Commercial Real Estate Loans for Investors 2025 Now

Commercial Real Estate Loans in Kentucky: 2025 Expert Guide

2025 is an exciting year for Kentucky’s commercial real estate (CRE) market. From the bustling streets of Louisville’s CBD to growth corridors like Lexington’s Hamburg District, Kentucky investors are capitalizing on strong market fundamentals. If you’re considering purchasing or refinancing a property, expanding your portfolio, or undertaking a new development—having the right financing is critical. This comprehensive guide covers Kentucky commercial mortgages and multifamily loans, top lenders, key areas to invest, application steps, and up-to-date local market insight.

Kentucky’s Leading Commercial Real Estate Markets in 2025

• • Louisville Central Business District (CBD): Major hub for office, retail, mixed-use, and hospitality with USD $2B+ in transaction volume expected in 2025.
  • Lexington Hamburg District: Rapidly developing retail and multifamily submarket with ongoing mixed-use expansion.
  • Bowling Green Tech Corridor: Growing office and industrial presence, ideal for tech startups and logistics operations.
  • Northern Kentucky Riverfront: Attracting new multifamily, hospitality, and entertainment projects along the Ohio River.
  • Pikeville Downtown: Revitalization bringing new retail, healthcare, and multifamily properties to Eastern Kentucky.
  • Owensboro Commercial Triangle: Industrial and logistics volume driven by warehousing and regional distribution hubs.
  • Paducah Historic District: Redevelopment-driven opportunities in hotel, mixed-use, and adaptive reuse.

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Types of Commercial Real Estate Loans in Kentucky (2025)

• Commercial Mortgages: Permanent financing for stabilized assets (office, retail, industrial, hotels, self-storage, medical, etc.).
• Bridge Loans: Short-term financing for acquisitions, value-add, lease-up, or repositioning opportunities.
• Construction Loans: For ground-up development, renovations, or property expansion.
• Multifamily Loans: Specialized financing for apartment buildings (5+ units), including small balance, agency, bank, and debt-fund executions.

Focus: Commercial Mortgages in Kentucky (2025 Edition)

Commercial mortgages remain the backbone of real estate investment and owner-occupied business property financing in Kentucky. In 2025, stable interest rates and strong demand are fueling activity for property types ranging from suburban office parks to new retail centers in Lexington and Louisville.

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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Typical Commercial Mortgage Terms in Kentucky (2025):

• Loan Amounts: $500,000 to $25,000,000+
• Loan-to-Value (LTV): Up to 75% for stabilized assets
• Interest Rates: 6.5% – 8.75% (property type, borrower strength, and loan term dependent)
• Amortization: 20 – 30 years
• Fixed or adjustable (ARM) rates for 5, 7, or 10 years
• Prepayment Options: Step-down or yield maintenance
• Recourse or Non-recourse depending on lender/program

Key Kentucky CRE Lenders to Know

• Republic Bank & Trust: Headquartered in Louisville with strong local CRE expertise and tailored mortgage offerings.
• Fifth Third Bank: Regional leader for commercial and multifamily financing; robust presence in Louisville, Lexington, and Northern Kentucky.
• Stock Yards Bank & Trust: Kentucky-based, competitive on owner-user and investment property loans across diverse sectors.
• Independence Bank: Especially active in Bowling Green, Frankfort, and Owensboro for industrial and retail properties.
• PNC Real Estate: Large loan programs (agency, CMBS, bridge) in major Kentucky MSAs.
• Walker & Dunlop: National multifamily lender with strong Fannie, Freddie, and FHA platforms throughout Kentucky.

Step-by-Step: How to Apply for a Commercial Mortgage in Kentucky

1. Identify Property & Project Scope: Define the asset type, location, acquisition or refinance, and your business plan.
2. Engage with Lenders: Approach multiple regional banks, credit unions, and direct CRE lenders for loan quotes or pre-qualification.
3. Assemble Documents:
   • 3 years business and personal tax returns
   • 2024-2025 property rent roll
   • Current property operating statements
   • Purchase contract or refinance payoff statements
   • Personal financial statement (assets/liabilities)
4. Obtain & Review Loan Term Sheets: Compare interest rates, LTV, amortization, fees, and prepayment penalties before accepting terms.
5. Sign LOI/Commitment Letter: Pay the lender’s application deposit for third-party reports (appraisal, environmental, engineering).
6. Underwriting & Due Diligence: Cooperate with lender as they review third-party reports, title, and property documentation.
7. Loan Approval & Closing: Finalize loan documents, complete closing, and fund your acquisition, construction, or refinance.

Kentucky CRE Investment Success Stories (2025)

• Lexington Multifamily Acquisition: Investor secured a $3.2M, 10-year, 6.65% fixed-rate mortgage through Fifth Third Bank for a stabilized 42-unit garden apartment complex in the Hamburg District. 75% LTV enabled competitive pricing and strong cash flow.
• Louisville Retail Plaza Refinance: Local developer refinanced a $4.8M neighborhood shopping center via Republic Bank. The 7-year fixed mortgage at 7.00% reduced monthly payments and enabled capital improvements for anchor tenant upgrades.
• Bowling Green Warehouse Build-to-Suit: Logistics company leveraged Independence Bank’s $2.1M owner-user commercial loan at 75% LTV, 20-year amortization, financing site acquisition and facility expansion.
• Northern Kentucky Riverfront Mixed-Use: Investor syndicate utilized PNC Real Estate to arrange a $6.5M, 5-year interest-only bridge loan for a value-add historic hotel/adaptive reuse, unlocking interim capital before permanent agency takeout.

2025 Kentucky Market Outlook

Industrial: Expect continued warehousing and logistics growth in Owensboro, Bowling Green, and the Louisville Airport corridor. Demand for last-mile delivery space is robust.

Multifamily: Steady population growth in Lexington and Northern Kentucky, coupled with job expansion, is driving both small-balance and large-scale multifamily investment.

✅ 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.

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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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Retail & Hospitality: Mixed-use and adaptive reuse projects are revitalizing Paducah and downtown Louisville. Suburban retail in fast-growth counties like Fayette and Warren is outperforming statewide averages.

✅ 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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Overall, Kentucky’s stable employment base, strategic logistics assets, and favorable business climate make it a reliable choice for CRE investors seeking strong risk-adjusted returns in 2025.

Start Your Kentucky CRE Loan Application Today

Compare lenders, get pre-qualified, and unlock your next commercial property investment. Work with local experts who understand Kentucky’s unique market dynamics. Greater transparency and competition among lenders in 2025 have made it easier than ever to secure tailored commercial mortgages and multifamily financing, positioning your project for immediate and long-term success.

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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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