Commercial Property Line of Credit: 2026 Borrowing Guide

Most borrowers searching for a commercial property line of credit start by asking a bank for a rate. That is the first mistake. No single published rate for this product exists in the US market. Lenders price it off an index, and your actual rate is set by the sponsor, the asset and the amount you borrow relative to the property's value. If a banker quotes you a number before looking at your property, they are guessing. What you can control is the structure. Here is how the product works, what it costs, and the pitfalls that cost borrowers real money.

What a commercial property line of credit actually is

A business line of credit is a revolving credit account. You get access to cash up to a set limit. Interest only starts when you draw from the line. As you pay down the balance, that money becomes available to use again. This is different from a loan, which is a lump sum repaid on a fixed schedule of principal and interest.

For a rental property line of credit, that distinction matters. You can draw for a roof repair in March, pay it down from rent over a few months, then draw again for a vacancy-related expense later. You are not locking in a new loan each time. The same structure applies to an investment property line of credit used across a small portfolio.

But do not confuse the name. A line secured by commercial real estate is often called a commercial property line of credit. Some banks reserve that term for larger amounts. Chase, for example, splits its offering into two products. The Business Line of Credit covers $10,000 to $500,000. The Commercial Line of Credit covers over $500,000. Both revolve, but the terms and indexes differ.

The common mistake: chasing a rate that does not exist

Here is the scenario. You own a small retail building. You call three banks and ask for their commercial property line of credit rate. One says "Prime plus one." Another says "SOFR plus three." A third says "we will price it after underwriting." You hang up confused.

None of them lied. There is no standard rate because these lines are not standardized. Pricing is index-linked. Chase's Commercial Line of Credit, for amounts over $500,000, is priced at a variable rate indexed to 1-month term SOFR. There may be a 0.4% to 1.2% interest rate discount on new business loans and lines of credit of more than $500,000 under Chase's Relationship Pricing Program. Chase's smaller Business Line of Credit, from $10,000 to $500,000, is indexed to Prime.

No defensible all-in rate range can be stated from the evidence. The borrower's rate is set by the sponsor, the asset and the amount borrowed relative to value. So your job is not to find the rate. Your job is to understand the index and the spread you are being offered.

How index-linked pricing works

The rate on a commercial property line of credit is the sum of two parts: the index and the spread. The index is a benchmark that moves with short-term interest rates. The spread is the lender's markup for risk, administration and profit. Both matter, but the index is the part you can look up. No authoritative source in the evidence provides dated WSJ Prime or SOFR levels for any specific date, so check the current index level yourself before you sign.

Common indexes used for these lines include:

• 1-month term SOFR, used by Chase for its Commercial Line of Credit over $500,000
• WSJ Prime, used by Chase for its Business Line of Credit from $10,000 to $500,000

Floating-rate debt priced over SOFR behaves differently from fixed-rate debt priced over a Treasury. If the short-term index falls, your payment falls. If it rises, your payment rises. That is the trade you make in exchange for flexibility and a lower initial cost.

A commercial property line of credit is almost always floating. You take the index risk. The bank takes the credit risk.

What Chase actually offers: terms, fees and eligibility

Chase is one of the few large US banks with publicly documented terms. Use them as a benchmark, not as the only option. Your local or regional bank may offer different structures.

For the Chase Business Line of Credit ($10,000 to $500,000), available to existing Chase for Business customers:

• Access funds for 5 years with potential to renew, then another 5 years to repay any balance
• Variable interest rate indexed to Prime
• Minimum monthly payment of 1% of principal plus accrued interest
• No application or origination fees
• Annual fee: $200 or 0.25% of your approved line, whichever is greater, capped at $750
• After the first year, the annual fee is waived if you use at least 40% of your credit, averaged over 12 months
• Eligibility: business annual revenue of at least $100,000, FICO score of at least 660, majority ownership and management unchanged in the past two years
• Other factors: credit reports free of recent delinquencies and bankruptcy, consistent on-time payment history, debt-to-credit ratio

For the Chase Commercial Line of Credit (over $500,000):

• Up to 2 years with potential to renew
• Minimum monthly interest-only payment
• Balances may be paid anytime but are due in full at maturity
• Origination fee of 0.15% of the approved line amount, capped at $3,000
• Priced at a variable rate indexed to 1-month term SOFR
• Possible 0.4% to 1.2% discount under Relationship Pricing Program for new business loans and lines of credit of more than $500,000

Chase also works with the Small Business Administration to offer SBA Express lines of credit up to $500,000.

Pitfalls to avoid with a rental property line of credit

A rental property line of credit sounds flexible. It is, but the flexibility cuts both ways. Here are the traps.

Pitfall 1: Assuming the line is committed forever

The Chase Commercial Line of Credit matures in up to 2 years, with potential to renew. The Business Line gives you 5 years of access, then 5 years to repay. At maturity, the commercial line is due in full. If you used it to fund a long-term renovation and cannot refinance, you have a balloon problem. Match the draw period to the useful life of what you are funding. Do not use a 2-year line to pay for a 10-year improvement.

Pitfall 2: Ignoring the annual fee math

On the smaller Chase line, the annual fee is $200 or 0.25% of your approved line, whichever is greater, up to $750. The fee is waived after year one if you use at least 40% of your credit, averaged over 12 months. If you only draw occasionally, you may pay the full fee and still not use enough to waive it. Run the numbers before you choose the line size.

Pitfall 3: Treating the line as permanent capital

A line of credit is not equity. It is not a long-term mortgage. It is a working capital tool. For an investment property line of credit, use it for short-term gaps: repairs, tenant improvements, bridge until a refinance, or seasonal cash flow. If you use it to fund a down payment on another property, you are stacking debt on debt. That can work, but it raises your debt service and your risk.

Pitfall 4: Missing the index reset risk

Your rate is variable. It resets with the index. If you borrow at SOFR plus a spread and SOFR rises, your payment rises. If you borrow at Prime plus a spread and Prime rises, your payment rises. Ask what index your line uses, and ask how often it resets.

Pitfall 5: Not asking about relationship pricing

Chase's Relationship Pricing Program offers a possible 0.4% to 1.2% discount on new business loans and lines of credit over $500,000. That is a meaningful range. If you are an existing customer with deposits and other business, ask. If you are not, ask what it would take to qualify. The discount is not automatic. It is negotiated.

How to compare offers without a published rate

Since no single rate exists, you need a framework. Here is what to collect from each lender.

• The index: SOFR (which term?) or Prime
• The spread over that index
• The floor, if any
• The draw period and the repayment period
• Whether the line is interest-only or requires principal
• The origination fee (Chase charges 0.15% up to $3,000 on the commercial line; the smaller line has none)
• The annual fee and the waiver conditions
• The maturity date and renewal terms
• The collateral requirement (real estate? blanket lien? personal guarantee?)
• The eligibility thresholds: revenue, FICO, ownership stability

Write these down side by side. The index and spread are the core. A line at SOFR plus a spread may be cheaper or more expensive than Prime plus a spread depending on the spreads quoted and the current index levels. Check the index yourself before you decide.

When a line of credit is the wrong tool

The evidence does not support a one-size-fits-all answer. But here are cases where a line is likely wrong.

• You need fixed-rate, long-term financing for an acquisition. Use a commercial mortgage.
• You cannot repay the balance within the draw period. Use a term loan.
• You need to fund a construction project with a known draw schedule. Use a construction loan.
• You want to avoid annual fees and your usage will be low. A credit card or a small term loan may be cheaper.

A commercial property line of credit shines when you have recurring, unpredictable short-term needs and the cash flow to pay them down.

A realistic example

You own a mixed-use building in a secondary market. You need funds for a facade repair and a new HVAC system. The work will take a few months. You expect to refinance the building later and pay off the line then.

You qualify for a Chase Business Line of Credit. You draw the amount you need. The rate is Prime-indexed. Your spread is not published, so we cannot state your all-in rate. But you know the index. Your minimum monthly payment is 1% of principal plus accrued interest. You pay it down over time. The annual fee is waived if you use at least 40% of your credit. You pay no origination fee.

That works. But if you had taken the over-$500,000 commercial line, you would pay a 0.15% origination fee and the balance would be due in full at maturity. That is a different risk profile.

The bottom line on pricing

The honest answer is that you cannot know your commercial property line of credit rate until you apply. The evidence does not contain a published all-in range, and any website that gives you one is guessing. What you can do is know the index, ask for the spread, understand the fees, and match the draw period to your need. Check the current index level before you sign. It changes. And read the maturity date twice.