What Is Wholesale Commercial Lending?


You might have come across the term “wholesale commercial lending” during your hunt for a new commercial real estate loan for your business. Whether it’s your first time buying a home or building a real estate empire, you might be surprised by the variety of available home financing alternatives. Not only are there numerous mortgage types, but there are also numerous potential lenders, including one you may not have heard of before: wholesale lenders.

Individual home purchasers can benefit from wholesale lending by taking advantage of the lower prices offered by wholesale lenders. This article will explain wholesale lending in detail and help you decide if it is your best option.

Key Takeaways: Wholesale Banking

-Wholesale banking describes any banking services sold to large clients, like other banks, corporations, and government agencies.

-Services sold in wholesale banking operations include mergers and acquisitions, currency conversion, underwriting, and consulting.

-Wholesale banking is very different from retail banking, which serves large businesses and individuals

-The majority of banks offer traditional retail banking services as well as wholesale banking services

-The term “wholesale banking” also refers to the process of lending and borrowing between large institutional banks.

What Is Wholesale Commercial Lending?

Wholesale commercial lending makes large-scale loans to corporations and other organizations through intermediaries such as brokers or financial institutions. The loans, typically for large sums of money, fund business endeavors, including real estate developments and acquisitions.

Wholesale commercial lending is distinct from retail lending, including giving loans to customers directly. In wholesale lending, the middleman or broker represents the borrower and negotiates favorable terms on their behalf with the lender. Wholesale lenders typically have tight underwriting requirements and may require collateral, financial documents, and other assurances before granting a loan. 

What Is a Wholesale Commercial Loan?

For commercial purposes, a wholesale commercial loan is granted to a business, usually in significant sums. Wholesale loans are frequently supplied by financial organizations such as banks, credit unions, or other lenders to enterprises with significant financing needs or that require money for huge projects.

Wholesale commercial loans are often used to fund large-scale business operations such as the purchase of real estate, business development, or the takeover of another company. These loans may be secured or unsecured and come with various terms and conditions based on the needs of the borrower and the lender.

What Is Wholesale Banking?

Wholesale banking refers to providing financial services to substantial customers, including other banks, financial institutions, governmental organizations, multinational enterprises, and real estate developers. It contrasts with retail banking, which prioritizes serving individual customers and small businesses.

Currency conversion, working capital finance, significant trade transactions, mergers & acquisitions, consultancy, and underwriting are just a few services offered through wholesale banking.

Examples of Wholesale Banking?

The simplest way to think of wholesale banking is as a discount supermarket, similar to Costco, that deals in such big quantities that it can offer special prices or reduced costs per dollar. When major institutions or companies have a lot of assets or business transactions, it makes more sense to use wholesale banking services rather than retail banking services.

For instance, a company with several locations usually needs a wholesale banking solution for cash management. The best candidates for these services are technology businesses with satellite offices. Let’s assume that a SaaS (software-as-a-service) business has ten sales locations across the United States and that each of its 50 sales representatives uses a business credit card.

The SaaS company’s owners also demand that each sales office hold $1 million in cash reserves, for $10 million across the corporation. A corporation with this profile is too large for conventional retail banking. Instead, business owners might approach a bank and seek a corporate facility to house the company’s financial records.

Related article: What Commercial Real Estate Borrowers Should Know About Debt Funds

What Other Types of Commercial Lenders Are There?

Businesses can obtain finance from various types of commercial lenders. The following are some of the most prevalent categories of commercial lenders:

Credit unions: Credit unions are financial cooperatives owned by their members that provide various financial services, such as commercial loans. They frequently provide lower interest rates and more lenient terms than conventional banks.

Government-backed lenders: The government has many financing initiatives to assist small businesses in obtaining capital. For instance, the Small Business Administration (SBA) provides finance to companies that would not be eligible for conventional bank loans through several loan programs, such as the 7(a) loan program and the microloan program.

Non-bank lenders: Financial organizations that are not regular banks or credit unions are referred to as non-bank lenders. They include venture capitalists, private equity firms, and other specialist lenders. Non-bank lenders might be a practical choice for companies not eligible for traditional financing because they frequently have more lenient lending standards than conventional banks.

Online lenders: A more recent class of lenders offer commercial loans via online channels. They are a well-liked choice for firms looking for quick access to financing because they usually provide quicker approval times and simpler application processes than conventional lenders.


Wholesale commercial lending is a method in which lenders make loans to businesses and organizations through middlemen. It is a more streamlined and cost-effective method of corporate funding. It has its advantages, but it is advised for borrowers to carry out due diligence before choosing it.

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March 13, 2023