Blog
Commercial Loan Maturing in Six Months: Your Plan
By Jason Taken · Principal
6 minute read
Prepare for a commercial loan maturity with a six-month refinance plan, document checklist, cash-gap example, and questions about extension options.
A commercial loan maturity creates a fixed decision date. Six months before that date, the useful question is: what financing can the property support, and what must happen before the current debt comes due? A new appraisal, a lease renewal, or an owner’s cash contribution may change the answer.
Start with the commercial real estate refinance review if you own a multifamily, office, medical, retail, industrial, or specialty property. Include its current use, debt balance, and maturity date. Cannabis real estate should be identified at the outset so the review accounts for that use.
The schedule below is a planning framework, not a promised closing timeline. If maturity is closer, begin with the missing information and the current lender’s deadlines today.
Six months out: establish the actual deadline
Read the note and all amendments together. Record the maturity date, extension notice deadline, any conditions for an extension, and the lender or servicer contact. Request the payoff procedure and an estimate of charges that would apply to the proposed repayment date.
Create a one-page summary with:
- Property address, asset type, unit or suite count, and current occupancy.
- Borrowing entity, ownership, and the person authorized to make decisions.
- Current debt, maturity, and any other liens on the property.
- Requested financing, intended use of proceeds, and cash available to contribute.
- Current property income, major lease expirations, and unfinished work.
Separate facts from estimates. An owner’s value estimate and a potential tenant’s interest are useful context; they are not an appraisal or a signed lease.
Five months out: reconcile the property file
Collect the current rent roll, leases and amendments, the last twelve months of income and expenses, and year-to-date results. Mark unpaid rent, free-rent periods, vacant space, and lease end dates. Explain differences between billed rent and money collected.
Add tax bills, insurance information, a repair budget, existing reports, entity documents, and the financial information requested for the borrower and guarantors. The commercial loan documents checklist provides a starting file order; the actual lender’s requirements control.
For a medical building occupied by its owner, identify the relationship between the practice and the property entity. For an office investment, show the lease expirations suite by suite. The goal is a file that another person can understand without reconstructing the business from emails.
Four months out: test proceeds against the payoff
Property value alone does not establish refinance capacity. The OCC’s commercial lending handbook describes reviewing income, debt coverage, value, and borrower finances. A property’s income may constrain the proposed debt even when the owner believes there is substantial equity. OCC Commercial Real Estate Lending handbook
Ask for a proceeds breakdown that distinguishes the gross loan from money available at closing. Here is a hypothetical example, with no implied approval or quoted terms:
| Item | Illustrative amount |
|---|---|
| Gross new loan | $2,800,000 |
| Less repair funds held for later release | −$150,000 |
| Loan funds available at closing | $2,650,000 |
| Existing loan payoff, including its applicable charges | $2,600,000 |
| New financing and closing costs | $75,000 |
| Separate reserve funded at closing | $50,000 |
| Total needed at closing | $2,725,000 |
| Borrower cash needed to cover the gap | $75,000 |
The calculation is $2,725,000 minus $2,650,000. If the owner also wants $40,000 left outside closing for operations, the cash plan needs $115,000. That operating cushion is separate from the closing reserve.
Use the actual quote to avoid counting a reserve twice. Refresh the payoff for the closing date, and identify any charges still excluded from the estimate. A higher headline loan amount can still leave a cash gap when part of it is held back.
Run a second version with the largest uncertain assumption removed. If a tenant has not signed its renewal, ask what the file looks like without that renewal. If repairs are unfinished, separate the current property from the planned result. Compare the cash gap in both versions. The purpose is to find the assumption that needs evidence before you commit to a path.
Three months out: compare refinance and extension
Ask the current lender about an extension while reviewing replacement debt. The federal banking agencies encourage prudent work with creditworthy commercial borrowers facing financial difficulty. That guidance supports a conversation; it does not promise an extension to any borrower. Federal Reserve guidance on commercial loan accommodations
Compare the alternatives against the work that remains:
| Decision | Questions to answer |
|---|---|
| Refinance now | Are proceeds sufficient, conditions achievable, and the payment workable with current income? |
| Seek an extension | What will the extra time accomplish? What fee, paydown, or other conditions apply? |
| Use interim financing | What specific event supports its later repayment, and what happens if that event is delayed? |
| Sell or contribute more equity | Is the timing credible, and are the funds or sale proceeds sufficient? |
An extension can help when a defined milestone needs time. Write that milestone down: a signed renewal, completed repairs, or documented rent collection. If extra time changes none of the constraints, revise the plan rather than relying on the calendar alone.
Compare total cash needs over the same period. Put extension charges, added interest, required principal reduction, and work still to be paid beside the proposed refinance costs. Include the cost of a later refinance if the extension is only a temporary step. A smaller payment today does not answer how the debt will be repaid at the next maturity.
Two months out: turn proposals into a closing plan
Review the written conditions behind each proposal. Track the responsible person and status for appraisal, title, insurance, environmental review, entity authorization, and any property-specific items the lender requests. Confirm report-ordering instructions before spending money on new reports.
A preliminary proposal still leaves work to complete. Use the term sheet, LOI, and commitment comparison to frame questions about the stage of review and remaining conditions. Ask directly what could change the proceeds or prevent funding.
Keep the current lender updated on material timing changes. A hoped-for closing date should not be treated as an approved extension.
One month out: verify funds and the fallback
Update the payoff, rent roll, financials, and closing-cost estimate. Confirm who will supply any cash gap and how much remains for operations afterward. Track unresolved items against the contractual deadline, not just the target closing date.
If funding remains uncertain, pursue the documented alternative before its own notice deadlines expire. Waiting for a final answer from one party can consume the time needed to act with another.
Keep one current decision sheet
Maintain a single sheet with each financing path, gross loan, closing funds, owner contribution, key conditions, target date, and date of the latest written update. Give every unresolved item an owner and a next action. For example, “tenant renewal pending” becomes “property manager to obtain the tenant’s response and update the vacancy case.”
Use a separate column for confirmed facts and open assumptions. This helps owners, partners, and advisers discuss the same transaction when proposals change. After each material update, ask whether the chosen path still covers the payoff and leaves enough cash to carry the building. Save the supporting proposal or lender email with that version of the sheet.
Bring the property, debt, and deadline together
The most useful first submission identifies both the desired result and the obstacle: a maturity date, reduced proceeds, vacancy, lease rollover, or incomplete work. Include what has changed since the existing loan was made.
Request a commercial refinance review to organize the available paths. If your package is ready, submit the commercial loan request with the maturity date, payoff, property financials, requested amount, and cash available. That gives the review a concrete financing problem to solve.