CRE Loan Maturity Crisis: 5 Steps How to Secure $2.4 Trillion in Alternative Funding Before Your Bank Says No

By Van Gothreaux

The commercial real estate industry faces an unprecedented crisis that could reshape the entire lending landscape. With nearly $1 trillion in loans scheduled to mature in 2025 alone and over $1.5 trillion by the end of 2026, business owners and property investors are discovering that traditional banks are increasingly saying "no" to refinancing requests.

This isn't just a temporary blip in the market: it's a fundamental shift that demands immediate action. The good news? There's $2.4 trillion in alternative funding available for those who know where to look and how to position themselves strategically.

Why Traditional Banks Are Closing Their Doors

Understanding why banks are refusing loans is crucial to finding alternative solutions. The numbers paint a stark picture: one in three commercial mortgage-backed securities (CMBS) loans that matured since 2020 have failed to pay off on time. This represents a dramatic shift from pre-pandemic averages where payoff rates consistently exceeded 80%.

The office sector has been hit particularly hard, with non-payoff rates hovering around 40%. Remote and hybrid work models have permanently altered demand for commercial office space, leaving property values in freefall and creating negative equity positions for countless borrowers.

High interest rates compound this challenge exponentially. Properties financed a decade ago at historically low rates now face refinancing costs that can double or triple monthly payments. When you combine elevated borrowing costs with declining property values, you create a perfect storm that makes traditional bank lending virtually impossible.

Distressed assets reached $116 billion in the first quarter of 2025 alone: a staggering 31% increase from the previous year. Banks, facing their own regulatory pressures and capital constraints, are simply unwilling to take on the risk.

Step 1: Diversify Your Funding Sources Beyond Traditional Banking

The first step in securing alternative funding is acknowledging that traditional bank relationships may no longer be sufficient. You need to build a diversified funding portfolio that includes multiple sources of capital.

Start by identifying private lenders who specialize in commercial real estate transactions. These lenders often have more flexible underwriting criteria and can move significantly faster than traditional banks. Private debt funds, family offices, and high-net-worth individuals are actively seeking yield in today's market.

Credit unions represent another underutilized resource. Many credit unions have expanded their commercial lending capabilities and offer competitive rates with more personalized service than large banks. Their community-focused approach often translates to greater willingness to work with local businesses and property owners.

Consider alternative lending platforms that use technology to streamline the application and approval process. These platforms can connect you with multiple lenders simultaneously, increasing your chances of securing favorable terms.

Step 2: Leverage Loan Modifications and Extensions Strategically

Before your current loan matures, initiate conversations with your existing lender about modification options. The most common approaches include extending maturity dates, reducing interest rates temporarily, or implementing forbearance periods.

However, approach this strategically. Document your property's performance metrics, demonstrate your management capabilities, and present a clear plan for addressing any challenges. Lenders are more likely to work with borrowers who proactively communicate and demonstrate competence.

Be prepared to provide updated financial statements, property appraisals, and detailed cash flow projections. Many lenders prefer modifications over foreclosure proceedings, but you must present compelling reasons why an extension benefits both parties.

Remember that many modified loans from 2020-2022 are now maturing again. If you previously received an extension, don't assume automatic renewal. Start planning your next steps at least 18 months before the new maturity date.

Step 3: Partner with Private Capital Investors

Private capital represents one of the most significant opportunities in today's market. Regional and community banks are actively seeking partnerships with private investors who can purchase existing loans at discounted rates.

This creates opportunities for borrowers to negotiate more favorable terms with new private lenders who acquire their loans. Private investors often have longer investment horizons and may be more willing to work through temporary market challenges.

Consider joint venture partnerships where private investors provide capital in exchange for equity participation. This can be particularly effective for properties with strong fundamentals but temporary cash flow challenges.

Reach out to commercial mortgage brokers who specialize in connecting borrowers with private capital sources. These professionals maintain relationships with dozens of potential funding partners and can help structure deals that traditional banks won't consider.

Step 4: Focus on High-Performing Property Sectors

Not all commercial real estate sectors face equal pressure in the current market. Data centers, industrial properties, and specialized healthcare facilities continue to attract significant investor interest and lending support.

If you own properties in struggling sectors like traditional office or retail, consider repositioning strategies. Office buildings can potentially be converted to mixed-use developments, and retail spaces might work better as distribution centers or last-mile delivery hubs.

For new acquisitions, focus your efforts on property types that demonstrate resilient cash flows and strong long-term demand fundamentals. Industrial properties supporting e-commerce fulfillment continue to command premium valuations and abundant financing options.

Healthcare-related properties, senior living facilities, and essential service locations also attract consistent lender interest. These property types often provide stable, long-term lease arrangements that lenders view favorably.

Step 5: Work with Specialized Servicers and Alternative Lenders

When traditional refinancing isn't available, specialized loan servicers can provide valuable solutions. These firms focus exclusively on complex commercial real estate situations and often have access to funding sources unavailable through conventional channels.

Special servicers work with distressed or maturing loans to find mutually beneficial solutions. They may arrange new financing, facilitate loan sales to alternative lenders, or structure creative workout arrangements that keep properties performing.

Alternative lenders, including business development companies (BDCs) and specialty finance firms, actively seek commercial real estate opportunities that banks avoid. These lenders typically charge higher rates but offer faster approvals and more flexible terms.

Consider working with commercial finance professionals who understand the alternative lending landscape. At Capco Capital LLC, we help business owners navigate these complex funding challenges and connect with appropriate alternative capital sources.

Timing and Implementation Considerations

The key to successfully securing alternative funding lies in timing and preparation. Don't wait until your loan matures to explore options. Begin the process at least 12-18 months before your maturity date to ensure adequate time for due diligence and negotiations.

Prepare comprehensive financial documentation, including recent appraisals, environmental reports, and detailed operating statements. Alternative lenders often require more documentation than traditional banks, but they can also move more quickly once they have complete information.

Maintain realistic expectations about pricing. Alternative funding typically comes at a premium to traditional bank financing, but the cost of capital should be weighed against the opportunity cost of losing the property or missing growth opportunities.

Building Long-Term Wealth Through Strategic Positioning

While the current crisis presents significant challenges, it also creates unprecedented opportunities for savvy business owners and investors. Properties available at distressed prices today may represent exceptional long-term wealth-building opportunities.

Consider how alternative funding strategies can position you to acquire additional properties while competitors struggle with refinancing challenges. The businesses and investors who successfully navigate this crisis will emerge stronger and better positioned for future growth.

The $2.4 trillion in alternative funding represents more than just crisis management: it's the foundation for building sustainable wealth in a transformed commercial real estate market. By diversifying funding sources, leveraging strategic partnerships, and focusing on high-performance sectors, you can turn today's challenges into tomorrow's opportunities.

Take action now to secure your financial future. The businesses that thrive in 2025 and beyond will be those that adapt quickly to new funding realities and position themselves strategically for long-term success.