Loan Program Options

 

 

 

LOAN PROGRAMS

 

 

 

 

 

 

CONFORMING LOANS

 

 

3 Year Fixed - Conforming

Interest Rate Fixed initial 3 years, 30 year term, 30 year amortization, adjusts semi-annually starting in year 4, based off six month libor index, prepayment penalty, minimum credit score 640-650, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


5 Year Fixed - Conforming

Interest Rate Fixed initial 5 years, 30 year term, 30 year amortization, adjusts semi-annually starting in year 6, based off six month libor index, prepayment penalty, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


7 Year Fixed - Conforming

Interest Rate Fixed initial 7 years, 30 year term, 30 year amortization, adjusts semi-annually starting in year 8, based off six month libor index, prepayment penalty, minimum credit score 640-650, max LTV 75%,office, retail, industrial, multifamily, 1-4 units investment, no land


10 Year Fixed - Conforming

Interest Rate Fixed initial 10 years, 30 year term, adjusts semi-annually starting in year 11, based off six month libor index, prepayment penalty, minimum credit score 640-650, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


15 Year Fixed - Conforming

Rate Fixed 15 years, 15 year term, 15 year amortization, prepayment penalty, minimum credit score 640-650, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


Fix & Flip Line of Credit


The Fix & Flip Line of Credit is for experienced investors with 1+ completed flip projects in the last 24 months, and credit scores above 620. Max credit line is equal to 5 times borrower liquid cash in bank which an be used for multiple projects


$50,000 - $3,000,000


9 month term with two 3 month options to extend


Funding up to 90% of the purchase price


Funding up to 95% of rehab costs, max 75% ARV


Minimum 3 months interest payments


620+ Credit


Full-Doc Loan


SFR, 2-4 Units, Condos, Townhomes & Multifamily up to 20 Units. Must be non-owner occupied.


Fix & Flip Single Loan


The Fix & Flip Single Loan is for inexperienced or novice investors no completed flip projects in the last 24 months, and credit scores above 620.


$50,000 - $1,000,000


9 month term with two 3 month options to extend


Funding up to 85% of the purchase price


Funding up to 85% of rehab costs, max 70% ARV


Minimum 3 months interest payments


620+ Credit


Full-Doc Loan


SFR, 2-4 Units, Condos, Townhomes & Multifamily up to 20 Units. Must be non-owner occupied.


 New Construction


Ground-up construction loan for experienced developers and investors with and credit scores above 620.


$150,000 - $3,000,000


12 month term with up to three 3 month options to extend


Funding up to 75% of the purchase price / land value


Funding up to 95% of the construction costs, max 75% ARV


Minimum 3 months interest payments


620+ Credit


Full-Doc Loan


SFR, 2-4 Units, Condos, Townhomes & Multifamily up to 20 Units. Must be non-owner occupied.

 

 

NON-CONFORMING / HARD MONEY / BRIDGE

 

 

 1 Year Fixed Interest Only - Non-Conforming

Interest Rate Fixed for 1 year, interest only payments, loan due at end of one year, no prepayment penalty, no minimum credit score, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


2 Year Fixed Interest Only - Non-Conforming

Interest Rate Fixed for 2 years, interest only payments, loan due at end of year two, no prepayment penalty, no minimum credit score, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


3 Year Fixed Interest Only - Non-Conforming

Interest Rate Fixed for 3 years, interest only payments, loan due at end of year three, no prepayment penalty, no minimum credit score, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


3 Year Fixed P&I - Non-Conforming

Interest Rate Fixed 3 years, principal and interest payments, 30 year amortization, loan due end of 30 years, semi-annual adjustment starting in year 4, prepayment penalty, 650 minimum credit score, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


8 Year Fixed P&I - Non-Conforming

Interest Rate Fixed 8 years, principal and interest payments, 30 year amortization, loan due end of 30 years, semi-annual adjustment starting in year 9, prepayment penalty, 650 minimum credit score, max LTV 75%, office, retail, industrial, multifamily, 1-4 units investment, no land


Fix & Flip NO DOC Loan


$50,000 - $10,000,000


12 month term with two 6 month options to extend


Funding up to 75% of the purchase price


Minimum 3 months interest payments


No Minimum Credit


Limited Documents Required


SFR, 2-4 Units, Condos, Townhomes & Multifamily. Must be non-owner occupied.

 

 

SBA Loans

 

 

SBA 7(a) Loan

Purchase, Refinance, New Construction


The SBA 7a loan program is a government-sponsored commercial real estate loan program that helps small businesses acquire the commercial real estate that their companies need to grow.  As a result of the sub-prime crisis and the resulting credit crunch, banks across the United States have greatly reduced their commercial real estate lending.  The Federal government is desperate to pump money back out into the economy.  One of the vehicles that they are aggressively using is the SBA loan program.

The Small Business Administration (SBA) does not actually make small business loans.  Instead, the SBA merely guarantees up to 90% of the principal of certain business loans made by banks and other specialized SBA lenders.  Two of the most popular SBA loan programs are the CDC/504 program and the SBA 7(a) program.

Under the SBA 7(a) program, an SBA lender will make a commercial real estate loan that is fully-amortized over 20 or 25 years.  Right off the bat, this is a very attractive program because most commercial real estate loans have a loan term of only five to ten years.

The SBA will then guarantee up to 90% of this small business loan for the bank, and the bank will typically be able to sell the loan off in the secondary market at a handsome premium - often five to seven percent of the loan amount.  A loan or a bond sells for a premium when it fetches more than the face amount of the debt, usually because the interest rate is higher than the market.

SBA 7(a) loans are written as adjustable mortgage loans tied to prime.  The spreads will vary from a low of 1.5% over prime to a maximum of 2.75% over prime.  The loan fee depends on the size of the loan and the type of collateral (equipment versus commercial real estate), but the fees usually run between 2 and 3 points.

Small business owners can borrow between $50,000 and $2 million using the SBA 7(a) program.

The really big advantage of the SBA 7(a) program is that the owners of existing small businesses can often get loans up to 90% of the purchase price in order to buy commercial real estate for their businesses.  Commercial real estate loans up to 90% loan-to-value are pretty terrific today, especially when you consider that many conventional commercial real estate lenders have cut their loan-to-value ratios down from 75% to just 58% to 63% LTV.

In order to qualify for an SBA 7(a) loan, the business owner must occupy, or intend to occupy, at least 51% of the commercial real estate being purchased.  The commercial real estate cannot have a residential component.  For example, if the target property consisted of an old home and a large warehouse, it probably could NOT be financed using SBA financing.

SBA 7(a) loans must be fully-collateralized.  In other words, the SBA lender is likely to blanket all of the borrower's inventory, receivables and equipment.  This makes it difficult for the business to obtain a business line of credit from a bank.  In addition, the SBA lender will usually blanket the personal residence of the borrower.

Borrowers can also obtain SBA 7(a) loans for working capital, to purchase equipment or to acquire businesses or franchises.  The required down payments, however, are larger.  Start-up borrowers will usually be required to put at least 20% down.  More often they will be required to put 30% down.


SBA 504 Loans


The SBA 504 loan program is the best way to get a fixed rate SBA loan.  The SBA 7a loan program is a floating rate commercial loan, tied to prime with no floor or ceiling.  Yikes. SBA 504 loans are a little complicated to understand, but they are super-easy to get.  The program consists of a conventional first mortgage, with an SBA-guaranteed second mortgage riding piggyback on top.  The conventional first mortgage will typically come from a bank.  It will have a fixed rate for the first five to ten years.  If the loan is only fixed for the first five years, it will typically readjust once at the end of five years and then be fixed for the remaining five years.  The conventional first mortgage loan will usually be amortized over 25 years, and it will balloon after ten years. The piggyback second mortgage will come from a local Community Development Corporation (CDC), and it will be guaranteed by the Small Business Administration.  By the way, the word “piggyback” is redundant.  A second mortgage is always subordinate to a first mortgage, but my point here is that the first mortgage and the second mortgage are recorded on the same day, just minutes apart.

A Community Development Corporation (CDC) is a non-profit organization consisting of a small group of people trying to bring businesses and jobs into a city.  It frequently includes the Mayor, the City Treasurer, and the head of the local Chamber of Commerce.  They often hand out tax breaks to companies that move plants to their city.  Now you, as a borrower or broker, never have to worry about the CDC.  Your SBA 504 lender will find them and bring them to the table.  This piggyback second mortgage is fully-amortized over 20 years, and it enjoys a low-low fixed rate for the entire twenty year term!  Why is the interest rate so low?  Because it is guaranteed by the SBA, a department of the Federal government.  You will often see that the fixed interest rate on the conventional first mortgage is pretty low, say 5.5%, but the rate on second mortgage, say 5.25%, is even lower, and that low interest rate is fixed for the entire 20-year term.  The borrower’s blended rate in this example is around 5.4%, a wonderful rate.  The SBA 504 loan program is terrific. The conventional first mortgage cannot exceed 5/9th’s of the approved financing.  The SBA-guaranteed second mortgage makes up the remaining 4/9th’s of the approved financing.  The example below will help you to understand. Example: Bob’s Trucking Company, a seven-year-old company, wants to buy a depot to house and repair its trucks.  The purchase price of the depot building is $1,000,000.   Since the company is older than three-years-old, the company qualifies for 90% LTV financing.  In other words, they only have to put down 10% of the purchase price.    By the way, if the company was younger than three-years-old, it would only qualify for 70% LTV financing.  Bob’s Trucking applies just once to 504 Loans Are Us, Inc., a private finance company that specializes in SBA 504 loans.  The specialty finance company arranges for First Neighborhood Bank to make a conventional first mortgage loan of $500,000 that is fixed at 5.875% for the first five years.  The loan is amortized over 25 years, and it has a balloon payment after 10 years.  The specialty finance company also arranges for Neighborhood Community Development Corporation, the business development arm of the City of Neighborhood, to make a 20-year, fully-amortized, fixed rate loan of $400,000 at just 5.75%.  The specialty finance company gets the second mortgage guaranteed by the SBA and arranges to sell the second mortgage in the secondary market to an investor who loves the fact that the loan is guaranteed by the Federal government.  Bob’s Trucking Company doesn’t care about all of these behind-the-scenes machinations.  They just applied once to the specialty finance company, and the 504 loan company took care of everything.  Now they are moving into their $1 million new facility, and they only had to put down $100,000 (10%).  Wow.  Best of all, they will now enjoy a low-low fixed rate loan. You can find scores of SBA 504 lenders by submitting your commercial loan application through C-Loans.  Just click the Apply Now button above, and be sure to click the “I want an SBA loan” checkbox on your application.


PROPERTY TYPES FINANCED

Self-Storage Facilities

Single-Family Flip Projects

Land Development

Warehouse

Equipment/Machinery

Mobile Home Parks

Raw Land

Resorts

Restaurants

Mixed Use

Convenience Stores

Gas Stations

Medical

Gold Mines

Car Wash

Hospitality

Hotel/Motel

Tavern

New Residential Development

Pawn Shops

Golf Courses

Marinas

Auto Body Repair

Industrial

Owner Occupied Business

Special Purpose Properties

Conversions