The current economic climate might seem daunting, but within this tricky and volatile economy lies a surplus of unique opportunities just waiting for you to take full advantage of. A strategically-timed business loan can help you capitalize on each opportunity you choose to pursue before your competitors do–while they’re still thinkin’ about what to do and how to do it.
Whether it’s expanding your product line, purchasing new equipment or opening a new location, the right loan can provide the leverage you need to seize these golden moments, which just might require additional capital resources. That’s why we’re gonna show you how to get a business loan right the heck now!
Scaling your operations can be an overwhelming process without the funds you need to succeed. A business loan can provide you and your Company with the necessary capital to invest in additional staff, technology upgrades, increased inventory or anything else you need to increase revenue and boost your bottom line. Getting a business loan empowers you to scale your business effectively and meet growing demands without financial strain or at least minimizing it.
Unexpected expenses can throw even the most meticulous business plans into disarray. From sudden equipment failures to unforeseen regulatory fees, a well-timed loan can act as a buffer, ensuring your business continues to run smoothly through local, national and global economic peaks and valleys. There’s no need to stumble over hurdles when you have a financial safety net in place.
Timely opportunities rarely knock twice. Whether it’s a limited-time supplier discount or an immediate market gap, having ready access to funds can make all the difference. Quick access to business loans and commercial credit lines gives you the agility needed to adapt and pivot, ensuring you don’t miss out on lucrative prospects.
Cash flow is the lifeblood of any business, and disruptions can be fatal. A business finance loan can help you bridge the gap during slow seasons or while waiting for Clients to pay your accounts receivable. Maintaining a healthy cash flow ensures that your day-to-day operations run without a hitch, and you can focus on growth rather than just survival.
What Type of Business Loan Do You Need?
Choosing the right business loan isn’t a one-size-fits-all situation. You need to consider your specific business needs and financial situation. Are you looking to expand, manage day-to-day operations, or purchase new equipment? Each goal could point you towards a different kind of loan.
Several factors can influence your choice of loan. These include how much money you need, what you intend to use it for, and how quickly you need it. Another crucial determining factor is how long you’ve been in business. It’s vital to understand these elements as they will affect your loan approval chances and the terms you receive. For instance, a higher credit score often leads to better rates and terms.
Various Types of Business Loans: A Comprehensive Look
Secured Business Lines of Credit offer you stability via collateralization. This could be real estate, inventory, or other assets. While it provides peace of mind through lower interest rates, the risk is forfeiting those assets if you default. Weigh the pros and cons carefully before committing to this option.
Unsecured Business Credit Lines are all about flexibility without requiring collateral. They’re ideal for managing short-term working capital fluctuations to mitigate potential negative effects upon your cash flow or providing you with the financial flexibility to capitalize upon sudden opportunities without missing a beat. However, this freedom comes at a cost. Expect higher interest rates and stricter credit approval criteria.
SBA Loans could be a viable option if your financial house is in order and you have a bit more time to spare. Since SBA loan criteria tends to relatively stringent and document-intensive, here are our Business Loan Funding Partners’ typical SBA Loan basic lending parameters and particulars:
SBA Loan Unique Benefits
- Maximum Loan Amount: $5 Million
- Loan Approvals within 1-5 Business Days; Funding within 4-10 Weeks
- SBA 7a: 10 Year Term; SBA 504: 25 Year Term
- Interest Rate: Prime + 1% – 2.75%
- Monthly Payments
- No Prepayment Penalty
- Reports to Business Credit Bureaus
Qualifications for SBA Loans
- 2+ Years Time in Business
- 660+ FICO Score
- $40,000+ Deposited Monthly in your Business Bank Account or $500,000+ in Annual Sales
- No Bankruptcies, Liens or Foreclosures within in the past 3 years
Business Term Loans enable you to borrow a lump sum, which is ideal for funding substantial projects like expanding your premises or major equipment purchases. Usually, these loans come with fixed interest rates and repayment terms, offering predictability. Keep in mind that you must commit to longer repayment periods.
Revenue-Based Financing ties repayment to your business performance, making it a flexible choice for revenue-generating companies. Instead of fixed monthly payments, you’ll pay a percentage of your monthly revenue. This can ease financial strain during slower periods but also means higher costs during peak times.
Equipment Loans enable you to finance new assets without draining your cash reserves. The equipment itself often serves as collateral, making these loans easier to secure. They can help upgrade your machinery, vehicles, or other necessary tools. Just be aware of depreciation and the loan’s term in relation to the equipment’s useful life.
Subordinated Debt is typically used for larger-scale funding needs and sits lower in priority compared to other debts if liquidation happens. While it has higher risks and costs, it can be a crucial piece in complex financing strategies. This business finance strategy (also known as a 2nd mortgage) is often utilized by more mature businesses looking to meet extensive financial requirements.
So, where do we go from here? Provided you are ready to take action to get a business loan right the heck now, check out our Business Funding Partner to obtain the funding you need to take your business to the next level.
Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
Alright, let’s break down hard money construction loans. These are short-term loans designed for the construction of commercial buildings and residential real estate for business purposes, often used when traditional financing is too slow or nonexistent.
So, what’s the deal with these loans? Well, they’re different from your typical bank loans in a few ways. For starters, they’re usually provided by private investors or companies rather than banks. This means the approval process is typically quicker and less stringent, focusing more on the quick liquidation value of your real estate collateral than on credit based factors like your FICO score.
One of the primary benefits of a hard money construction loan is speed of approval and funding. If you’re in a pinch to start a project, these loans can be a lifesaver. However, it’s a double-edged sword. The interest rates on hard money loans are usually higher than traditional loans due to the increased risk that hard money construction lenders must shoulder, whether that risk is real or perceived.
On the flip side, the flexibility can be a major plus for you and your construction/development team. Borrowers often use them to fund their commercial construction projects or to do “buy, fix & flip’ deals on residential properties. If traditional banks are turning you down or dragging their feet, a hard money construction loan just might be your best bet. But remember, the faster the loan, the higher the stakes. So, crucial to weigh the pros and cons meticulously.
In essence, hard money construction loans can be a boon if you’re up against the clock or need financing where banks won’t venture. Just be sure you’re fully aware of the higher costs and you have a solid executable exit strategy.
When to Use Commercial Hard Money Construction Loans
Commercial hard money construction loans shine in certain scenarios where traditional financing falls short–specifically when your bank says “no” or they simply can’t fund your project fast enough for you to achieve your project funding objectives. Knowing when to use these loans can mean the difference between a stalled project and a successful one.
Commercial development projects often benefit from the flexibility and speed of hard money loans. Think about real estate developers with a keen eye for prime commercial spots. When a golden opportunity materializes, but traditional financing just isn’t swift enough, commercial hard money hard money lenders can step in to seal the deal quickly. Time-sensitive projects like these can’t afford the lengthy approval process of banks.
For commercial purpose residential projects, hard money construction loans can also be a game-changer. Consider scenarios like flipping houses. If you spot a property with massive potential but you need quick funds to snap it up before your competitors do, a hard money loan can provide you with the necessary liquidity to get your deal done with maximum speed and efficiency. These loans are also helpful when dealing with problematic properties that banks tend to shy away from due to their condition or other risk factors.
The key advantage here is speed. With hard money loans, you get your hands on the funding quickly, allowing you to move fast on lucrative opportunities. They’re especially useful within competitive markets where delays can mean losing out.
But with great power comes tremendous responsibility. Higher interest rates mean these loans aren’t cheap, so it’s vital to have a clear and realistic repayment plan. Know your project timelines and your strategy to turn a profit inside out to ensure you don’t get left high and dry. In the right situations, these loans can be the game-changer you need to jump-start your project.
The Application Process for Hard Money Construction Loans
Securing a hard money construction loan is straightforward if you know what lenders are looking for. Let’s break down the steps involved in getting your hands on one of these loans.
First, research potential commercial hard money construction lenders. Unlike traditional banks, hard money lenders are often private investors or firms, so their loan term and conditions vary widely. Make sure to compare a few options to ensure you’re getting the best deal.
Next, prepare your documentation. Even though hard money loans are less strict than bank loans, you’ll still need to provide certain key documents. This typically includes details about the property, a clear project plan, and your own financial information. Lenders want to see that you’ve done your homework, have a sufficient track record and have a solid plan in place.
What are the eligibility criteria? Generally, commercial hard money construction lenders tend to focus more on the strength of your collateral than on your credit. This can be a major advantage if your credit history isn’t perfect but the property you’re looking to finance is well located and has substantially more value than the loan amount you seek. However, some commercial hard money lenders may still want to see proof of income or other your financial wherewithal and stability.
Then comes the property appraisal. Lenders will require an appraisal to confirm the property’s value “as-is”, “as-completed” and “as-stabilized”. This helps them gauge the risk involved in lending to you. Be prepared for this part; having a well-documented property can streamline your process. But remember, as a general rule: the Lender orders the appraisal and you pay for it, So, there’s really no need for you to order and pay for your own appraisal prior to approaching any commercial lender.
Plus, be prepared to answer questions from commercial hard money construction lenders like:
- Is there any current debt on the Subject Property; if so, what’s the payoff amount?
- What’s your track record / experience level as Principal Borrower / Personal Guarantor building or renovating properties of this type and magnitude?
- What sorta skeletons might lenders find when they run a background check on you?
Finally, review the loan terms carefully. Hard money loans can have higher interest rates and shorter repayment periods compared to traditional loans. Ensure you understand the terms and conditions thoroughly before signing anything. It’s a good idea to consult with a financial advisor to make sure this loan aligns with your long-term goals.
Tips for Managing Hard Money Construction Loans Effectively
In order to avoid common pitfalls, first of all, stay organized. Keep track of all your documents, payments, and progress reports. Use project management software if it helps. Clear records will keep you on top of your repayment schedule and ensure you’re meeting milestones.
Next, control your budget tightly. Hard money loans come with higher interest rates, so every dollar counts. Get multiple quotes for materials and labor to ensure you’re getting the best deals. Make sure there’s a buffer in your budget to handle unexpected expenses without derailing your project.
Communication is key. Maintain regular updates with your lender. If there are any changes or delays, let them know immediately. Transparent communication can help you renegotiate terms if needed, and shows the lender you’re on top of things.
The exit strategy is your lifeline. From day one, have a clear plan on how you’ll pay back the loan. Whether it’s selling the property, refinancing upon completion, certificate of occupancy, stabilization, etc, know your exit strategy inside out. Without a solid plan, you could find yourself in financial trouble.
Also, it’s wise to seek expert advice. Whether it’s a financial advisor a real estate consultant, or a commercial real estate attorney, getting a second or multiple opinions from experienced professionals can provide insights you might have overlooked. They can help you spot red flags early and guide you towards better decisions. Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
Commercial real estate bridge loans – they’re quick, temporary financial lifelines within the commercial real estate world which empower you to fund your deals and get you from point A to B when time is of the essence and you absolutely positively need to close your loan quickly without the mounds of documentation, stringent requirements and red tape of conventional lenders. Typically used when there’s a gap between buying a property and securing long-term financing, these loans can be your lifesaver for short-term needs.
Unlike traditional commercial real estate loans that are often more rigid with stringent requirements, bridge loans are relatively flexible. You usually get them for their speed and ease when you’d rather not jump through hoops to get the cash you need. They are particularly handy when you’re waiting for your current property to sell or your long-term loan to process, but you need funds right the heck now.
Let’s break down some of the key characteristics. Loan size can vary widely depending on the deal – we’re talking anywhere from a few hundred thousand dollars to millions. Lien position is another critical element. Generally, commercial real estate bridge lenders take first lien position, meaning they’re the primary loan on the property, which gives lenders more security if you default.
Loan-to-value, or LTV, is a ratio that compares the loan amount to the value of the property. For commercial bridge loans, an LTV around 60-75% is common. It balances the risk for lenders while providing enough funds for you as the Principal Borrower to maneuver swiftly as needed. The goal here is to have enough financial elbow room without taking on excessive risk.
Commercial Real Estate Bridge Loan Terms, Rates and Fees
When it comes to bridge loans, terms generally run between 6 to 36 months. The idea is to provide short-term financing that you’re expected to replace with more permanent funding, like a commercial mortgage refinance or property sale, pretty quickly.
Closing time-frames are another big plus. With bridge loans, you’re not jumping through nearly as many hoops as you would with a conventional loan. It means faster approvals and a smoother path to closing, which can be a lifesaver when you’re in a time crunch.
Interest rates for bridge loans are typically higher than those for conventional long-term loans; there’s a pretty wide range varying from about 7% to around 15% since you’re looking at rates that reflect the loan’s short term nature and relatively higher risk. Commercial real estate bridge lenders charge these rates because they’re taking on a considerably more uncertainty than conventional lenders take on for longer-term loans on stabilized properties.
Since the vast majority of commercial real estate bridge lenders charge upfront fees, that’s a reality of life for which you should prepare and perhaps even brace yourself for. You might encounter application fees, appraisal fees, and possibly even origination fees. While these can add to your immediate costs, they can be necessary for getting that quick access to funds.
Here at Commercial Real Estate Loans USA, for commercial real estate bridge loans between $2 and $15 million collateralized by sufficiently cash flowing properties nationwide, interest rates are currently 6.99-8.99%. Plus, you can close your loan within 10-20 days and pay no upfront fees @ all.
Advantages and Practical Considerations
Speed is the name of the game with commercial real estate bridge loans. Traditional commercial mortgage lenders can and do drag their feet, taking months to process. On the other hand, bridge loans across the board are designed for rapid execution. In some cases, you can secure funding within a week, providing the liquidity you need without getting bogged down by red tape.
Lending locations and property types can be quite diverse. These loans can be applied to a range of commercial properties, including office buildings, retail spaces, and more. It offers a degree of flexibility that you won’t find with more specialized financing options.
Practical considerations are equally important. When using bridge loans, always assess the lender’s requirements and your ability to meet them promptly. Each lender might have different standards for credit scores, net worth, and property conditions, so make sure you’re clear on their specific lending parameters before you dive in.
A well-defined exit strategy is crucial. Lenders will want to know your plan for paying off the loan promptly. This could be through selling the property, refinancing with a long-term loan, or using other funds. Without a solid exit strategy, your loan approval process will likely hit some roadblocks.
Real-life scenarios? Think about businesses that need to relocate quickly, property investors snapping up a great deal, or owners looking to renovate while waiting for long-term financing. These loans fit perfectly into those kinds of plans, offering tactical financial solutions while keeping your broader investment strategy intact.
In short, when you require quick, reliable, flexible funding with certainty of closing, commercial real estate bridge loans offer you a viable solution that eliminates the red tape, stacks of loan documents and seemingly endless hoop jumping required by conventional lenders. Just make sure you have a clear, well thought-out executable exit strategy to avoid any potential pitfalls. Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
Commercial hard money bridge loans, a vital niche within the commercial real estate financing realm, offer solutions when traditional loans don’t quite fit the bill to achieve your real estate investment objectives with maximum speed and efficiency. Think of them as the bridge over troubled water, a temporary fix to get you from point A to B while you arrange for more permanent financing.
At its core, a commercial hard money bridge loan is short-term, usually ranging from a few months to 3 years (often with extensions available @ a cost), collateralized by commercial real estate. It’s more flexible and faster to obtain compared to a conventional loan, making this type of loan ideal for situations where speed and certainty of execution are crucial.
The major distinction between them and conventional loans lies in the funding source and approval criteria. Instead of banks, private commercial lenders typically offer these loans, focusing more on the value of the property and less on your creditworthiness. This can be a game-changer if you’re in a hurry or have less-than-stellar credit.
In commercial real estate, hard money bridge loans play an essential role. Imagine purchasing a property that needs immediate renovation, but the conventional loan process at your bank or credit union drags on with endless paperwork, credit committee meetings and approval processes. A hard money bridge loan can swoop in to cover those urgent costs, allowing you to act quickly and capitalize on opportunities as they arise.
When and Why You Need Commercial Hard Money Bridge Loans
For the most part, a commercial hard money bridge lender’s job begins when your bank says “no” or they can’t fund you as fast as you need them too–right the heck now. Imagine finding an incredible property deal with a tight closing window. Traditional loans take time, and that delay could cost you the opportunity. In such cases, hard money bridge loans are lifesavers, providing rapid financing so you don’t miss out.
One prime scenario where these loans shine is property renovation. If you’re flipping a commercial property that needs significant improvements, a hard money bridge loan can cover renovation costs upfront. This allows you to enhance the property’s value quickly and flip or refinance it later.
Another advantage is that these loans are excellent for ‘fix-and-hold’ investors. Suppose you purchase a commercial property, intending to rent it out eventually. A hard money bridge loan gives you the immediate cash needed to snap it up, then refinance with a traditional loan once the property’s income stream stabilizes.
Let’s consider a few real-world examples. Say you’re an investor who finds a distressed property in a prime location. You know the property’s potential but don’t have the months to wait for a conventional loan. A hard money bridge loan can fund the purchase and initial renovation, and once those are completed, you can refinance with a traditional mortgage.
Or perhaps you’re in the midst of a sale where timing is everything. If you’re selling one property to buy another, a bridge loan can secure the new purchase while you finalize the sale of your current property. This ensures you don’t lose out on the new opportunity due to timing mismatches.
In sum, hard money bridge loans offer a level of speed and flexibility that traditional loans can’t match. They provide critical financial agility, allowing you to seize opportunities and navigate complex real estate transactions with ease.
Interest Rates, Terms, and Unique Features of Hard Money Bridge Loans
Comparing interest rates and terms between commercial hard money bridge loans and conventional loans reveals some key differences. Hard money loans typically come with higher interest rates – ranging from 6.99% to 15% – compared to traditional loans. This is mainly because these loans are short-term and carry higher risk for lenders. Rates on the lower end are available for projects and Principals that are more viable. See how you qualify.
Despite the tendency for higher rates, the terms associated with commercial hard money bridge loans are often much more flexible. Borrowers can generally expect loan terms from six months to a few years, giving ample time to execute their investment strategies.
One standout feature is the lack of prepayment penalties, which offers significant benefits. With no penalties for early repayment, you can clear the loan as soon as your property project is completed or refinanced, minimizing overall interest costs.
Speed and efficiency are other critical advantages. Fast approvals and funding processes mean you can move quickly on investment opportunities, allowing you to maintain competitive edge in the market.
It’s worth noting ways to leverage these loans for optimal returns. For instance, using the loan amount efficiently for high-impact renovations can boost property value significantly. Ensure you have a clear repayment strategy in place to avoid pitfalls.
Consider repaying the loan promptly to reduce interest expenses. Your exit strategies might include refinancing with a conventional loan once the property is stabilized or selling the property to pay off the loan. Proper financial strategy ensures you maximize the benefits of your commercial hard money bridge loan.
Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
Commercial hard money loans are a type of short-term financing often used for business purpose real estate purchase acquisition, renovation, construction or refinance. Unlike conventional loans from banks or credit unions, these commercial loans are typically provided by private commercial lenders. They’re popular among commercial real estate investors who seek quick access to funds without the stringent requirements of conventional lenders.
One major difference is how a commercial hard money loan is secured. Traditional commercial real estate loans are usually made based largely upon the Principal Borrower’s creditworthiness, commercial real estate investment track record, financial wherewithal, and to some extent, collateral strength. In contrast, commercial hard money loans are largely asset-based, meaning that the collateral valuation take precedence over all other factors. This makes them a viable option for borrowers with less-than-perfect credit but valuable property with which to collateralize their commercial hard money loans.
Property types play a crucial role in these loans. From commercial buildings and warehouses to undeveloped land, the range of properties eligible is quite broad. This flexibility can be a lifeline for developers in niche markets looking to secure funding.
Loan size varies depending on the lender and the value of the property. While traditional loans may cap-out based on standard assessments of risk, hard money lenders often look more closely at the potential return on investment of the property in question. This can result in larger loan amounts for high-value properties.
Loan-to-Value (LTV) ratio is another critical aspect. In order to mitigate the increased risk they shoulder, commercial hard money lenders typically lend at 60-80% on standing (already built) properties. However, their LTVs on land or construction projects tends to be in the 20-50% range to minimize their risk in the event of loan default. It’s important to carefully evaluate the Subject Property’s value and its potential ROI before committing to higher leverage. An accurate property valuation can make or break the deal. That’s why the Appraisal–which the commercial hard money lender orders and you pay for–is almost always the most critical component of an asset-based lender’s decision-making process.
Key Elements of Commercial Hard Money Loans
Interest rates for commercial hard money loans are typically higher than traditional loans. This is mainly due to the increased risk taken on by the lender, who doesn’t rely on a borrower’s credit history as much. Currently, typical commercial hard money loan rates are between 6.99% and 15%, sometimes a bit lower, but often even higher for properties, projects and Principals they deem highly risky. On the flip-side, when your property and you as Principal Borrower have higher viability, your interest rate just might be on the lower end of the rate spectrum. So, see how well you qualify.
Commercial hard money loan terms for tend to be shorter, often ranging from 6 months to a few years; however, there is almost never a prepayment penalty for these loans. While traditional loans might stretch over decades, hard money loans are more suited for short-term projects like fix-and-flips, quick turnarounds on commercial property purchase and renovation projects, or even lightning fast cash-out refinances to fulfill your short-term liquidity gaps. Keep in mind that shorter terms can mean higher monthly payments, but they also reduce long-term financial commitment on the borrowing and lending sides of the Closing Table.
Uses of loan proceeds are versatile, including but not limited to acquiring property, renovation, refinancing, or even bridging financial gaps in an ongoing project. The flexibility here is a big draw—borrowers can tailor the loan to fit their immediate needs. However, clearly defining the purpose and ensuring the loan aligns with your financial strategy are paramount.
Evaluating the Costs: Are Commercial Hard Money Loans Really Expensive?
Breaking down the costs involved is a vital step in evaluating commercial hard money loans. While the interest rates are higher, they come with the benefit of faster approval times and less stringent requirements. Besides interest, you’ll likely encounter fees like origination fees, underwriting fees, and sometimes a prepayment penalty. It’s essential to factor these into your cost analysis.
Balancing the benefits against the higher costs is crucial. Yes, the rates are more, but the speed and flexibility often outweigh this downside. For instance, being able to snag a high-potential property quickly can translate into significant profits, offsetting the initial higher costs. A quick gain or a strategic investment turnaround can make the extra expenses worthwhile.
Real-world examples help illustrate the point. Consider a developer who used a hard money loan to purchase a commercial building that needed renovation. Fast access to funds allowed them to buy and renovate the property swiftly, leading to a lucrative lease agreement. The higher interest and fees were easily offset by the rental income and property appreciation.
Maximizing value and minimizing costs is the goal. Look for commercial hard money loans from reputable sources, negotiate terms as much as possible, and articulate your clear, feasible exit strategy / repayment plan. Thoroughly researching and planning can prevent nasty surprises and keep costs in check. Cutting through potential “gotcha” fees and securing favorable terms can turn a good opportunity into a great one. Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
Private money construction loans are an essential tool for many real estate developers looking to get their projects off the ground. These loans come from private commercial lenders, not traditional banks, and can offer flexibility that’s especially handy in the fast-paced world of commercial real estate finance.
So, what makes private money construction loans stand out? First off, they often have quicker approval processes compared to traditional financing. This can make a huge difference if you need funds rapidly to secure a deal or start construction. Plus, private lenders tend to be more lenient regarding credit scores and financial history, focusing more on the property’s value and the project’s potential.
Private lenders are also more likely to finance unconventional projects that might make traditional banks wary. Whether it’s a unique architectural design or a mixed-use development, private lenders can provide the financial backing necessary to bring these innovative projects to life.
But don’t think it’s a free-for-all. Private money loans typically come with higher interest rates due to the increased risk taken on by the lender. However, here at Commercial Real Estate Loans USA you have access to the best of both worlds: Currently, our Private Commercial Construction Funding Partners are offering you:
Non-Recourse Ground-Up Commercial Development & Construction Loans @ 5%~7.35% FIXED
At any rate, you’ll need a solid plan and good communication with your lender to ensure a smooth loan process. The relationship is often more personal, which means building trust and showing competency can go a long way.
Key Requirements to Qualify for Private Money Construction Loans
Getting a private money construction loan isn’t as daunting as it might seem. The first step? Nailing down a solid Project Overview or Executive Summary. Private lenders want to see that you’re serious and have thoroughly thought things through.
Start with resumes or bios for all the project principals or sponsors. These should highlight relevant experience, skills, and past successes on similar projects. Basically, you need to show that your project development team really knows what the heck they’re doing.
Next up is the detailed construction budget. These aren’t just random numbers you pull out of thin air. Break it down to the nitty-gritty – labor, materials, equipment, permits, the whole shebang. It shows the private lender you’ve anticipated every possible cost and contingency and you’re prepared for what’s ahead.
Then, there’s the Sources & Uses of Funds Statement. This document outlines where every dollar’s coming from and where it’s going. Transparency here builds trust; the lender needs to see you’ve planned thoroughly and that your funding sources are legit.
Lastly, you need to show that you have accessible liquid cash. It’s not enough to have a great idea; you need the financial means to support it. Liquid cash on hand proves you can manage unexpected costs and keep the project moving forward even if things get tight.
If you’re missing any of these key documents, don’t panic. Once you’ve completed our 2-MINUTE MINI-APP and you’re in our system here at Commercial Real Estate Loans USA, just email us to request a simplified e-form that will enable you provide all of the info we require to quickly determine the viability of your project and you as its Principal Borrower. This makes the whole process less intimidating and much more manageable.
Steps to Enhance Your Success Rate in Securing Private Money Construction Loans
First things first: create a compelling Project Overview or Executive Summary. This isn’t just about throwing facts together. Make it engaging and clear, showcasing your project’s strengths and potential. Don’t shy away from highlighting what makes your project unique.
When it comes to demonstrating your expertise and experience, let your credentials shine. Use the resumes or bios to paint a picture of your competent, experienced development team that can successfully handle the complexities of your commercial construction project. Your confidence in your team’s abilities can instill confidence in your private commercial real estate lender.
Construction Budget planning requires accuracy and comprehensiveness. Avoid underestimating costs or glossing over details. A well-planned budget reflects your professionalism and foresight, signaling to lenders that you’re meticulous and prepared for any & all contingencies.
A clear Sources & Uses of Funds Statement is crucial. Make sure it logically lays out where the money is coming from and how it will be used. This statement should leave no room for ambiguity, giving the lender a crystal-clear picture of your financial strategy.
Having an adequate liquidity cushion is key to your success. Demonstrating that you have enough liquid cash to handle unexpected expenses shows the lender you’re financially stable and capable of keeping the project humming along smoothly.
Avoid common pitfalls during the application process. Don’t rush through the paperwork or omit essential details. Double-check everything before submission to ensure all the required information is present and accurate. Even tiny mistakes can create huge setbacks, so take your time and get it right the first time. Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
Commercial real estate development loans are a big game-changer for anyone looking to break ground on new projects. These loans provide the necessary funds to cover everything from purchasing land to the construction of buildings, ultimately helping turn blueprints into bustling income-producing completed commercial properties.
Several types of commercial development loans are out there. Each loan comes with its own set of terms, interest rates, and approval processes. It’s crucial to understand the differences to make informed choices that align with your project requirements, current liquidity and overall financial situation.
Here’s we’ll show you why you need a commercial real estate development & construction loan and how to get one since these loans are vital for ensuring that your development projects are well-funded and can progress smoothly from start to finish. Without them, many amazing real estate projects would stall before they even get off the ground.
Navigating the Types of Commercial Development Loans
One size doesn’t fit all when it comes to commercial development loans. Let’s explore the main options available, so you can find just the right fit for your project.
Many traditional banks and financial institutions offer commercial development loans, but they tend to have stringent requirements, including relatively high sponsor FICO scores, impeccable extensive development track records, and deposit requirements of at least 10% of the loan amount, which can severely restrain your liquid cash. Especially within the current volatile interest rate environment, banks tend to lend @ variable interest rates, which makes it tougher for you to predict your future cost of capital, even though rates can fluctuate in either direction.
For those projects and Principals that don’t meet strict bank criteria, other options are available. Also, bank development and construction loans are almost always full-recourse, which means all Principal Borrowers who have at least a 20% ownership stake in the project must be Personal Guarantors on the loan note, potentially putting all of their assets @ risk.
Hard money construction loans are a popular albeit expensive alternative. These are short-term full-recourse loans provided by private lenders and are usually secured by the property itself. The approval process is generally quicker than traditional loans, which is great if you’re on a tight timeline. However, be prepared for higher interest rates and shorter repayment periods since hard money construction lenders must compensate for the additional risk they shoulder.
Asset-based commercial construction loans are another viable option. These full-recourse loans are secured by tangible assets like the subject property or equipment. They tend to be more flexible in terms of approval and can be useful if you need substantial funding but perhaps don’t have the best credit score, experience level or your liquid cash reserves are relatively thin.
Private money construction loans are quite similar to hard money loans but usually come from private individuals or smaller investment groups rather than larger institutions. These loans can offer more flexible terms and speedier access to funds, though they might also come with higher costs. Here at Commercial Real Estate Loans USA, our Middle Market (currently @ 7.35%) and Large-Scale (currently @ 5%) fixed-rate commercial real estate development loans are non-recourse, which means that the collateralized assets are limited to the Subject Property, so you as Principal Borrower do not have to personally guarantee the loan.
Knowing where to get these different types of commercial development loans is key. Research and approach lenders who specialize in the type you’re interested in. Networking with real estate professionals and attending industry events can also open doors to financing opportunities you haven’t yet even considered.
Mechanics and Requirements of Commercial Real Estate Development Loans
Understanding how commercial real estate development loans work is crucial for any project. These loans empower you to finance your land acquisition, development and construction or major renovation of your commercial property. Knowing the ins and outs of this type of financial product will help ensure you and your development team’s smooth sailing from the application process to project completion and stabilization.
Commercial development loans have a specific set of requirements. Lenders generally look for a solid business plan, a detailed construction budget, Sponsor resumes/bios and a clear timeline for project completion in accordance with your draw schedule. Pro forma financial statements, Principal Borrower credit histories, and Personal Financial Statements (PFS) are also critical components of your loan package. Being fully prepared with all necessary documentation can significantly speed-up your approval process and enable you to make a strong positive impression upon potential lenders.
It’s essential to understand the fundamentals of commercial real estate development and construction loans. Key considerations include loan-to-value (LTV) and loan-to-cost (LTC) ratios, interest rates, and repayment terms. Getting familiar with these basics can help you negotiate better terms and identify the loan that best suits your needs.
Borrowers often face challenges such as fluctuating interest rates, strict regulatory requirements, and unforeseen construction delays. To overcome these obstacles, staying informed and maintaining close communication with your lender is key. Having a financial cushion to cover unexpected costs can also help keep your project on track.
By understanding the mechanics and meeting all requirements, you’ll be well-equipped to navigate the complexities of commercial real estate development loans. Armed with this knowledge, you’re more likely to secure the commercial project funding you need to transform your clear commercial real estate visions into reality. Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
If you’re exploring financing options to construct a new commercial building or complete a large renovation project, it’s vital that you become familiar with commercial construction loans and how they work. These loans are specifically designed to fund the building and development of commercial properties, a very different beast compared to other types of commercial loans.
What sets commercial construction loans apart is that these loans cover the cost of developing a project before it becomes revenue-generating. Unlike traditional commercial mortgages, which are based on the value of “standing” (already built) real estate, construction lending decisions are largely based upon the projected value of the property post-construction completion. It’s a high-stakes game with its own unique risks, which is precisely why interest rates for these loans tend to be higher than those for standing properties and vary widely.
Interest rates on commercial construction loans are affected by several factors. Lenders look at the current market rates, the project’s risk profile, the borrower’s financial health, and sometimes, the relationship between the borrower and the financial institution. I cannot stress enough how significant the impact of interest rates is on the total cost of your construction project over time. A slight percentage change can make a substantial difference in the amount you repay.
Armed with this understanding, it’s time to set my sights on where you can find the best interest rates for your particular project. It’s all about aligning your needs with the right lender—an endeavor that requires thorough research and a strategic approach, which I’ll delve into in the next section.
Top Sources for Competitive Interest Rates
When searching for the best interest rates for your commercial construction loan, it’s crucial to know where to look. Different financial institutions and funding sources can offer varying terms and rates. I’ll guide you through some of the most promising options.
Banks and credit unions often come to mind first when considering a loan. They are the traditional go-to sources for borrowing funds. These institutions can provide competitive rates, especially for individuals with strong credit and a solid business plan. As Principal Borrower, your relationship with your local bank or credit union can also be advantageous.
For conventional commercial construction loans, bank & credit union rates tend to be between 8-8.99% variable, hinged upon the 30-day SOFR ( Secured Overnight Funding Rate) or some other benchmark interest rate like LIBOR (London InterBank Offer Rate ) or the Wall Street Journal Prime Rate.
Moving towards alternative lenders, you may find more flexibility in lending criteria and potentially innovative loan structures. These lenders can be a good match for projects that may not fit the typical bank mold, but be aware that this might come with higher rates.
Hard money bridge loans are another albeit expensive option for ground-up construction project financing, currently ranging from 9-15%. Typically, borrowers approach hard money bridge lenders when their bank or credit union says “no” or can’t fund their project fast enough. In fact, since some of these lenders can close in as soon as a week or so from receiving their requested documentation, they are a very viable alternative when you need to close within a very tight time-frame.
Then there’s the option of leveraging government-backed loan programs like SBA 504 and 7(a). These loans are designed to help small businesses and can offer favorable terms, including lower interest rates, which are viable for qualified construction projects.
In today’s digital age, online loan aggregators have become a handy tool. They allow you to compare loan options from various lenders quickly and efficiently, ensuring you have a broad view of the rates available to you.
Lastly, consider employing the expertise of a commercial mortgage loan broker who specializes in finding you the best deals and can negotiate on your behalf. While they do charge for their services, their experience could lead to securing a lower interest rate than you would on your own.
Securing the Absolute Best Interest Rate for Your Project
If your commercial construction project requires a loan amount between $4 million and $18.5 million, you just might qualify for our Private Commercial Construction Loan Program that’s currently @ 7.35%, which absolutely can’t be beat!
Securing a favorable interest rate for your commercial construction loan can make a huge difference in the financial success of your project. It can feel daunting, but with the right preparation and strategy, you can position yourself to obtain an attractive rate.
Ensure your creditworthiness is solid. Lenders will scrutinize your credit history, so it’s crucial to clear any discrepancies and improve your credit score ahead of time. A higher credit score signals to lenders that you’re a low-risk borrower, which can lead to better loan terms.
A well-crafted Executive Summary highlighting your project’s viability and your business acumen is key. This document lays the groundwork for a lender’s confidence in your project and in you as a developer.
Don’t settle for the first offer. Shop around, compare loan terms from multiple lenders, and don’t be shy about negotiating. Each institution has its own appetite for risk and reward, and you might find significant variation in the rates available to you.
You’ve gotta read read the fine print. Fees, penalties, and loan covenants hidden in the contract can add up and affect your project’s profitability. Make sure you understand all the costs involved, not just the interest rate.
Finally, timing can play a crucial role. Market interest rates fluctuate based on economic conditions. By keeping an eye on these trends and timing your application accordingly, you may be able to lock in a lower rate.
By addressing these critical factors, you’re not just searching for a loan; you’re investing in the future of your business. Remember, a low interest rate, while vital, is just one part of your project’s success. A comprehensive approach including strong financial health, a solid plan, and the right timing will serve you best in the long run. Finally, as always…
Any questions or concerns? Feel free to contact us just about anytime. We’re here for you and we are rooting for your success. Thanks for checking us out and see you @ the Virtual Closing Table!
If you’re gearing up to secure financing for your ground-up hotel development and construction project, know this: the quality and presentation of your project’s leadership team is critical. Here’s the truth – a strong resume or bio for all project principals and sponsors isn’t just a formality, it’s a cornerstone of your hotel construction loan approval process. Lenders scrutinize this documentation to gauge the reliability and expertise of those at the helm of your organization.
Assembling a robust project team sets the tone for your entire hotel construction project finance proposal. It’s about more than just impressive titles; it’s about presenting a group of individuals with a diverse but complementary set of skills and a proven track record of success. When lenders look at your team, they’re calculating risk. They want to see experience, sound judgment, and a history of on-time, on-budget projects. And if you’re wondering, yes, a past of navigating through rough waters successfully can be just as persuasive.
Now, when you’re putting together that resume or bio, tailor it to the industry. Elaborate on relevant experience, such as previous construction projects, especially within the hospitality sector, and your development team’s financial expertise. Highlight completed projects, the hurdles you’ve overcome, and the benefits that lenders, equity capital investors and even end-users have gained from your successful completion and finished product delivery. This isn’t just about what you’ve done, it’s about signalling you can replicate that success with the current project.
Your leadership team’s credentials pave the way for the financial statements you’ll present next. The meticulous details of a construction budget are waiting in the wings, and they’ll need to rest on the sturdy foundation of the reputation that your development team has established. If your team’s resumes or bios knock it out of the park, lenders are more likely to trust your team’s capability to manage the finances and navigate the complexities of hotel development and construction.
Building Your Financial Blueprint: Crafting a Detailed Construction Budget
I’m here to help you understand the pivotal role of a detailed construction budget to secure your hotel construction loan. A comprehensive budget acts as the financial blueprint of your project, demonstrating your commitment to fiscal responsibility and strategic planning. It’s not just a collection of numbers; it’s a reflection of your project’s feasibility.
Now, let’s talk about the key elements that make up this budget. You’re going to find out about direct costs, which include everything from materials and labor to equipment and permits. Overhead costs can’t be overlooked either; they cover the less obvious expenses such as site security and temporary utilities. Then there are soft costs, which cover things like architectural design, consultant fees, and insurance. And don’t forget the contingency reserve—your safety net for unforeseen expenditures.
It’s crucial to base your estimates on current market trends while staying realistic about the costs. Any underwriter is going to scrutinize these figures, so if they’re misaligned with the going rates, your credibility could take a hit. Providing explanations for your cost estimates can also go a long way. It shows you’re not just throwing numbers out there; you’ve actually done your homework.
The creation of an all-encompassing budget is a bit of an art form. It requires attention to detail and a thorough understanding of the hotel construction industry. You should choose something that resonates with your project’s scale and complexity, and align it with industry standards. Remember, your initial submission is important, but you can always adjust your approach down the road when it’s backed by solid reasoning.
You’re setting the stage for the next big step – presenting your financial roadmap that includes the Sources & Uses of Funds Statement, which we’ll discuss in the next section. Think of the budget as the map that outlines the journey your funding will take, and the following section is going to delve into how you’ll be navigating that path.
Your Financial Roadmaps: Sources & Uses of Funds and Pro Forma Operating Statements
I’m going to show you why precisely articulating how you’ll allocate every dollar can make or break your loan approval. With a Sources & Uses of Funds Statement, you’re going to find out about the roadmap that lenders use to navigate through the financial aspects of your hotel construction project. Here’s the gist: this document separates the dreamers from the doers. It tells your lender, ‘I know exactly where your money is going,’ which is what they need to hear to write that check.
Now, let’s talk about your liquid assets. These figures in your financial disclosures act like the seal of trust between you and the lender. You’re essentially saying, ‘I’ve got skin in the game and I’m ready to move at a moment’s notice.’ Your immediate liquidity shows your capacity to handle unexpected costs that might not be covered in the budget or arise mid-construction. When lenders see readily accessible LIQUID CA$H, they see commitment and a buffer against risks.
This isn’t just about presenting numbers and accounts; it’s also about narrating the story of your project’s potential through financial security and credibility. Choose something that resonates with your lender’s need for security—this is where your accessible liquid assets shine. It underscores the solidity of your financial footing. A lot is happening very quickly in the world of hotel construction financing, and it’s crucial to stay informed and prepared.
Finally, you’ll need to provide a pro forma operating statement (P&L), which states projected income, expense, and net operating income (NOI) figures for at least 3 to 5 years out (although some lenders require 10 or even 20-year projections) based upon realistic assumptions.
So my question to you today is, have you prepared a Sources & Uses of Funds Statement that is both realistic and comprehensive? And does your display of liquid assets reflect a level of readiness for both planned and unplanned expenses? If you want to inspire confidence in lenders, these are the pieces of your application you can’t afford to overlook. Just don’t focus too much on perfection—aim for a precise and transparent presentation that tells the story of a well-thought-out investment.
And that’s the strategy I like to leverage: clarity, credibility, and directness, built on a foundation of robust and sound financial planning. I really hope that you take this advice to heart when you’re ready to take the next step in securing a hotel construction loan. Remember, your first attempt doesn’t need to be your last, but a strong financial plan can certainly make it your best. When you’re ready to take action, you can Get Funded Now. Thanks for your time, and I look forward to helping you build your vision into reality.
You’re eyeing a bold new project – a commercial building that could redefine a city skyline or serve a thriving community. But before the ground is broken, you need to navigate the world of commercial construction loans. These are specialized financial products and they differ from traditional commercial loans in several ways.
A commercial construction loan is designed to fund the costs associated with erecting a new building or renovating an existing one. It’s a vital tool for developers, allowing them to manage expenses throughout the construction phase before obtaining permanent financing.
Unlike traditional commercial loans that provide a lump-sum amount upfront which is then repaid over time, construction loans typically allow borrowers to draw funds incrementally. This method matches funding to the project’s timeline, minimizing unnecessary interest costs.
If you’re new to this field, note that lenders have a stringent set of criteria when evaluating loan applications. They’ll examine every angle of the proposed project and your financials to ensure the loan is a sound investment for them. It’s critical to meet these requirements, so let’s explore what exactly financial institutions look for.
Here are the basic commercial construction loan requirements in terms of documentation you must provide your lender:
- Resume/Bio for all Principals
- Detailed Construction Budget
- Detailed Capital Expenditures made Since Purchase (if applicable)
- Sources & Uses of Funds Statement
- Principal Borrower’s immediately available & accessible LIQUID CA$H
Key Financial Metrics Evaluated by Lenders
When you apply for a commercial construction loan, lenders scrutinize your financials to mitigate risk. It’s crucial you understand these requirements to increase your chances of approval.
The Loan-to-Cost (LTC) ratio represents the loan amount as a percentage of the total project cost. Most lenders prefer an LTC ratio below 80%. This reflects your substantial investment in the project, which reassures lenders of your commitment and reduces their risk.
Similarly, the Loan-to-Value (LTV) ratio is pivotal. It compares the loan amount with the project’s projected value upon completion. You’ll find that a lower ratio often equates to more favorable loan terms, as it indicates a lower risk for the lender.
Your credit history isn’t just a track record of money management; it’s a testament to reliability. A strong credit score is advantageous and often essential. Lenders typically look for scores that reflect a history of timely payments and financial prudence.
Another key metric is the Debt Service Coverage Ratio (DSCR). Measured by comparing your business’s annual net operating income to its annual mortgage debt service, it helps lenders gauge if your cash flow is adequate to cover the loan payments. A DSCR of more than 1.25 is generally preferred.
The lender will also assess your financial stability and liquidity. You’re expected to maintain ample reserves to cover unexpected costs. This shows the lender that even if costs overrun or income falls short, you will still be able to finance the project and service your debt.
Lastly, previous experience with similar construction projects can be a significant advantage. It demonstrates to lenders that you are familiar with the challenges and costs of commercial construction, implying that the project’s financial projections are realistic and achievable.
Navigating the Non-Financial Terrain of Commercial Construction Loans
When I discuss the quest for a commercial construction loan, I don’t just focus on numbers. Sure, the financial metrics are critical, but there’s another side to this story that demands your attention: the non-financial factors. These elements are pivotal in illustrating not just the viability, but also the vision behind your project.
I start with emphasizing the POWER of a solid business plan. Your business plan must communicate confidence and foresight. It paints a picture for lenders, showing them how you anticipate turning blueprints into reality — and profit.
Next, consider the location and market research. These factors immensely sway a lender’s decision. By showing a profound understanding of the market dynamics, you reassure lenders that their investment has the potential to thrive.
Compliance with environmental regulations and local zoning laws can’t be overlooked either. Lenders need assurance that your project won’t be mired in legal quagmires, delaying construction and jeopardizing their investment.
Lastly, having a trusted contractor and meticulous construction plans in place speaks volumes about the reliability and efficiency of your endeavor. This demonstrates to lenders that you’ve meticulously scrutinized every detail of the construction plan and have a reliable team ready to execute. Once you have compiled the basic documentation mentioned within this article, it’s time for you to get funded now. Meanwhile, take care and see you @ the Virtual Closing Table!
So you’re interested in diving into the world of investment properties. It’s exciting, right? But before you start envisioning the passive income and the potential financial freedom, there’s something crucial you need to tackle: investment property loan requirements. 
Now, what is an investment property? In simple terms, it’s real estate purchased to generate income, either through renting it out, reselling after value appreciation, or both. Your primary residence? That’s not what we’re talking about here.
There are several flavors of investment property loans—each with its own set of rules. You’ve got conventional loans, jumbo mortgages for pricier homes, and government-backed loans, to name just a few. And if you have time or liquidity constraints, chances are you’ll have to go the commercial hard money loan route.
But no matter what type of loan you’re eyeing, certain general requirements cut across the board. The lender’s going to take a magnifying glass to your credit score, your down payment size, and your existing financial obligations. They’ll also want to see that you’ve thought this through with a robust investment strategy.
Understanding these essentials isn’t just about ticking boxes. It’s about setting yourself up with a strong foundation for when you approach lenders. Get this part right, and you’re already on the path to a successful investment journey. And don’t worry, I’m going to help you with that.
Mastering the Lender’s Checklist: Key Criteria for Eligibility
When you’re eyeing an investment property, knowing what lenders want is crucial. It’s not just about finding a great property; it’s also about making sure you meet the lender’s criteria for an investment loan. The lender’s checklist can seem daunting, but I’m going to break it down for you.
Your credit score is the gatekeeper. It’s one of the first things lenders look at, so you’ll want to ensure it’s as high as possible. The better your credit score, the more favorable terms you’re likely to get. You can do a lot to improve it: pay down debts, avoid new credit inquiries, and ensure your credit report is error-free.
Next up is the down payment. Investment properties typically require a larger down payment compared to owner-occupied homes – think 20% to 30%, sometimes even more. That’s because lenders see investment loans as riskier. If you want to make your loan application stronger, aim for the higher end of that down payment range.
Hold up, your real estate investment experience can play a role too. If you can prove you’ve successfully managed investment properties before, lenders might view you as a safer bet. Make sure to document your experience and successes in the industry to leverage this advantage.
Lastly, there’s the Debt Service Coverage Ratio, or DSCR for short. It’s a formula lenders use to assess the cash flow of the property in question. They want to see that your property’s income will more than cover the mortgage payment. Understanding and maximizing your DSCR is key to gaining approval.
Assembling Your Application: Specific Data and Documentation You’ll Need to Succeed
You’re going to find out about the importance of having all your ducks in a row when it comes to applying for an investment property loan. This isn’t just about showing you have the finances to cover the purchase, it’s also about presenting a clear, comprehensive picture of your investment’s future profitability.
Accurate and thorough financial documentation is not negotiable. You need to have recent tax returns at the ready, as well as proof of current income and assets. Lenders will scrutinize these documents closely to understand your financial history and stability.
Tax returns and income verification speak volumes to lenders. They paint a picture of your financial solvency and indicate your ability to manage an investment property. Be prepared to provide these for at least the past two years, combined with pay stubs or other proof of ongoing income.
The viability of your investment will often be judged through property analysis reports. These should detail the potential and existing profit margins, expected maintenance costs, and other expenses. A well-prepared analysis can make a substantial difference to a lender’s confidence in your project.
Don’t underestimate the value of a solid appraisal and property inspection. Lenders want to avoid risk, and an appraisal that confirms the value of your property, alongside detailed inspections, can alleviate concerns about the investment’s condition and worth. But remember that since the vast majority of lenders insist that they order the appraisal @ your expense, it’s pretty much a waste of money to order your own appraisal beforehand.
Also, commercial lenders usually require investment properties to be held in a business entity–typically a limited liability company (LLC) although other entity types such as corporations, or S-Corporations are also acceptable. If your decide to hold your investment real estate within an LLC, you’ll need to provide the lender with the following documentation:
- Articles of Organization
- Operating Agreement (fully executed)
- Certificate of Good Standing (issued within the past 30 days)
Finally, if the property is already rented, provide lease agreements and historical occupancy rates. These prove to lenders that the property generates reliable income. It shows that you’re not only thinking about the financials of the deal but also the practical aspects of property management. Since underwriting requirements differ, once you’ve gathered the basic data & documentation listed above, just take the first step to get funded now and see you @ the Virtual Closing Table!
Finally, here’s what you’ve been waiting for! We now offer you commercial construction loans of $25 million or more @ 3.25% worldwide for ground-up construction including but not limited to the following commercial real estate asset type:
- Hotels and Motels
- Office Buildings
- Self Storage Facilities
- Apartment Complexes
- Shopping Centers
- Warehouses
- Industrial Facilities
For additional information, feel free to contact us.
The first step toward securing a commercial bridge loan is to make sure that you have a deal that’s profitable for your Company and your prospective commercial real estate lender. As a general guideline for standing (existing) property purchase financing, you should be “all-in” (purchase price + renovation/improvement costs) is somewhere south of 70% of the After Repair Value or ARV. The lower that percentage, the stronger the deal for you and your lender. In fact, since bridge loans are more expensive in terms of higher interest rates, we like our Clients to be all-in @ less than 65% of ARV just to have an extra profitability contingency cushion. That way, we’re all covered just in case…
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Successful businesses are those that are managed most effectively which also means, balancing the “5 Cs”- Cash flow, Capital, Credibility, Customers, and Credit. Let’s take a look at these factors and how they apply to the success of your business, including your ability to obtain commercial hard money loans.
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Oct 16
26
How to Use Commercial Bridge Loans
Securing a commercial bridge loan may be just the thing for your business whether you’re in between anticipated incoming funds or you need to take the success of your company higher faster than your bank is capable of. Bridge loans usually have higher interest rates than conventional commercial real estate loans, but have lower rates than commercial hard money loans. Bridge loans are inherently short-term, so they typically have a 6-month to 3-year time frame within which they need to be paid back.
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As a business owner, you are certainly not alone in thinking that your Company may need alternate forms of financing to help you maintain or expand your business. Many companies are in the same position while they try to obtain a loan from banks or other financial institutions. A commercial bridge loan may be perfect for “bridging” the gap in your finances while you’re in the process of obtaining conventional permanent financing. Here are 3 commonly asked questions about commercial bridge loans and whether or not they can help you achieve your business objectives.
1. What are commercial bridge loans?
A commercial bridge loan is a short-term loan that is used to bridge the gap between various financial expectations–to get your company from point A to B within the most time-efficient and cost effective manner.
2. What is the difference between a commercial bridge loan and commercial hard money loan?
Both commercial hard money loans and bridge loans both use the property as a collateral asset, but the main difference between the two is that hard money loans are made only by private investors. This kind of loan typically has a higher interest rate than a bridge loan would and generally are used in cases where a company may be facing impending financial problems like balloon payments coming due or in cases where Principal Borrowers require extreme speed of funding like with auction purchases–where the opportunity cost of missing out on a great deal far exceeds high but short-term hard money loan interest rates.
3. When should I not get a commercial bridge loan?
When your Company requires interim financing on a property while you seek long-term commercial real estate financing, you might consider a bridge loan. There are large risks in this kind of investment but also high rewards associated as well. But you should seek alternative financing if you can’t find long-term financing or pay the extra cost of interest on the loan. However…
When prospective Clients call us seeking a commercial bridge loan, the first question we usually ask is “have you already approached your local bank?” We ask this because our job begins when your bank either says “no” for various reasons or they can’t fund you within your tight time-frame. If you qualify for bank financing and you have plenty of time to get your project funded, you probably don’t need a bridge loan.
Bridge loans are a great way to practically guarantee your ability to purchase a property. Your battle isn’t over with a bridge loan and you still want to eventually obtain long-term, traditional financing as soon as it’s feasible, but whether you need to expand your Company’s business or survive a current crisis, a commercial bridge loan can help you weather the storm and achieve your business objectives in a timely and cost-effective manner. So, when your bank won’t lend you the money or they can’t process your loan fast enough, just call us and we’ll help you obtain the best commercial bridge loan you qualify for as fast as humanly possible. Deal?
We hope you’ve found this information useful. Feel free to share your thoughts, questions, and concerns in the Comment / Reply area below. Thanks & see you @ the Closing Table!
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Oct 16
22
What is a Commercial Bridge Loan?
A commercial bridge loan is a short-term loan that is used to bridge the gap between various financial expectations. Typical transactions have an urgent time-frame to close, a very strong value proposition, and a clear-cut exit strategy within 6 to 36 months, often with 1 or 2-year extensions available for extra fees.
In order to compensate for the higher level of risk and often extreme speed of loan execution with relatively low documentation requirements, commercial bridge loans are generally considerably more expensive than conventional loans in terms of higher interest rates and points. As additional compensation, commercial bridge lenders also mitigate risks by having lower loan-to-value ratio requirements as well as requiring cross-collateralization in certain circumstances.
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Is the Commercial Real Estate Market a Ticking Time Bomb?
Commercial real estate loans generally have provisions which require borrowers to pay off their loans or refinance them by a certain date which typically is within 5 or 10 years of initial funds disbursement. By 2013, $1.3 trillion in real estate loans will be due from property borrows such as for offices, hotel, shopping centers, multifamily homes, self-storage and industrial properties. Nearly half of the maturing multifamily and commercial debt will not qualify for refinancing according to Deutsche Bank, which means that two-thirds of CMBS debt will no longer be qualified or eligible to refinance. This will result in losses of over $50 billion dollars in securitized commercial loans and $200 billion dollars on commercial real estate loans, which will, again, effects commercial real estate financing.
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Commercial mortgage loans, also known as commercial real estate loans, include funding for companies that seek to purchase commercial real estate. They aren’t the same as commercial loans because commercial mortgages are granted to companies that will make use of the property just for commercial reasons.
Commercial mortgages might have fixed or adjustable rates, that is what determines the category into which they fall.
Commercial mortgage lenders are only going to grant commercial mortgage loans to customers who will guarantee that property is going to be used solely for commercial purposes. Investors looking to acquire property for other reasons like lodging or personal residence are encouraged to seek traditional commercial loans.
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As the name implies, commercial bridge loans are short-term commercial loans collateralized by real estate that serve as a bridge for you as the borrower that gets you to your next commercial property deal. This type of commercial real estate financing permits you to alleviate liquidity constraints and take full advantage of time-sensitive opportunities with speed and efficiency.
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Have you had it with getting turned down for commercial real estate mortgage requests? From the outset of this credit crunch we find ourselves in, hard working business people just like you And me have been wishing for a simpler, more reliable means to get our commercial real estate ventures financed. Now is just the right time for you to get in the driver’s seat, take control of the commercial mortgage finance process, and get your projects funded with eye-popping speed and efficiency.
This is an effective, efficient, and extremely powerful commercial real estate finance portal that empowers you to concurrently submit your commercial real estate loan requests to approximately 750 hungry commercial real estate loan officers. After you submit your 4-minute mini-app, this system eliminates all of the commercial lenders which it deems inappropriate lenders (such as: those that don’t operate in your state or other geographical region where your the real estate that you intend to finance happens to be). Then the system gives you a list of roughly 30 of the most suitable commercial mortgage lenders, several of which should be optimal for the commercial mortgage loan that you are looking to get.
A commercial hard money loan must only be thought of as a solution right after you have exhausted all other sources and have come towards the conclusion that you just will not qualify for a conventional loan. The alternative, even though difficult for a lot of borrowers, is normally uncomplicated. Either lose your commercial property or accept the terms supplied by the hard money lender.
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Commercial hard money loan providers are really companies or private lenders who are willing to extend credit to commercial borrowers on a relatively short-term basis with stricter terms including higher interest rates to compensate for the risk involved. Frequently money-making income financial loans are now being released having a greater rate of interest compared to traditional income financial loans. Commercial hard money loans bear some similarity to commercial bridge loans or commercial bridge financing.
A commercial hard money loan is really an unconventional commercial real estate loan that traditional banks just don’t provide us with. This kind of commercial financing has been used for more than half a century. Such hard money loans will often have an initial lien on commercial property. When your hard money loan includes a secondary lien, it’s called mezzanine financing.
Mar 12
8
Commercial Hard Money Loans
Commercial hard money loans really are a specific kind of resource-based loan. With this type of commercial loan, a borrower receives funds which are collateralized by real commercial property. The inherent risk of commercial hard money loans is compensated for via higher interest rates versus conventional commercial real estate loans. This kind of loan isn’t, when, released with a commercial bank or any other deposit institution.
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