Business Lending 101

Commercial Real Estate (CRE) Lending:

What it is: CRE lending involves providing financing for properties used for business purposes, such as office buildings, retail spaces, warehouses, and apartment complexes.

In Layman’s Terms: Imagine you wanted to start a business, and you need a place to operate. If you can’t buy the property outright, you might get a loan to purchase or develop the building you’ll use for your business. That loan falls under CRE lending.

Commercial and Industrial (C&I) Lending:

What it is: C&I lending focuses on providing financing for a company’s day-to-day operations and business activities. This can include working capital loans, equipment financing, and other types of loans that help a business run smoothly.

In Layman’s Terms: Let’s say your business needs money for things like buying inventory, upgrading equipment, or managing day-to-day expenses. You might take out a loan specifically for these operational needs, and that would be considered C&I lending.

Key Differences:

PURPOSE

CRE Lending: Primarily for acquiring or developing properties used for business purposes.
C&I Lending: Supports a company’s ongoing operations, covering various needs beyond property acquisition.

ASSET INVOLVED

CRE Lending: Involves real estate assets like buildings and land.
C&I Lending: Involves various assets, such as inventory, equipment, and accounts receivable.

FOCUS ON OPERATIONS

CRE Lending: Centers on the physical space where a business operates.
C&I Lending: Focuses on the day-to-day functioning of the business, ensuring it has the necessary resources to run efficiently.

In essence, CRE lending is about the physical space where a business operates, while C&I lending is about providing the financial support needed to keep the business running smoothly. Many businesses may use a combination of both types of lending to meet their overall financial needs.