Commercial Loan News

Commercial Real Estate Loans- Still Closing! Overview of what the most viable loan programs in the business. 

Commercial Mortgage Brokers,Argument ForA lengthy discussion of the benefits of working with a commercial mortgage broker. 

Commercial Construction Loans – Abandoned Deals  Commercial construction loans have taken perhaps the hardest “beating” in the current credit crisis.  Bottom line, banks do not want too or cannot take on the additional risks that come with construction loans. 

Hotel Loans -All is Not Lost Hotel loans and hotel financing has become much more limited in the last six months, but there still are options out there.  Here are a few things to consider on increasing your chances of getting your hotel loan closed.

Comercial Real Estate Finance  San Diego- After the  2008 4^th quarter of shock and awe in the world’s capital markets, lenders appear to have found their footing and liquidity has returned to the commercial real estate financing market. Credit for multifamily, office, industrial and retail properties is available. Most life insurance companies in attendance in San Diego for the Commercial Real Estate Finance convention on February 8,-11, 2009, have budgeted billions to deploy into the commercial real estate markets in 2009. While several previously large market participants remain on the sidelines, liquidity remains available. Lenders surveyed indicated loan pricing will be generally be higher and loan proceeds lower in 2009. 

Commercial mortgage training, fee agreements, spreadsheets, etc.

"Screen Your Commercial Loans" (published in Scotsman Guide 8/07)
Brokering commercial mortgages has its perks.  It is generally viewed as a prestigious profession and brokers tend to deal with highly sophisticated borrowers on most transactions.  However residential brokers should not fool themselves that entering this business will be a cake-wake. 

Commercial Mortgage Refinancing   There are many pitfalls that can eliminate or create problems on a commercial mortgage refinance.  Whether or not your particular situation will qualify, depends on several factors.  Understanding your potential loans strengths and weaknesses will save you time and ensure your best chance of a successful commercial refinance.  

Commercial Refinance There are several issues that can hold up your commercial mortgage refinance.  As the credit crisis deepens many of the typical issues have been exasperated as banks and lenders scramble to protect their own balance sheets and loan turn downs may be just a result of the banks issues and nothing to do with the borrowers commercial mortgage refinance, for example.  

Commercial Loan Fee Agreement When is the best time to ask your borrower to sign your commercial mortgage fee agreement?  There is some debate over this.    Though, all seem to agree that it should be before the borrower sees a  term sheets that you have collected.  This may seem a small detail, it’s one of those little ones that can have a big impact on your wallet.

Loans for gas stations  Gas station loans can be “tricky”.  Environmental concerns, slim profit margins, credit card fees, fuel theft often causes many banks and lenders to shy away or better said, ignore gas station loan opportunities entirely. 

90% Commercial Loans Straight 90% financing for investors is very rare.  6 months to one year ago there were a few lenders that offered 90% financing but there rates where normally 1-3% higher than typical interest rates at 80% financing.  The way the investors still can structure 90% financing on investment properties is to have the seller hold a second lien position loan.  Yes this might be obvious for you, but you should not just assume this is easy to get done. 

Loans for Restaurants One of the most common options is the SBA loans.  Although not perfect, they can be a viable option. For one, they are still reliable and are still closing.  Two, they do offer some of the lowest fixed rates available and the highest level of financing for restaurant loans.

Loans for Hotels Found a hotel that you plan on purchasing and are now examining options for your hotel loan?  You will quickly discover that unless you’re planning on putting 35% down or more (and in the form of cash, not equity from your house for example), that the hotel has a strong flag and great historical financials your only option will be either the SBA 504 or the SBA 7a programs.

Franchise Restaurant Loans Many borrowers are surprised to learn that they may actually have more options on restaurant loan options for free standing, non franchise properties than franchise restaurants.  With conventional financing and SBA loans it’s almost a no brainer to go the franchise route.

Loans For Car Washes Looking for options on car wash loans?  You’ll probably find that you have limited options as most of the national banks and lenders that use to lend within this building type have pulled out due to the “credit crisis”.  Car wash facilities that are strictly self serve and located in smaller towns will have additional challenges finding decent cash wash loan options.

Restaurant Loans and SBA Examining options on a restaurant loan? Due to the current credit crisis you might want to take a look at the SBA  programs first, as they are currently the most reliable comercial loan programs.  Not only do they have the highest probability of closing, they also boast some of the lowest rates, highest leverage, and longest fixed rate financing around for restaurants.

Commercial Loan Interest Rates A list of commercial loan rates and indexes commonly used in this industry are below, for your reference.  Note that on each individual index, you can click on, to see a historical summary and chart, broken down by either week, month, year or over a three year period.  By taking a 3 year look at an index, you can get a better feel for its volatility.  This can be especially important if you are considering an adjustable rate loan and or a 1 to 3 year fixed program. 

Common SBA Loan Questions Business owners have heard much about the SBA commercial mortgage programs over the years and unfortunately much of the rumors are negative.  The SBA has changed dramatically and most of the bad press is now without merit.  Here are some of the common questions we field on a daily basis.  All SBA lenders are the same, why work someone that isn’t local?Program guidelines and criteria vary from lender to lender.

Business Mortgages Entrepreneurs that have been through the process of purchasing a commercial property for their business, understand the complexity of the process.  Securing financing is just one part of the equation – which in and of itself is cumbersome and borrowers literally have 100’s of loan option to choose from.

Commercial Subprime Loans Although there is really no “commercial subprime mortgage” sector like there was in residential, there are 3 types of commercial mortgages programs that are designed for borrowers with difficult situations.  These loan programs include: 1. Stated income commercial loans 2 . Commercial hard money  3. SBA 7a loans.

Business Debt Consolidation During these difficult times business owners search for any angle on how to reduce costs.  Consolidating business debt into commercial mortgages can be a “clean” and relatively easy way to increase cash flow, but there is risk and a cost to do this.

SBA Fixed Rate Loans Many business owner and other professionals in the commercial mortgage industry are surprised to learn that the SBA does allow refinances through the 7a program and their rate does not have to float. 

Underwriting Commercial Refinances Property owners conducting a commercial mortgage refinance are often surprised by the new range of loan programs that have become available in the last 5 years.  Programs such as commercial 30 year fixed, second lien position loans, etc are turning heads.  However the process is still expensive and time consuming and underwriting is still tied to the fundamentals - loan to value, debt service coverage ratios, global income, property analysis, and credit worthiness of the borrower.

Owner Occupied Commercial Loans Business owners currently considering a commercial mortgage refinance, will find that  many of the rules have changed.   As the economy and so called credit crisis continue, small balance lenders (loans between $300,000 - $5 mil) are scrambling to reset their guidelines while not denying every loan that comes across their desk.

Commercial Mortgage Decline Two of the more common reasons for commercial mortgage decline are property value and or concern over net income.  As capital sources continue to tighten commercial  underwriting standards, borrowers feel the pinch in lower loan to values and higher debt coverage ratios.  Transactions that were tight, but doable 3-6 months ago are, in many cases, simply not fundable today.

Commercail Second Mortgages  Second lien position loans have historically been a very rare financing tool reserved for extremely strong borrowers, divided into two general segments.  1.  Owner occupant property owners with outstanding business finances.  2. Large sophisticated commercial real estate developments with minimum loan amounts beginning at $5 million.  Typical project size would be $15 million plus. 

Commercial Mortgage Refinances - Issues There are several potential issues that can delay or “kill” your commercial mortgage refinance.  Some of which will just tack on a few days or weeks to the process while others will completely eliminate the lenders interest in funding your loan.  A prime example of this is value and environmental issues.

Hard Money Commercial Loans Commercial real estate loans, private money loans also know as commercial hard money and or bridge loans are becoming more prevalent as borrowers enjoy less red tape, quicker closings and more “common sense” underwriting than conventional financing provides.  Typically though, borrowers still relay on this type of financing as an option when conventional sources are not available.

Commercial Hard Money Loans vs Stated Income Many borrowers that have “hair” on their potential commercial loan are forced to look at both the commercial stated income loan or the commercial hard money loan.  Although both loans fit within the “subprime” category both fall into different niches.  Neither option is ideal for the borrower, but both can be a viable option for borrowers that have been declined by traditional banks