COMMERCIAL REAL ESTATE LOANS
The Best Kept Secrets About SBA 7(a) Commercial Real Estate Loans
ATTENTION Business Owners
Are you currently renting your property?
Would you prefer to BUILD EQUITY in your business?
Pre-qualify for Commercial Real Estate Loans in 5 Minutes with No Impact to Your Credit Score
Does it make sense to keep your money invested in growing your business?
Consider a Loan for Commercial Real Estate
Give Us Your Info
Did you know that owning instead of renting can increase your cash flow?
Do you have a large rental expense? Does it make sense to replace that rental payment with a commercial mortgage finance loan option?
Get Your LOI (Letter of Intent)
Did you know that an SBA commercial real estate loan is affordable?
A $1 million SBA business real estate loan is just under $7,000 a month.
Your Property is Valued
Do you have a large upcoming balloon payment with a bank loan?
Get Your Funds
Refinance loans and improve your rate term or even your monthly payment.
COMMERCIAL REAL ESTATE: DO I BUY COMMERCIAL OR DO I LEASE?
The general rule of thumb is if you plan on occupying the same space for at least seven years then the real estate purchase is usually less expensive than the rental.
The cost to purchase commercial real estate is much more expensive upfront versus your rental costs. The bigger question is whether you have the purchase price funds to invest in the down payment for the mortgage without liquidating your net worth.
IMAGINE A 100% BUSINESS PROPERTY FINANCING SOLUTION!
Let me ask you a question.
Are you better off taking money to use as a down payment or investing that money in your business to grow and generate more annual revenue over time?
Do you have 5 minutes?
If “YES” we can get you prequalified.
Here are the general eligibility and credit commercial real estate loan requirements:
- Good credit history with 675 minimum
- $1.15 debt service coverage ratio (DSCR)
- 3 yrs. business tax returns
- Interim Balance Sheet, P&L and Net Operating Income
- 51% Owner-occupied commercial real estate
- Zoned for Commercial or Industrial
- 90% LTV Max
- Operating Businesses Only
- Two plus years in business
Unfortunately, we will not be able to help you if:
- You are a developer or landlord, and you do not occupy at least 51% of the property.
- No bankruptcies in the last three years
- No foreclosures in the last three years
- No prior default on loans that are government-backed
- No outstanding tax liens
- No construction on an empty lot
- No building a new structure
- No investment properties
- No real estate flip projects for private investors
The Commercial Lending Process
We can get you prequalified in five minutes. Once you receive your preapproval, we will need:
- There will be a Letter of Intent (along with a refundable $5,000 deposit application fee)
- After credit approval, there will be a property appraisal value and an environmental review (Phase I).
- The closing will have additional Business Documentation, the lease agreement, the loan document preparation and closing costs.
If all things go smoothly during the application process, expect at least 45 days from start to finish. You can use our loan calculator to know all your costs. Even after origination fee, packaging fee and referral fee these loans are immensely cheaper than alternative loans from alternative lenders or even insurance companies.
What are the differences between an SBA 504 Loan and the SBA 7(a) Loan?
Types of Commercial Real Estate Loans
The loan size is the first major distinction between the SBA 504 and the 7(a). The 504 has a minimum loan size of $125,000 with a maximum of $20M (or more) while the 7(a) has a minimum of $50,000 and a max of $5M.
Commercial Real Estate Loan Rates
The 504 and 7(a) have fixed and variable rates respectively. (There are some fixed rate options on the 7(a).
The terms for the 504 are 20 years for real estate and ten years for equipment. This is far better than a revolving equity loan, equity line of credit, business lines of credit or using business credit cards.
The SBA 7(a) loan is twenty-five years for commercial property, up to 10 years for business equipment and acquisition, 5 – 7 years for working capital and a weighted average for mixed use.
Why SBA 7(a) Loans are the Secret Ingredient
Many small business owners need to acquire commercial real estate to grow their companies. As you know, the Small Business Administration (SBA) is a designated government sponsored agency that offers these businesses commercial real estate loans. You no longer need the private mortgage lenders or mortgage brokers to get your business finance money loan.
Why look for bridge loans or worse, hard money loans? Especially with low mortgage rates.
The SBA 7(a) loan program is especially critical in today’s marketplace. Operational requirements need capital to grow, and because of the credit crisis, there is a dearth of bank and commercial loan lenders that provide commercial real estate loans.
Uncle Sam recognizes that the greatest recession since the great depression stifled economic growth in America, especially with property loans. With many banks teetering on collapse these commercial loans lenders all but closed their doors to small businesses.
Washington D. C. recognized the need to bolster the economy, and one of the aggressive steps they took was to encourage the use of the SBA programs without dealing with government district offices.
Now, remember, the Small Business Administration doesn’t make the loan. The role they play is to help facilitate the financing. They accomplish this by guaranteeing up to 90% of the business loan made by either the banks or those institutions specializing in SBA financing.
One huge advantage of the SBA real estate loan are the terms. Many commercial real estate loans only have terms of 5 to 10 years. This program by the
SBA enables you to amortize the loan over 20 to 25 years.
These terms, of course, are a tremendous relief on the cash flow of any business. When you combine the fact that you can do this without a down payment, you can see how this is a powerful one-two punch.
You can keep your cash working for you while reducing your monthly payments.
Think about it.
Most conventional commercial real estate loans offered today require a substantial down payment. Traditionally the LTV (Loan to Value Ratio) is 90%. However, many institutions have cut their LTV from 75% down to 58% to 63%.
Prime Commercial Lending Rate
You can receive a 25 year fully amortizing term loan with no balloon payments.
With our 100% financing, you’ll have minimum out of pocket expenses. This funding means rather than tie up your capital in a building you can be putting it to work growing and expanding your business.
You’re currently looking at variable rates between 5.50% and 6.75% and spreads (prime rate plus) between 1.5% to 2.75%
Imagine all this with a 3-year prepayment penalty declining from 5% in year one to 1% in year three.
The qualifications are simple
You need a FICO personal credit score of 675, and you must be occupying at least 51% of the property. You must be prepared to have this loan 100% collateralized. You’re looking at all your inventory, receivables, and equipment encumbered by this loan.
Plus, you will have a blanket guarantee extending to your personal residence.
Our suggestion is to read this informative guide for additional information.
Better yet, CALL 888.456.9223 now to speak to an underwriter.
We can get you pre-qualified in only 5 minutes as one of the top SBA lenders.