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Blog, Bridge Loan, Commercial Loan News, SBA

3 Pandemic-Proof Commercial Loans

Pandemic or not, businesses want to stay in business. Investors want to jump on rare investment opportunities — but how do they do that when the banks shut them out? The answer: they turn to private lenders.

But why are people so hesitant when it comes to private lenders?

Sure, banks have been around for a long time and have traditionally been seen as trustworthy, while private lenders may be seen as rogue lenders who make their own rules — but that isn’t necessarily a bad thing.

Private lenders aren’t loan sharks that are after your assets. They are established, reliable lenders that are looking to step up when the banks cannot… and these are especially such times. Dave Dambro, branch owner of Commercial Capital Ltd., FL, says, “The truth is, lenders don’t want your real estate. They don’t want your collateral. They’re in the business of giving money to get this much back in return. It’s that simple.”

Therefore, if you’re a borrower who is facing credit or cash flow challenges due to the effects of COVID-19 — but you have a strong business or commercial real estate asset to leverage for a loan — you still have several real options available when it comes to commercial financing — and they’re not available at your corner bank.

These commercial loan options, all from private lenders, include Hard Money, Bridge, and SBA loans.

Hard Money

Hard Money loan is a type of mortgage that is secured by real property, and is typically from private money lenders rather than banks. Hard money loans are non-recourse, and thus the borrower is not held personally liable in case of a default. This means that in the case of a default, the lender would only go after the collateral asset – which is, in our example, the commercial real estate – rather than going after the borrower’s personal assets.

Hard Money loans are COVID-proof for this simple reason: buildings DON’T GET SICK! Since these are short- term loans (typically less than 24 months) they operate on the expectation that the property won’t decrease in value significantly enough during the brief loan period. And also, while certain properties may become slightly less attractive (ie. office buildings, hotels, retail strips), the loan only lends at 50-70% LTV. Thus, the emergency sale of the collateral will still usually cover the loan in the case of a default.

Besides being non-recourse, there are some other COVID-friendly benefits to these loans: since they’re concerned with the collateral, they require less documentation from the borrower. This is especially beneficial for the borrower who has credit challenges or can’t qualify for a conventional loan through a bank. Can’t find an appraiser? This is not necessarily a problem! Sometimes, lenders themselves will determine the collateral’s market value — without an appraiser — if there is sufficient evidence of the property’s value.

Bridge Loans

As with a Hard Money loan, a Bridge Loan is a loan made of temporary funds that are based on the value of the real estate collateral’s value, with some emphasis based on the borrower’s creditworthiness. Also known as gap financinginterim financing, or swing loans, Bridge Loans “bridge” the gap during times when financing is needed but not yet available.

Both corporations and investors may use bridge loans, which can be customized by the lender for many different requirements. These requirements may include making improvements, renovations or repairs to CRE prior to securing a permanent loan, or obtaining financing prior to stabilizing a property and qualifying for better rates and terms.

Bridge loans are usually short-term averaging 12-24 months. Generally an interest-only monthly payment rather than an amortizing payment is required to service the debt at slightly higher interest rates than a permanent mortgage. (However, since the monthly payment is interest-only, the cost to service the debt may not be that much higher than a typical P&I monthly payment.) Bridge loans are backed by some form of collateral (primarily CRE), but may include business assets.

By using a bridge loan, borrowers may use the equity in their current commercial real estate as the down payment on the purchase of another investment property until securing a permanent financing solution.

Why are Bridge Loans COVID-proof? Similar to Hard Money loans, Bridge Loans are COVID-proof because they are short term and rely on collateral, which “doesn’t get sick.” However, Bridge Loan requirements include providing a statement with an exit strategy back to permanent funding. For example, “If you give me this money for 12-18 months, here’s how I will refinance back to permanent…” This exit strategy acts as a safety feature, reducing the risk of exposure for the lender. This is why, with an exit strategy, you can reap the benefits of a higher LTV and better rates on a Bridge Loan.

SBA Loans

SBA Loans help stable small businesses grow and expand. By meeting certain criteria, the Small Business Administration guarantees a portion of your loan, which lowers the loan’s risk – getting you the best commercial loan rates and terms available.

Due to the effects of the pandemic on the economy, it’s become harder for lenders to find stable businesses to fund — so the rates are lower than ever. However, if your business has survived the challenge, an SBA loan might give your business a unique and rare opportunity to grow, acquire, and expand. Use an SBA loan to finance new equipment for your medical office, or purchase another fulfillment warehouse for your growing e-commerce business. An SBA loan has so many uses!

Why are these loans COVID-Proof? SBA Loans are COVID-proof because the SBA’s role is to promote the strength of small businesses to support and grow the economy and job market, as well as provide relief such as EIDL’s for natural disasters and such. This means that it will always be in the government’s best interest to save small businesses in the case of a natural disaster, such as the COVID-19 pandemic. That is why, thanks to the CARES Act, Congress has allocated another round of additional funds for SBA guarantees — providing rare and excellent financing opportunities — in order to keep the economy moving forward. (For more information on the current SBA incentives, read our recent article here.)

In conclusion…

Pandemic aside, there is plenty of commercial money available. If your business or investment makes sense financially, then the next step is simply finding the right commercial loan specialist to nail down the right loan for your requirements. The professionals at Commercial Capital Ltd., FL (a direct private and bridge money lender) can assist you with their own funds, and additionally advise you on the entire picture of your loan options, including SBA, CMBS, and conventional options. If you or your business is looking for commercial financing and want to find the best options available, call us today at (888) 959-1648 or email them at info@comcapfl.com.

Bridge Loan, Commercial Real Estate, What's Closing Now

$1,950,000 – Bridge Loan – Apartment Complex

Memphis, TN

This bridge loan on the purchase of an apartment complex did not have the necessary occupancy to get a normal loan, and the client needed to close quickly. The time it took from when the client signed our term sheet to the closing was only a whopping 18 days! NOT business days, actual calendar days!  Bridge loans are a great alternative when you need speed and flexibility.  Count on us to have the best hard money and bridge loan sources in the country. 

Bridge Loan, Commercial Real Estate, What's Closing Now

$2,000,000 – Bridge Loan – Multifamily Acquisition

Germantown, TN

This was a purchase of an apartment complex with an occupancy lower than 85% – and thus could not qualify for conventional financing. However, we were able to get the deal done with a bridge loan source that closes quickly.  Once this proven operator restores the building to full occupancy, it will be easy to move this loan into a conventional loan.  These are the easiest bridge loans for us to do and we can really perform well on these anywhere in the country.  Give us a call at 888-959-1648 on your next apartment deal, we can get it done for you!

Blog, Bridge Loan, Commercial Loan News

2019: A Huge Year for Construction & Bridge Loans

2019: the year for construction and bridge loans

For ComCapFL, 2019 was the year of the Construction and Bridge Loan. Most of these mortgages were conventional, non-SBA, non-government loans — which confirms that not only are we able to secure multi-million dollar non-recourse loans, but we’re able to do so with an incredibly fast turnaround. For example:

Last week, we closed on a $3.7MM purchase and construction loan at 80% LTV. It was a conventional, non-SBA loan and the rate was 5.5% with no bank points. The tenant, a successful local restaurant, wanted to open their fifth location. We closed the loan in 31 days (from time of signing of the approval until it closed and funded!) This deal was strong; but the speed, execution, and terms were excellent.  Not to mention, the borrowers were very pleased.

Now, in the new year, there is still A LOT of money available for construction projects. We have some incredible niches, including the following incredible products:

  • GREEN and SBA 504 For Construction Projects up to $25MM

These loans will have blended rates close to 5% and are available for hotels, self storage, funeral homes, bowling alleys and many other special purpose properties. This is considered a “very hot product” and will often take the Loan to Cost (LTC) up to 85-90%! With a green project, we can do SBA loans — even if you have maxed out your SBA eligibility. Call ComCapFL today to discuss your options.

  • NON-RECOURSE For larger construction projects above $5MM up to $100MM

First Mortgage Bridge Debt Up to 80%-85% for Multi-family in Major Metros (75-80% for other main property types including hotels!)  Rates tend to be around the 8.5% mark. THIS IS PRIVATE MONEY, NON-GOVERNMENT DEBT, which means quicker closings. It is the lowest-cost, high-LTC/non-recourse money available and we have it — at ComCapFL.

  • 100% Construction Money For Credit Tenant NNN Construction Projects

If you have a signed NNN lease from a credit tenant and need money to build out the space, we can get up to 100% of cost on that project. Of course, we can fund smaller projects as well (although the local banks do a pretty good job on the small stuff already.)

If you have deals that are too large or need higher LTC than the banks are willing to do, then trust in SMB lenders like the team here at ComCapFL. With more than 30 years of experience in real estate, business development and finance, we can help guide you to your perfect loan solutions, be it bridge loans or otherwise. Bring your loan request to us, and our experts will review the loan for FREE and deliver terms in writing within 48 hours. As we always say — there is no cost to get an expert second opinion and possibly, an approval!Call us today at 888-959-1648 or e-mail your scenario to info@comcapfl.com.

When most lenders say no, we say yes.  Over 90% of our closed loans were denied somewhere else BEFORE coming to ComCapFL.  When you present us with your loan requirements, we quickly preview the loan and if doable, kick out terms at no cost to anyone.  Once you move forward with us, we sink our teeth into the deal and have the tenacity to get that deal done even in today’s crazy market.

Archive, Bridge Loan, Fast Business Loan, What's Closing Now

$3,968,750 – Term/Bridge Loan – Gov. Contractor

Melbourne, FL

A fast closing was essential for a 40 year-old, stabilized government contractor. They called their own bank for a CRE cash-out refinance loan on their office property — a pristine piece of CRE collateral with less than $100K left on the original mortgage balance. After 3 months of “lip service” and wasted time, the bank came back with a “NO.” With 100 employees facing layoffs and over $200MM in new contracts approved and pending, we were able to provide a $500K term loan in less than 1 week… just in time for payroll, saving 100 jobs and a great business. We followed this loan with another $3,470,000 bridge loan from our in-house funds. We closed in under 3 weeks, with no appraisal, just in time to fund the operation’s cash requirements.

*On a personal note, all of us at Commercial Capital Ltd. really like it when we can help save jobs, protect the families and keep perfectly solid businesses from facing extinction – especially when the bank can’t!

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