A $10M+ commercial real estate purchase for an operating business is structured as three to five layers, not one loan, because no single lender writes the whole number at the terms each piece deserves. The real estate layer carries roughly 75 to 85 percent of the property's appraised value, so the business brings 15 to 25 percent down in real equity, 15 on the strongest files, and the lender underwrites it on the operating company's cash flow plus the appraisal. The ratio they're checking is DSCR, debt service coverage ratio: the business's net operating income divided by the new annual payment, and they want it around 1.25x, meaning $1.25 of income for every $1.00 of payment. The build-out and any machinery go on an equipment layer sized to the asset. Move-in costs and the first quarter in the building go on a working-capital layer sized to your deposits. If the building comes with a business you're acquiring, the acquirer's revenue carries the enterprise value as its own layer. Each layer prices at the lender that writes that piece every day, all of it under one application. A bridge structure funds in weeks and a conventional one in 30 to 60 days, against a bank's 60 to 90 on a single blended loan that usually wants 25 percent down. One condition on all of it: this is owner-occupied, your business in at least 51 percent of the building. A property you're buying for the rent roll is a different product and not this structure.
Here's the arithmetic on a $12M purchase. A regional manufacturer under contract on a 140,000-square-foot production and distribution facility, roughly $35M in revenue, 60 days to fund. The real estate layer takes $10.2M against the building at 15 percent down, so $1.8M of the company's cash. A $1.4M equipment layer covers the racking, the dock equipment, and the two production lines moving in, each machine securing its own piece. An $800K working-capital layer covers the move, the overlap month paying rent and the new building payment at once, and payroll while the lines come back up. Total structure $12.4M. Cash out of the business: $1.8M. The bank's version of the same purchase was one loan at 25 percent down, $3M out of operations, in 60 to 90 days the contract didn't have.
the equity a $12M owner-occupied purchase takes at 15 percent down on the real estate layer, versus $3M at a bank's 25 percent on one blended loan; the $1.2M difference stays in the operating account
— Owner-occupied CRE at roughly 15 to 25 percent down on the lender network; $8.2M five-layer manufacturing structure funded in 22 days at roughly 15 percent down on three facilities
What Each Layer Does on a $10M+ Purchase
The real estate layer carries the building. This is the biggest number and the easiest to finance correctly, because it's secured by the property itself. Owner-occupied commercial real estate runs $500K to $20M+ depending on the property, underwritten on your operating cash flow, the appraisal, and the DSCR. It's the one layer where the down payment is a hard rule, and the equity has to be real money from the business. A down payment that's itself borrowed sinks the file.
The equipment layer carries what's going inside. Racking, dock levelers, production lines, HVAC for a process floor, a build-out that's bolted to the building: every asset secures its own piece on equipment financing at a much smaller down payment than real estate, with the full price deductible in year one under Section 179. Blending $1.4M of equipment into the real estate loan means paying real estate equity on machinery.
The working-capital layer carries the move. Nobody budgets the overlap month, the deposits with the utilities, the lost production week, or the payroll that runs whether the lines are up or not. A working-capital layer sized to four months of business bank statements covers it in one to three days, drawn as the move happens, so the $1.8M down payment doesn't come out of operating cash twice.
The acquisition layer, when there's a company attached. If you're buying the business that runs in the building, the real estate still finances against the property, and the enterprise value finances against your revenue, not the seller's. Business acquisition financing is that layer; the acquirer's cash flow qualifies the transaction. Your own receivables can fund part of the purchase through an A/R facility, which is the layer most operators never consider.
Bottom line:
A bank prices a $12M purchase as one loan at its most conservative assumption and applies that assumption to the machinery, the move, and the building alike. The stack prices the building as a building, the iron as iron, and the move as working capital. Same purchase, $1.2M less cash out, funded inside the contract window.
What the Real Estate Layer Is Underwritten On
The operating company's cash flow. Six months of business bank statements and the last two years of returns. The question is whether the business's net operating income carries the new payment at about 1.25x. A business that's been paying $85,000 a month in rent and will pay $80,000 on the building has already proven it, which is how most $10M+ owner-occupied files read.
The appraisal. The property is appraised and the real estate layer is sized to appraised value, not contract price. A contract above appraisal means the gap is yours in cash, so get the appraisal ordered the week you go under contract.
Occupancy. Your business in 51 percent or more of an existing building, 61 percent or more of new construction. You can lease out the rest and use that rent to offset the payment. Below the threshold it's an investment property with different underwriting, and the first thing the desk confirms is which side of that line the file sits on.
Real equity. The 15 to 25 percent down has to come from the business, not from another loan. The desk will trace it. Build the down payment from retained cash, and let the working-capital layer protect operations instead of financing the equity.
A clean Phase I. A Phase I is the environmental site assessment, a records-and-site review for contamination. On a production or distribution facility it's standard, and a failed one stops the file until it's resolved. Order it with the appraisal.
What the Structure Is Worth on a $10M+ Building
The question underneath the structuring question is "do I put $3M of my operating cash into four walls or $1.8M." On a $35M business, $1.2M is a production line, a second shift, or the inventory for a contract you'd otherwise bid short. The stack doesn't just fund the building faster than the bank. It leaves the company able to operate inside it the day the keys turn over, which is the entire reason you're buying instead of renewing the lease.
See what your operating cash flow carries on a $10M+ building.
Start Your Funding Request →Where $10M+ Files Stall
One blended loan at the bank. The bank underwrites the whole $12M as real estate, wants 25 percent down on all of it, including the equipment, and takes 60 to 90 days in committee. On a purchase contract with a 60-day funding deadline, the structure that's right on paper loses the building.
A financed down payment. A second loan, a seller carry on the equity piece, or a line draw to cover the 15 percent all show up in the statements, and they all end the file. The equity is the one piece of the stack that has to be cash.
Occupancy under the line. A 180,000-square-foot building where your operation uses 70,000 is 39 percent owner-occupied. That's an investment property. Either take more of the building or structure it as one.
Appraisal or Phase I surprises. A contract $900K over appraisal is $900K more down. A Phase I flag on an old industrial site is weeks of remediation review. Both are solvable; both are fatal when they surface in week seven of a nine-week contract.
A business that can't carry it. Owner-occupied real estate is serviced by the operating company. Thin net operating income, a DSCR under 1.25x, or deposits that don't support the payment means there's nothing to underwrite, no matter how good the building is.
| Layer | On a $12M purchase | Secured by | What it does |
|---|---|---|---|
| Owner-occupied real estate | $10.2M at 15% down | The property, the appraisal, your cash flow at ~1.25x DSCR | Takes the building without taking $3M from operations |
| Equipment financing | $1.4M | Each machine, line, and fixture | Keeps machinery off the real estate equity; full Section 179 write-off |
| Working capital | $800K | Four months of deposits | Funds the move and the overlap month in 1 to 3 days |
| Business acquisition (if a company is attached) | Sized to enterprise value | The acquirer's revenue, not the seller's | Finances the business separately from the building |
Operators in Texas and Illinois send the $10M+ version of this question into the desk every quarter, usually in week two of a contract. Capital stacking is the principle underneath it. The commercial financing page is where $1M to $20M+ structures start, and the manufacturing and wholesale hubs cover the two industries that buy the most $10M+ square footage. The DSCR post runs the coverage math in detail.
Regional manufacturer acquiring a competitor with three production facilities, Chicago
Owner-occupied CRE + A/R facility + acquisition term loan + equipment + working capital
$8.2M
Five layers funded in 22 days; the three facilities carried $3.8M at roughly 15 percent down, the acquirer's receivables funded $1.4M, and only $1.2M of enterprise value needed a term loan
See the full case →What to Have Ready
The executed purchase contract with its funding deadline. The property address and whatever's on file: survey, prior appraisal, prior Phase I, rent roll if any of the building is leased. Six months of business bank statements and two years of returns. Your current lease and its monthly rent, which is the fastest proof the business carries the payment. A schedule of the equipment and build-out going in, with quotes. Proof of the down payment sitting in the business's accounts. A prepared file at this size runs on the appraisal's clock, not the lender's.
Structure the stack before the contract deadline
One application, one soft pull. The building goes on the real estate layer, the iron on equipment, the move on working capital, and the equity stays at 15 to 25 percent instead of the bank's 25 on everything.
Here's What Most People Get Wrong
They take the whole purchase to the bank that holds their operating account, because that's who they've always borrowed from, and they let the bank size one loan against the real estate and everything inside it. Then they're at 25 percent down on $12M, writing a $3M check, with a committee date that lands after the contract expires. The $10M+ buyers who fund on time aren't the ones with more cash. They're the ones who split the building from the equipment from the move, put each piece with the lender that prices it, and brought $1.8M of real equity instead of $3M.
Frequently Asked Questions
How is a $10M+ commercial real estate purchase structured for an operating business?
As three to five layers under one application: an owner-occupied real estate layer carrying 75 to 85 percent of appraised value at 15 to 25 percent down, an equipment layer for machinery and build-out, a working-capital layer for the move, and, if a business comes with the building, an acquisition layer carried by the acquirer's revenue. Each layer is priced by the lender that writes that piece, which is how a $12M purchase takes $1.8M of equity instead of a bank's $3M.
How much do you need down on a $10M+ owner-occupied building?
Roughly 15 to 25 percent of appraised value on the real estate layer, with the strongest files at 15 percent. It has to be real equity from the business; a down payment that's itself financed ends the file. The equipment and working-capital layers carry their own, much smaller, requirements, which is the reason to keep them off the real estate loan.
What is DSCR and what ratio do lenders want on owner-occupied real estate?
DSCR is debt service coverage ratio: the business's net operating income divided by the annual payment on the new loan. Lenders want about 1.25x, meaning $1.25 of income for every $1.00 of debt payment. An operator already paying rent at or above the new building payment usually clears it on the bank statements alone.
What counts as owner-occupied commercial real estate?
Your operating business occupies at least 51 percent of an existing building, or 61 percent of new construction. You can lease the remainder and use that rent to offset the payment. Below the threshold the property is underwritten as an investment, a different product with different terms, and not this structure.
How fast can a $10M+ owner-occupied purchase fund?
A bridge structure funds in weeks and a conventional one in 30 to 60 days, versus a bank's 60 to 90 on a single blended loan. The $8.2M five-layer structure above, which included three production facilities, funded in 22 days. The appraisal and the Phase I environmental review set the clock, so order both the week you go under contract.
Can you finance the business and the building in one structure?
Yes, as separate layers. The real estate finances against the property at 15 to 25 percent down. The enterprise value finances against the acquiring company's revenue, not the seller's, and the acquirer's own receivables can fund part of the purchase through an A/R facility. Most lenders do one or the other; the stack does both under one application.
Bobby's Take
The $10M+ structuring question almost always comes from an operator in week two of a contract who just got the bank's term sheet and did the math on 25 percent down. What they're really asking is whether they have to choose between the building and the business. They don't. The building is the easiest piece of the whole file to finance, because it's a building. The mistake is letting one lender price the iron and the move like real estate too. Split the layers, bring the equity in cash, order the appraisal and the Phase I the day you sign, and the stack funds inside the window the bank said was impossible. The operators who own their $10M+ facilities didn't have more cash than the ones still renting. They had a structure.
