets read.
- SBA 504 loan package checklist: A 504 project has three parties, two loans and a closing date set by a monthly bond sale. Build the package for all three.
- SBA 7(a) loan package checklist: A 7(a) package is the bank's usual file plus SBA's own list. Know which items SBA requires and you can have them ready before the first call.
- SBA 7(a) or 504: which fits your loan: Both are SBA loans, and they work differently. The choice usually turns on what you are buying and how much cash you can put in.
- Global cash flow, explained step by step: A property can cover its loan while the people behind it cannot cover their other debts. Global cash flow is the test that looks at all of it at once.
- How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.
- Investor commercial real estate loan checklist: On an investor property the rent pays the loan. The package is the evidence for the rent: who pays it, for how long, what it costs to collect, and who stands behind the borrower if it stops.
Questions people ask
Does a bank need an appraisal for an owner-occupied loan?
Under the FDIC's rule at 12 CFR 323.3, a commercial real estate transaction of $500,000 or less is exempt from the appraisal requirement, and so is a business loan of $1 million or less that does not depend on the sale of, or rental income from, real estate as its primary source of repayment. For an exempt loan the bank must still obtain an evaluation.
What makes a loan owner-occupied?
Repayment. The call report instructions define it as a loan where the primary source of repayment is the cash flow from the ongoing operations of the party, or an affiliate of the party, that owns the property. If half or more of the repayment comes from outside tenants' rent, it is an investor loan.
My building is owned by a separate LLC. Is that a problem?
No, it is common. The lender will want the lease between the operating company and the property company, the financials of both, and usually the guaranty of the operating company and the owners.
Cite this
Source: The Lender Report, Owner-occupied commercial real estate loan checklist, https://lender.report/guides/package-checklist-owner-occupied-cre/, data as of November 11, 2026.
General information, not legal, tax or credit advice. A lender's own policy decides what it will do; ask it for the policy in writing.
Source and date appear beside each figure. Banks report balances, not loans made. Loans made come only from HMDA and SBA files. We do not audit filings and can make errors joining them. Report a problem