Private Money Hawaii

Commercial Loan Requirements in Hawaii: What Investors Need (2025 Update)

Commercial real estate in Hawaii moves fast — and the investors who win deals are the ones who can close quickly, avoid bank red tape, and secure financing based on the property’s strength, not stacks of paperwork. That’s why private commercial loans are now one of the most popular funding options across Oahu, Maui, Kauai, and the Big Island.

But what exactly are the commercial loan requirements in Hawaii?
What documentation do lenders actually ask for?
And how does approval really work when you’re using private, asset-based financing instead of banks?

This guide breaks down every requirement you need to know in 2025, using simple explanations, Hawaii-local examples, and a clear investor-first approach.

Why Commercial Loan Requirements Are Different in Hawaii

Hawaii’s commercial market has unique challenges that impact what lenders look for:

• Older building stock
• Mixed-use zoning
• Leasehold properties
• High construction and insurance costs
• Strong warehouse and industrial demand
• Unique tourism-driven retail & hospitality markets
• Variations by island (Oahu ≠ Maui ≠ Big Island ≠ Kauai)

Because of these differences, traditional banks are often slow or conservative — especially for investors who want:

• Faster approvals
• Bridge funding
• Value-add acquisitions
• Non-stabilized assets
• Airbnb-adjacent commercial properties
• Tenant improvements
• Mixed-use buildings

Private commercial lenders solve these problems by focusing on asset-based underwriting, not bank-style borrower verification.

The REAL Commercial Loan Requirements in Hawaii (Private Lending Version)

Here are the actual requirements Hawaii investors need to meet in 2025.

Requirement #1 — Property Equity (Most Important)

Private commercial lenders approve deals based primarily on equity.

Typical Hawaii LTV Requirements:

• 65%–75% LTV for stabilized properties
• 60%–70% LTV for value-add or mixed-use
• 55%–65% LTV for hospitality, restaurant, or higher-risk assets

More equity = faster approvals + better pricing.

Example:

Commercial building in Honolulu:

• Purchase price: $1.5M
• Loan at 70% LTV: $1.05M
• Investor down payment: $450K

This approval could be done in 7–12 days with asset-based underwriting.

Requirement #2 — Net Operating Income (NOI) or Pro Forma

Unlike banks, private lenders evaluate:

• Current NOI (if stabilized)
• Pro forma NOI (if value-add or partially vacant)

They look at:

• Rent roll
• Existing leases
• Market rent potential
• Tenant mix
• Vacancy factor
• Operating expenses

NOI helps determine DSCR, rate tier, and max loan amount.

Requirement #3 — DSCR (Commercial-Level, More Flexible)

Commercial DSCR works differently from residential DSCR.

Private lenders allow:

• Lower DSCR
• Partial DSCR
• Pro forma DSCR
• Value-add DSCR assumptions
• Faster close with asset-forward underwriting

Typical Hawaii DSCR Requirements:

• 1.10–1.25+ for stabilized
• 1.00–1.10 for light value-add
• <1.00 allowed for heavy value-add with strong equity

Banks reject DSCR below 1.20.
Private lenders structure around it.

Requirement #4 — Basic Borrower Profile (Very Light)

Private commercial lenders require minimal personal documentation:

• Credit Score: 600–620+
• Valid ID or entity documents
• No major unresolved bankruptcies
• Business purpose certification

They do not require:

• Tax returns
• W-2s
• Pay stubs
• Debt-to-income ratios
• Global cash flow analysis

This is why commercial private lending is popular in Hawaii — especially among investors scaling portfolios.

Requirement #5 — Purchase Contract or Refinance Statement

Simple copies of:

• PSA for purchases
• Mortgage statements for refinance
• Payoff statements (if doing cash-out)

Private lenders do not require the lengthy bank disclosures.

Requirement #6 — Property Photos or Offering Memorandum

Lenders want to see the building’s:

• Condition
• Use type
• Tenant occupancy
• Exterior + interior
• Parking
• Mechanical equipment
• Roof condition (major in Hawaii weather)

If you have an OM from a broker, that makes approval even faster.

Requirement #7 — Appraisal or BPO (Fast-Track Options)

Private lenders accept:

• Commercial appraisal
• Commercial BPO (Broker Price Opinion)
• Drive-by valuation (case-by-case)
• Existing appraisal (if recent)

Appraisals are faster in Hawaii now, but private lenders can often:

Close before the assessment is fully completed if the deal is strong.

Banks will never do this.

Requirement #8 — Insurance (Critical in Hawaii)

Insurance affects underwriting more in Hawaii than most states.

Private lenders check:

• Hurricane insurance
• Flood zone status
• Lava zone maps (Big Island)
• Commercial liability
• Replacement costs

Insurance must be in place before funding, but underwriting is not slowed down because of it.

Requirement #9 — Clear Exit Strategy (Especially for Bridge Loans)

Private lenders want to know:

• Will you refinance?
• Will you stabilize the building?
• Will you lease up vacant units?
• Will you renovate and increase NOI?
• Will you resell within 12–24 months?

A strong exit strategy improves rate, LTV, and speed.

Example exit strategies:

• Stabilize mixed-use → refi
• Renovate warehouse → new long-term tenant
• Re-tenant Maui retail → sell or refi
• Improve NOI in Honolulu multifamily → long-term DSCR commercial loan