In Q2 2026, banks, credit unions, and insurance companies offered commercial real estate loans at an average of 6.47%. Private lenders offered an average of 9.76%.
That is a 329 basis point premium. On a $10 million loan, it is roughly $329,000 a year in extra interest. No rational sponsor pays that for nothing.
And yet, in our Q2 2026 CRE Lending Report, built from actual term sheets submitted by more than 700 lenders on the Gumption platform, private lenders kept winning deals. Not distressed deals. Not desperate borrowers. Experienced sponsors with bank offers in hand who read the numbers and chose the expensive option.
Here is why.
The premium is not a markup. It is a different product.
The 329 bps gap does not mean private lenders overcharge for the same loan. It means they underwrite loans that banks will not touch: transitional assets, higher leverage, compressed timelines. When a deal fits inside a bank's credit box, the bank wins on price almost every time. The premium exists because private credit operates outside that box.
Ten years ago, "private money" meant hard money: high teens pricing for special situations and fast closes. That market has now been expanded. Today's private credit funds fill major voids in CRE debt and equity capital markets, and here is what surprises even seasoned CRE professionals: in some cases private lenders now price on par with their bank counterparts, or beat them. When their rates are higher, they earn the spread elsewhere. Here are several key points from our Q2 data that show what sponsors are actually buying.
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Speed that banks cannot match. Debt funds use streamlined credit committees and alternative underwriting. Some fund without an appraisal. Others run white-glove servicing and draw processes; one lending partner on our platform boasts that its in-house construction management team funds draws within 48 hours. A bank draw can take weeks. For a sponsor carrying a construction crew, that difference is not convenience. It is money.
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Underwriting that prices experience, not tax returns. Debt funds scrutinize sponsors, but they weigh track record over personal balance sheets. A developer with ten successful projects and a thin liquidity statement is a bad bank borrower and a good debt fund borrower.
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Leverage banks won't offer. Private credit funds make up for it not just with pricing, but with structure: stretch senior, mezz, even preferred equity layered together to get proceeds where banks can't go. For quality build-to-suit projects with national tenants, some funds on our platform can piece together 90 to 100% financing across the stack.
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Structure. Some debt funds offer pari passu funding: the borrower injects equity in parallel with construction draws instead of all of it upfront. That preserves liquidity for the next deal. No bank construction loan works that way.
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Recourse. Banks typically require personal guarantees, especially on construction. Private lenders are more likely to offer non-recourse. A real trade sponsor weighs independently of the rate.
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Relationship and deposit requirements. Banks frequently want a deposit relationship, cross-collateralization, or other relationship banking as an implicit part of pricing. Private lenders are transactional, meaning no banking relationship is required. That's a real reason some sponsors choose private, even at similar pricing.
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Reporting burden. Banks require more frequent, more standardized financial reporting (covenant compliance certificates, etc.). Private lenders' reporting is often lighter, a soft cost that doesn't show up in bps but shows up in the sponsor's ops time.
The premium is also shrinking where you least expect it
The 329 bps figure is an average across everything private lenders do, including the transitional and high-leverage deals that inflate it. On quality assets, some private credit funds are competing with banks.
For financing on stabilized, bridge, and lease-up multifamily, we consistently see private lenders quoting 6.0% to 7.5%. The lowest private rate on our platform this year was 6.25%, on a stabilized 8-unit multifamily asset. That is bank territory, without the bank timeline.
What this looks like on a real deal
In Q2, Florida sponsors came to us for construction debt on a 31-unit multifamily project in South Florida. They had ample liquidity and equity. They also had a bank quote in the low 6s.
They took a private loan at 8.99% instead: $5.66 million, 18 months, interest-only, 73% loan-to-cost, 2% lender fee. Roughly 300 bps over their bank option, by choice.
What they bought: flexibility on day-one disbursements and a draw process that moves at construction speed rather than committee speed. The sponsors said it plainly. They were willing to pay more for an experience in line with their goals. The premium was not a cost of weakness. It was a line item for execution.
How to know which side of the 329 bps you belong on
The wrong way to choose a lender type is ideology. The right way is arithmetic.
Take the bank rate and the private rate. Price the difference in annual dollars. Then price what the private structure gives you: months saved on the timeline, equity you keep for the next acquisition, draws that never stall your GC. If the second number is bigger, pay the premium. If it is not, take the bank loan and enjoy your 6.47%.
The only way to run that arithmetic honestly is to see both sets of terms on your actual deal. That is what the platform is for. Sponsors on Gumption receive an average of four competing term sheets per deal within a week, from banks, credit unions, life companies, and private lenders side by side. Submit your deal and compare, or dig into the full dataset in the Q2 2026 CRE Lending Report.
Data source: Gumption Q2 2026 CRE Lending Report, drawn from term sheets submitted by 700+ lenders on deals totaling $642.8M in active pipeline. Published quarterly.