Finance 100% Of Owner Occupied Business Property / No Down Payment
100 percent commercial real estate financing is available up to $5 million for owner occupied properties with an SBA loan and most existing SBA-eligible small businesses are eligible.
At a minimum, you must have the following to qualify:
These loans are available for general purpose/multi-use properties as well as some single purpose properties. General purpose/multi-use is defined as the type of building that can be occupied by almost any type of business.
100 percent financing is also available for some “special use” properties such assisted living facilities, doggy day care, kennels, preschools, childcare buildings and others which are listed further down the page.
Commercial Real Estate Loan Repayment Schedules
With a commercial mortgage loan, there are plenty of repayment plans you can choose from, but the most common is the 30-year, fixed-rate mortgage loan. With commercial real estate loans, however, repayment terms typically range from five to 20 years, and some commercial loan types provide short-term financing where payment is due within a year.
Also, its less common with commercial real estate loans for the amortization schedule to match up with the repayment term. For example, you may get the option for five, 10, or 15 years to pay back your debt, but the amortization schedule goes as high as 25 years.
In this situation, the commercial loan is not designed to be paid in full by the time you complete your repayment term, and your business will need to make a balloon payment at the end to satisfy the remaining balance. If you dont have the cash required to make the balloon payment, youll need to have another commercial real estate loan ready to refinance the remaining debt.
Of course, there are some lenders that offer full amortization, but youll need to specifically search for that feature when youre shopping around.
Its also important to note that commercial real estate loans typically dont allow you to pay off your loan early without some kind of fee or penalty. Here are some potential ones you can come across:
Commercial Mortgage Program Highlights:
LTVs up to 75% .
Loans from as little as $1 million and up.
Amortizations up to 30 years.
Terms up to 25 years.
Life company, Bank, CMBS, Private & Institutional Financing options.
In-house Financial Analysts and Underwriters.
Obsessive, hands-on customer service.
If we don’t close, we don’t get paid.
A big thank you for making yourself available and arranging a fast refinance for me on my property!
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Commercial Loan Repayment Example
To understand how commercial payments work, lets review this example. Lets presume your commercial real estate loan is $2.5 million with 9 percent APR, with a loan term of 10 years. Lets use the calculator on top of this page to estimate your monthly payment, interest-only payment, and total balloon payment.
- Commercial loan amount: $2,500,000
According to the results, your monthly commercial mortgage payment will be $20,155.80 for 10 years. If you choose to make interest-only payments, it will only be $18,787.00 per month. Once the 10 years is up, you must make a balloon payment of $2,240,215.07 to pay off your remaining balance.
What If You Cant Make the Balloon Payment?
Sometimes, you might not be able to make a balloon payment on your commercial mortgage. If youre worried about lack of funds, refinance before the end of the term. Start asking about refinancing at least a year before the term ends. This will save you from foreclosure and losing your lenders trust. If you default on your loan, it spells bad news for your credit history, making it difficult to get approved for future commercial loans.
% Sba Financing For Purchase Refinance Or Construction
This program can be used by an existing business not just for the purchase of a building, but also to refinance a building and other business debt and even construction of a building whether it be ground up or major or minor renovations.
The key is that the property must be at least 51% or more owner occupied by your business. In other words, your business and/or your employees must legitimately occupy 51% or more of the building. .
It is also worth noting that some SBA 100% construction lenders will allow for construction of generic space for commercial tenants.
The following link provides detailed information on 100% construction loans: 100% financing commercial construction loans.
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Common Sources Of Commercial Mortgage Financing
There are many sources of commercial financing in the market. Commercial loans are offered by banks, credit unions, insurance companies, and government-backed lenders. Private investors also lend commercial mortgages but at much higher rates.
The right kind of commercial loan for your business depends on the loan features you need. You must also factor in your business strategy, the type of commercial property, and your credit availability.
Below are several common types of commercial loans and where you can obtain them:
Where To Get A Commercial Real Estate Loan
If you’re wondering where to get a commercial building loan, there are multiple sources you can obtain one from. You’ll have to compare commercial loan rates from various lenders to find out which one works best for you.
The following is a summary of the pros and cons of working with certain types of lenders:
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Full Capital Stack Solutions For Commercial Real Estate Owners Developers Entrepreneurs And Enterprises:
For merchant builders, the name of the game is IRR. For everyone in the business, it’s risk-adjusted, levered returns. It is very much about the time-value of your money. But strategies differ, as do capital solutions.
Commercial Real Estate.Loans and its team of expert commercial mortgage brokers have a rolodex as deep as any other national establishment. However, we pride ourselves on what make us different: access to more lending institutions and more capital, more diverse capital structures and solutions, in-house underwriting, and the same obsessive, hand-on, client service for $1MM loans as $50MM loans.
Whether youre sourcing a mezzanine piece that can’t be secured by a lien for your value-add office building opportunity, or you just need the best pricing on good, old-fashion life company loan for your stabilized property, Commercial Real Estate.Loans will leverage our relationships to benefit you first. Everyone else, including us, is secondary.
Full Capital Stack Solutions For Commercial Real Estate Entrepreneurs
Neighborhood Stabilization Program Grants
This program is meant to help neighborhoods that have a lot of abandoned or foreclosed homes. The resulting neglect drags down the appearance and hence the value of the entire neighborhood. Like most government grants for investment properties, NSP Grants can help people who could not afford to buy a house otherwise. When new owners move in and fix the property up, it benefits the entire community.
NSP Grants are provided by the Department of Housing and Urban Development. They do not go directly to individuals. But like most other federal grants, they go to state and local agencies and to some non-profits which then distribute the funds accordingly.
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First National Commercial Mortgages
First National offers commercial mortgages for purchases, new constructions and refinancing/second mortgages. First National classifies their mortgages into two main offerings:First Mortgage Financing andTop-up Financing and Second Mortgages.
First Mortgage Financing
First National offers First Mortgage Financing for mortgage loans between $2.5 million and $10 million for properties in major population centres in Canada. 1 to 5 year terms are offered with an amortization of up to 25 years. Maximum LTV is 75%.
|Major Population Centres|
Interest Rates And Fees For Commercial Real Estate Loans
Commercial real estate loans typically have higher interest rates than mortgage loans, with an average rate of 5 to 11% . Some lenders may go lower than that range, however, depending on the loan type and structure and the financials of the business. For small businesses that qualify, for example, SBA 504 loans typically provide lower commercial real estate loan rates, with averages below 3%.
You can also expect to pay some closing costs, including appraisal fees, origination fees, legal and loan application fees, and more. These fees typically amount to 1% to 2% of the commercial loan amount, which is much lower than what youd expect with a residential loan. If youre getting an SBA loan, though, you can also expect to pay a guaranty fee, which can be as high as 3.75% of the guaranteed portion of the loan on its own.
Where a commercial real estate loan can get really costly is with prepayment penalties and fees. As you compare lenders, make sure to read the fine print to determine how much you might be charged if you choose to pay off your debt early.
That said, commercial real estate loans dont require private mortgage insurance like conventional mortgage loans, so you wont have to worry about this ongoing cost.
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As a business owner, one of the most challenging decisions you will face is whether to lease or buy the space in which you operate your business. Owning your commercial space can become a very valuable asset over time, and if managed properly, can ensure your companys longevity
Understanding the basic details of commercial real estate loans can have a significant impact on your bottom line, and indeed the future security of your business.
Experts On Sba 7 Loans For Land And Real Estate
At SBA7a.Loans, we live and breathe the SBA 7 loan process. We match business owners like you with the best lender for your situation, even if it means that we have to look outside of the SBA 7 loan platform. We serve our customers by 1) offering a free educational portal, and 2) leveraging our lender-matching service to help you on your way to success. We have a deep love of American small businesses, and we believe it shows in our customer-first attitude.
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Refinance Your Commercial Building With Little Or No Equity
If you currently own a building and you do not have enough equity to refinance with a conventional or bank loan then this program could be a good fit. If you are unable to refinance your building or business debt with your current bank or lender due to to loss of property value, uneven financials, COVID 19, etc. but your most recent financials look solid then you might be able to qualify with an SBA lender.
The key to qualifying for this program is that you must have solid recent financials. Keep in mind, that “recent” means different things to different lenders as the SBA does not dictate to lenders what they can and cannot approve. For some it could mean 12 to 36 months of solid net operating income and trends and for others it could be less. It all depends on what the overall request looks like.
Who Scores Business Credit Profiles
There are three primary credit agencies that assess business credit scores. The following are three main types of business credit scores classifications used by lenders:
- FICO LiquidCredit Small Business Scoring Service This credit system ranges from 0 to 300, with 300 being the highest. The minimum required FICO SBSS score is 140 for a Small Business Administration loan pre-screen. But generally, 160 is more preferred by lenders.
- Dun & Bradstreet PAYDEX Score This business credit system has a scale between 1 to 100, with 100 being the best possible score. Scores between 80 and 100 are considered low risk, increasing your companys credibility to lenders. So aim for a high credit score of 80.
- Experian Business Credit Score This scoring system ranges from 0 to 100. Zero represents the highest risk, while 100 indicates the lowest risk. For Experian, a credit score between 60 to 100 is classified with medium to low risk. A score of 80 and above is well preferred by lenders.
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Emergency Capital Repair Grant
The Emergency Capital Repair Grant is provided by the U.S. Department of Housing and Urban Development to family housing property owners to enable them to carry out emergency repairs. This is a crucial one in the government grants for investment properties as these funds are used to tackle anything that can impact the safety and health of the tenants. Examples of repairs allowed include any structural components in critical condition and replacement of mechanical equipment. Individual investors can apply to the HUD for these funds up to a maximum allowed amount for this grant $500,000. Your housing project should serve a useful purpose for the community or the neighborhood where it is located as a requirement for compliance.
Who The Commercial Bridge Loan Is Ideal For
Any business that needs money faster than the typical 90 days delay.
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Projections & Debt Service Coverage Below 125x
A note about projections and qualifying…if the building you are either purchasing or constructing is going to be an improvement in some way over your current space AND if you don’t quite have the lender’s required DSCR it may still be possible to qualify.
For instance, if you have been paying more in rent than what your new payment will be then an argument could be made that you could qualify using projections based on the fact that you have been able to handle a higher payment.
Similarly, if the new space is in a much better location or larger and gives you an area that will enable you to sell or produce more product or offer more services and it will logically lead to increased revenues and profit, then it is possible that a lender may approve the loan based on the fact that your DSCR with improve after the move.
This actually happens quite frequently.
Capital Fund Education And Training Community Facility Grant
The CFCF program funding is $5 million and public housing authorities can apply for it. Like most government grants for investment properties, capital funding is for these authorities to construct, purchase or rehabilitate facilities for early childhood education, adult education, or job training programs based on need.
% Sba Financing By Borrowing The Down Payment And Other Options
If your business does not qualify for 100% SBA financing, you may still qualify for a low down payment AND some SBA lenders allow you to borrow the down payment for an SBA loan.
There are a few ways to do this.
Retirement Fund Rollover
Funds from Seller
Before You Start There Are A Few Things You Will Need To Know Or Have Available To Successfully Complete The Application
- Have available any special loan promotion offer code, if applicable.
- Know the dollar amount, type of loan you are applying for, borrowing purpose and collateral information, if applicable.
- Information about your business, such as:– Business Name and Address– Type of business organization and year established– Business Tax ID number, Annual Sales, Number of Employees
- Information about each Business Owner, such as:– Name, Home Address, Social Security Number, Title, Ownership Percentage, Personal Financial information, Historical Information– Government issued photo ID may be requested for verification purposes
- You may want to have copies of your most recent business and personal tax returns and/or financial statements to assist with completion of the application.
Important Information About Procedures for Opening a New AccountTo help the government fight the funding of terrorism and Money Laundering activities, Federal Law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will ask you for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your drivers license or other identifying documents.
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