Commercial Real Estate Loans in Indiana Now 2025

Commercial Real Estate Loans in Indiana: Complete 2025 Guide for Investors

Indiana offers a vibrant landscape for commercial real estate (CRE) investment in 2025, fueled by its pro-business climate, affordable property markets, strong logistics infrastructure, and thriving urban centers. Whether you aim to purchase, refinance, or renovate a commercial property, understanding Indiana’s commercial mortgage environment is critical to securing the ideal financing for your project.

Why Invest in Indiana Commercial Real Estate in 2025?

• Robust Economic Growth: Indiana maintains a low unemployment rate and a growing GDP, bolstered by manufacturing, logistics, tech, and healthcare sectors.
• Central Location: Proximity to major Midwest hubs (Chicago, Louisville, Cincinnati) and excellent highway systems (I-65, I-70, I-69).
• Diverse Markets: Downtown Indianapolis, Evansville, Fort Wayne, South Bend, Carmel, Fishers, and Lafayette offer a range of commercial opportunities from office towers to mixed-use developments.
• Investor-Friendly Environment: Competitive tax incentives and a business-friendly regulatory climate.

Popular Commercial Areas in Indiana

Indiana’s top cities and districts for CRE investment in 2025 include:

• Downtown Indianapolis – Office, retail, and hospitality properties thrive in the urban core and Mass Ave Arts District.
• Fishers – Fast-growing tech and office market with new mixed-use developments.
• Fort Wayne Downtown – Revitalization has brought new opportunities for multifamily and hotel conversions.
• Lafayette/West Lafayette – Student housing and medical office demand driven by Purdue University.
• Evansville Riverfront – Growth in logistics, healthcare, and retail assets.
• South Bend/Notre Dame Area – Multifamily and medical/educational expansion.
• Bloomington – Strong campus-adjacent retail and small office segments.

Types of Commercial Real Estate Loans in Indiana

This 2025 guide focuses on commercial mortgages—the backbone of property financing for stabilized (income-producing) assets. However, Indiana investors can also utilize:

Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!

Test Your Expertise: The Complexities of the 1031 Exchange

As a sophisticated real estate investor, you understand that the 1031 Exchange is a cornerstone strategy for tax deferral and wealth accumulation. But beyond the basics, the intricacies of the 1031 Exchange rules can pose significant challenges. This quiz is designed to test your in-depth knowledge and highlight critical nuances that separate casual investors from true experts in 1031 Exchange transactions.

Instructions: Choose the best answer for each question.

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Page 1 of 5

Question 1: Understanding "Like-Kind" in a 1031 Exchange

Which of the following scenarios most likely qualifies as a like-kind property exchange under IRS Section 1031, allowing for 1031 Exchange tax deferral?

a) An investor exchanges a portfolio of publicly traded REIT stocks for a commercial retail building. b) An investor exchanges their primary residence, used for personal living for 15 years, for a duplex intended for rental income. c) An investor exchanges raw land held for appreciation in Texas for a stabilized apartment complex in Florida, both held for investment. d) An investor exchanges a classic car collection (personal property) for a single-family rental home (real property).

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Question 2: Navigating the 45-Day Identification Period for a 1031 Exchange

An investor sells a multi-family property on June 15th for a 1031 Exchange. According to the strict timelines, by what date must they identify their replacement properties to comply with the 1031 Exchange requirements?

a) July 30th of the same year, as the 45-day period includes weekends and holidays. b) August 29th of the same year, allowing for an extra 45 days if needed. c) December 12th of the same year, aligning with the 180-day completion period. d) January 1st of the following year, if they plan to file for an extension.

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Question 3: The Role of a Qualified Intermediary (QI) in a 1031 Exchange

Why is the engagement of a Qualified Intermediary (QI) absolutely critical for the validity of a 1031 Exchange?

a) The QI provides investment advice and helps the investor choose the best replacement property for their 1031 Exchange strategy. b) The QI acts as a liaison with the IRS, directly negotiating tax liabilities related to the 1031 Exchange process. c) The QI holds the proceeds from the relinquished property's sale, preventing the investor from having "constructive receipt" of funds, which would invalidate the 1031 Exchange. d) The QI provides legal and tax advice to ensure the 1031 Exchange is perfectly compliant

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Question 4: Understanding "Boot" and its Impact on a 1031 Exchange

An investor sells a commercial building with $500,000 in equity for a 1031 Exchange. They purchase a replacement property for $450,000, effectively reducing their debt by $50,000. What is the tax implication of this scenario within the 1031 Exchange framework?

a) The entire 1031 Exchange is disqualified because the investor "traded down" in value. b) The $50,000 in reduced debt is considered "boot" and will be immediately taxable as partial gain in this 1031 Exchange. c) There are no immediate tax implications, as the primary goal of the 1031 Exchange is only about the "like-kind" nature of the properties. d) The investor can defer the $50,000 as long as they pay off other personal debts with the funds, still qualifying for a full 1031 Exchange.

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Question 5: Advanced 1031 Exchange Strategies & Flexibility

An investor aims to sell a highly appreciated single-tenant retail property and replace it with multiple smaller, diversified multi-family units to spread risk. Which of the following 1031 Exchange identification rules best allows for this diversification strategy, maintaining eligibility for a 1031 Exchange?

a) The "Three Property Rule," where the investor can identify up to three properties of any value, regardless of the relinquished property's value, for their 1031 Exchange. b) The "200% Rule," allowing identification of any number of properties, provided their aggregate fair market value does not exceed 200% of the relinquished property's value for the 1031 Exchange. c) The "95% Rule," which states that if more than three properties are identified, the investor must acquire at least 95% of the aggregate value of all identified properties to qualify for the 1031 Exchange. d) All of the above are valid identification rules within a 1031 Exchange, offering flexibility for various investment strategies.

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The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

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Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

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How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

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What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

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Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

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• Bridge Loans – For short-term needs, such as acquisition before stabilization.
• Construction Loans – Funding ground-up development projects.
• Multifamily Financing – Specifically tailored for apartment buildings (5+ units) and mixed-use assets.

Indiana Commercial Mortgage Overview (2025)

• Typical Loan Amounts: $500,000 – $25 million+
• LTV (Loan-to-Value): Up to 75% for stabilized assets
• Interest Rates (Q2 2025): 6.25% – 7.5% (Fixed and floating options)
• Loan Terms: 5, 7, 10-year terms with 20-25 year amortization
• Recourse: Both recourse and non-recourse available (depending on lender and borrowing entity strength)
• Asset Types Financed: Office, retail strip centers, industrial, flex, self-storage, hospitality, medical/healthcare, mixed-use, multifamily

Leading Commercial Real Estate Lenders in Indiana (2025)

Indiana’s competitive CRE finance ecosystem includes national banks, regional lenders, credit unions, and specialty finance companies:

• Old National Bank – Headquartered in Evansville, robust suite for office, retail, and industrial properties Statewide.
• Lake City Bank – Northern and Central Indiana focus; attractive terms for small/mid-sized transactions.
• German American Bank – Particularly active in Southern Indiana with both construction and permanent loans.
• KeyBank Real Estate Capital – Strong national platform with deep Indiana roots for large and structured deals.
• Merchants Bank of Indiana – Aggressive on multifamily loans and creative bridge financing solutions.
• First Merchants Bank – Preferred provider for central Indiana offices and industrial portfolios.

Step-by-Step Commercial Mortgage Application Process

1. Prequalification:
   • Consult with a CRE loan specialist to assess your property, financials, and loan needs.
   • Typical documentation: rent roll, operating statements, borrower financials, property summary.
2. Select Lender and Loan Program:
   • Compare offers/TILs from banks, credit unions, and specialty lenders.
   • Negotiate terms, interest rates, closing costs, and recourse requirements.
3. Application and Processing:
   • Submit full application with all property and borrower documentation.
   • Lender orders appraisal, Phase I ESA, credit, and background checks.
4. Underwriting and Approval:
   • Loan committee reviews risk, cash flows (DSCR), LTV, and sponsor experience.
   • Conditional approval issued subject to third-party reports.
5. Closing:
   • Finalize legal documentation, title policy, insurance, guarantees if required.
   • Fund loan; ownership/encumbrance updated at county recorder.

Success Stories: Indiana Commercial Mortgage Transactions

• Fort Wayne Office Acquisition: Local investor bought a stabilized Class B office building (35,000 SF) for $2.9 million in 2025. Financed with a 10-year, fixed-rate commercial mortgage from Lake City Bank at 6.50% with 25% equity.
• Indianapolis Retail Center Refinance: Regional retail owner refinanced a 50,000 SF community shopping center in Broad Ripple for $4.15 million through Old National Bank, securing a 7-year loan at 7.00% with 20-year amortization, improving annual cash flow.
• Bloomington Medical Office Purchase: Healthcare practice purchased a 10,000 SF office for $1.05 million. German American Bank provided a 5-year (fixed/adjustable) loan at 6.35%, with a personal guarantee.
• Lafayette Mixed-Use Property: Developer acquired and renovated a historic building near Purdue University. Merchants Bank of Indiana issued a $3.5 million loan with a 70% LTV, non-recourse structure due to strong sponsorship and cash flow history.
• South Bend Industrial Warehouse: Investor secured $850K through First Merchants Bank for purchasing and repurposing a 28,000 SF warehouse.

Indiana CRE Loan Market Trends 2025

• Moderate Rate Environment: Rates stabilize after the Fed’s mid-2024 hikes; lenders remain cautious on underwriting but actively pursue quality sponsorships and locations.
• Focus on Industrial & Multifamily: Strong tenant demand in logistics corridors (I-65, I-70, I-69), and student housing near Purdue, IU, and Notre Dame.
• Adaptive Reuse Surge: Growing appetite for conversion loans (e.g., office to mixed-use residential).
• Emphasis on Sustainable Projects: Green building certifications and retrofit projects score extra points for favorable terms with institutional lenders.

Expert Tips for Securing an Indiana Commercial Mortgage in 2025

1. Build a strong deal team (broker, attorney, CPA, property manager).
2. Present clear pro forma and exit strategy to the lender.
3. Gather all required documents upfront to expedite closing.
4. Be prepared to invest 20-30% equity, especially for non-recourse loans or value-add plays.
5. Consider local/regional lenders for mid-sized deals; national banks for large/complex assets.

Conclusion: Take Advantage of Indiana’s 2025 CRE Opportunities

Indiana’s commercial real estate market is primed for continued growth in 2025. By understanding the mortgage landscape, thoroughly evaluating lender options, and approaching your transaction strategically, investors can unlock significant cash flow and long-term appreciation in this heartland state.

✅ Small Business Resources 

• SBA – Small Business Administration
  https://www.sba.gov

• SCORE Mentors (Free Mentoring & Workshops)
  https://www.score.org
• Small Business Development Centers (SBDC)
  https://americassbdc.org

Are You an SBA Real Estate Loan Expert?

Test your in-depth knowledge on using SBA Loans for owner-occupied commercial Real Estate acquisition. These questions delve into the critical details that can impact your business's growth and financial strategy.

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Page 1 of 5

For an existing commercial property, what is the minimum owner-occupancy percentage required for an SBA 7(a) real estate loan, and does this specific scenario qualify?

A manufacturing company plans to acquire a 30,000 sq ft industrial real estate facility using an SBA 7(a) Loan. The company initially needs 18,000 sq ft for its operations and intends to lease out the remaining 12,000 sq ft.

A) 60%; Yes, it qualifies. B) 51%; Yes, it qualifies. C) 75%; No, it does not qualify. D) 60%; No, it does not qualify, as they are leasing out a portion.

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Which of the following sets most accurately represents additional cost categories that can typically be financed within an SBA 504 Loan for a commercial real estate project?

Hint: Beyond the straightforward purchase of a commercial real estate property, an SBA 504 Loan is highly effective for comprehensive projects.

A) Business inventory, working capital, and employee salaries. B) Building renovations, long-term machinery essential to operations within the property, and soft costs like architectural fees. C) Advertising expenses, short-term equipment leases, and utility deposits. D) Personal real estate investments, vehicles for personal use, and stock market investments.

Page 3 of 5

Between an SBA 7(a) Loan and an SBA 504 Loan, which program generally offers the lowest typical borrower down payment for a commercial real estate acquisition, and what is that common minimum percentage for established businesses?

A highly profitable professional services firm in a competitive market wants to purchase its office real estate with minimal upfront capital. The firm's owners prioritize cash flow and liquidity.

A) SBA 7(a) Loan; 15% B) SBA 504 Loan; 10% C) SBA 7(a) Loan; 5% D) SBA 504 Loan; 20%

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For new construction, what is the initial minimum owner-occupancy percentage required, and what is the maximum timeframe to meet the full owner-occupancy threshold, for an SBA Real Estate Loan?

A fast-growing tech startup plans to construct a new 50,000 sq ft headquarters using an SBA Loan. They will immediately occupy 35,000 sq ft and have a definitive plan to occupy the remaining 15,000 sq ft within two years as their team expands.

A) Initial 51%, full 80% within 5 years. B) Initial 60%, full 80% within 3 years. C) Initial 75%, full 100% within 1 year. D) Initial 51%, full 100% within 2 years.

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What is this crucial requirement, and what fundamental principle does it underscore for the lender?

When securing an SBA Loan for a commercial real estate purchase, principal owners with a 20% or greater ownership stake are almost universally required to provide a specific type of assurance beyond the collateral of the real estate itself.

A) A fixed-rate interest payment commitment, demonstrating long-term stability. B) A first-lien position on all personal assets, ensuring full recovery. C) A personal guarantee, signifying the owners' personal commitment to loan repayment. D) A business plan with projected revenue growth of at least 15% annually, showing future viability.

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Ready to get started? Consult with an Indiana-based CRE loan expert today to compare loan programs and secure your next investment property with confidence!

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✅ Real Estate Investor Resources

• AirDNA (Short-Term Rental Data)
  https://www.airdna.co

• Rentometer (Rent Comps)
  https://www.rentometer.com
• Zillow Research & Data
  https://www.zillow.com/research

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

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Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

Page 3 of 3

Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

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GHC Funding DSCR LOAN, SBA LOAN, BRIDGE LOAN

Contact GHC Funding Today. Main: 833-572-4327 Email: sales@ghcfunding.com

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