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SBA, What's Closing Now

$1,495,000 – Acquisition and Rehab of Medical Office

Orlando, FL

This husband-and-wife doctor duo needed a loan to purchase and renovate their dream office. The purchase price was $1 million, and renovations totaled $495,000. Once we rolled in the closing costs, working capital and cost overruns, the final loan amount was $1,443,200.

What made this file even more complicated was that the doctors were also diverse in their business holdings. Each doctor owned multiple entities, which meant that their submission file was quite large – but we were able to get the deal done! We are the SBA experts, and know exactly how to manage large files and identify any issues before closing – saving you time, and getting your loan issued faster.

If you have a deal like this, explore your options by using our fast, no document Loan Finder App, or give us a call at (888) 959-1648.

SBA, What's Closing Now

$2,600,000 – SBA Loan – Employee Buyout

Melbourne, FL

Our client spent his entire adult life working for a very successful restaurant in town, so when the owner was ready to sell – he stepped up to buy. The only challenge was that he wanted to finance the deal immediately following a period of time when restaurant properties took a big hit.

Despite pandemic cash-flow challenges in 2020, we were able to prove a pattern in the financials to show a continued future trend of growth for the business. That along with the buyer’s good credit, great experience, and some money down, this new restaurant owner will not only carry on the legacy, but will also do so using the cheapest money available with an SBA Loan – before rates go up for good!

If you’re motivated to take the next step towards ownership, give us a call. It is very important to consult with a professional that you trust not only to help you with the loan process, but to strategize and select the best money to suit your future. To get started on qualifying for your employee/partner buyout loan today, contact ComCapFL through our website or by calling us at (888) 959-1648. There’s no risk or obligation to explore your options!

Blog, Commercial Loan News, SBA

New SBA Stimulus Promises Small Businesses Months of Free Money and MORE (EXPIRED)

*Amended on February 23, 2021 to reflect SBA’s Procedural Notice posted on February 16, 2021. Details constantly subject to change. For more information, visit the SBA’s website at www.sba.gov.

As things continue to rapidly evolve in commercial financing during COVID-19, one thing is for certain: small businesses need help more than ever. As it becomes more and more unlikely for a business to walk into their corner bank and secure a loan, private lenders and commercial loan brokers have assumed the role and are coming to the rescue – with the help of the SBA.

This week, the SBA announced its emergency enhancement plans to provide new stimulus for 2021 — and they’re coming in HOT and ready to help small business.

So, if you’re looking to acquire a business, start a franchise, purchase a building for your business, expand or even refinance – NOW is a better time than ever. Why?

Free Money.

That’s right. Unlike the SBA’s stimulus package from the last major recession (which also increased guarantee percentage and cancelled guarantee fees), the SBA has added in an extra bonus of paying THREE full months of principal and interest to the lender on the borrower’s behalf – up to $9,000 per month.

While we wait for the guidelines to officially come out, these are the details that we are hearing from the SBA on how this will actually work…*

For New SBA Loan Borrowers (Approved after Feb. 1, 2021)

  1. Three Months of P&I Payments Made For You by the SBA

For all new SBA loans approved after February 1, 2021, the SBA will make three payments of principal and interest on the loan, paid to the lender, on the borrower’s behalf. These payments are good for all amounts up to $9,000 per month. In addition, the borrower does not need to apply for this relief, as it will be automatically applied to for them, by the lender.

  1. Waiving of Guarantee Fees

In addition to the three free payments, the SBA will also waive SBA Guarantee Fees on all new SBA 7(a), 504, and Micro-loans that are approved starting February 1, 2021. These SBA guarantee fees are paid by the borrower, and are usually around 2-3% of the guaranteed portion of the loan. For example, here are some common amount guarantee fees:

  • $1mm loan = $26k fee waived
  • $3mm loan= $82k waived
  • $5mm loan = $138k fee waived
  1. Increase of Guarantee Percentages for SBA 7(a) Loans

The SBA is also changing the guarantee percentage of its 7(a) loans. These guarantees provide insurance to the lender in case the borrower is unable to repay the loan. In such a case, the SBA would cover the loan payment amount to the lender, thus mitigating the lender’s risk in taking the loan.

While this has no real effect on the borrower, it has major implications for the lenders: it encourages them to fund loans that they wouldn’t have otherwise funded. (Thus, if you were on the cusp, now would be a good time to go back to your lender and try again!) Typically, this guarantee percentage is 75-85%, but thanks to the new guidelines, that guarantee percentage will go up to 90% (or even 100% on loans with commercial real estate!)

With all of these new bonuses, a new $5 million SBA loan will save approximately $135,000 in payments and fees! However, there is a deadline: to qualify, your loan must be approved before September 30, 2021. So borrowers — make sure to apply prior to August 2021, as we will surely see the system bottleneck as it comes to a close…

Who is encouraged to apply?

If you’re looking to purchase, grow or expand your business and require between $500,000 to $5 million, an SBA loan might be for you. SBA Loans cover these requirements:

  • Owner-occupied Commercial Real Estate Purchase or Refinance
  • Debt Refinance
  • Business Acquisitions
  • Partner Buyout
  • Expansion
  • Start-up Franchise
  • Machinery/equipment Purchase

This applies across most industries, even covering hospitality that has bounced back during the pandemic. Unfortunately, this leaves out specific businesses and property types such as gas stations, mobile home parks, and ground-up construction.

Pre-Approval Checklist: What You’ll Need

The SBA loan application and approval process has never been described as “quick and easy” (most SBA loans take about 30-90 days to close), but you can make the process easier for both you and the lender by having these documents prepared ahead of time:

Business Documents

  • Three Years business tax returns
  • Interim Financials (P&L statement and balance sheet – no more than 60 days old)
  • Month-by-Month Financials (may be required for businesses impacted by the pandemic)
  • Business Debt Schedule

Personal Documents (for any owner with a 20%+ stake in the company)

  • Three Years of Personal Tax Returns
  • Updated Credit Score (make sure to double check this!)
  • Personal Financial Statement
  • Resumé (for acquisitions and startups)

And as always, when looking to obtain commercial financing, we advise that all borrowers and business owners keep their big-ticket purchases to a minimum! While a new house or fancy car might be selling at a price that you feel you can’t miss out on, you’ll really kick yourself if it ends up making you miss out on these killer loans!

Where to Apply for a New SBA Loan

Although traditionally, a business’s first instinct is to ask their local bank for a loan, that is no longer a viable option — especially for SBA loans. In order to obtain an SBA loan, you’ll want to apply for a loan with an SBA Preferred Lending Partner, or PLP. However, not all PLP’s fund the same SBA loans, and some only fund specific industries or commercial real estate property types. Your best move, to save time and find the best lender for your loan requirements, is to consult with a Commercial Loan Specialist who can help you examine several different lenders at once. These commercial loan specialists leverage their relationships with PLP’s and behave like a partner to you, the borrower — advocating for you from application to approval to close.

If you’re interested in applying for a new SBA loan today, we encourage you to reach out to our specialists at Commercial Capital Ltd., FL (ComCapFL) and find out how we can help you find the best options for you and your business.




Additional Resources:

Blog, Commercial Loan News, Commercial Real Estate, SBA

5 Loan Document Tips for Commercial Borrowers During COVID-19

Due to the economic impact of COVID-19, commercial underwriting has become more conservative than ever. While the experience is unlike the financial crisis of 2007, which affected the availability of commercial loans — we are seeing a change in the amount of risk a lender is now willing to take on as a result of COVID-19’s other economic effects. This is good news: it means that there is still plenty of commercial money available! However, the parameters that must be met to get funded have dramatically changed.

As we move into 2021, it is expected that cautious underwriting to continue as an industry-wide trend. Thus, borrowers will have to provide more documentation than ever to qualify for commercial loans. Before applying for your next commercial loan, take a few minutes to review our checklist for how to best prepare or the underwriting process. Proper preparation will not only save you time down the road, but may also be a make-or-break in securing the best loan terms in the near future.

Loan Doc Tips 2021

Tip #1: Provide Extra Income Verification

The effects of COVID-19 may have had a significant impact on the income of your business or property in 2020. In order to prove that your business is has a steady track record, be prepared to provide more than the standard 2 years of income tax returns – providing 3-4 years as well as 3-4 years of personal tax returns will set you up to be a more solid candidate.

Every lender has different requirements. Make sure to confirm these requirements ahead of time, and then have the additional documentation readily available – as it will more than likely be called upon.

Tip #2: Prove Higher Debt Service Coverage Ratio

While in 2019, a DSCR of at least 1.15 showed that a business generated enough income to service its debts, such a ratio is no longer accepted as the standard when it comes to applying for commercial loans. In order to put your best foot forward, show how your business is strong enough to last the pandemic by proving a higher debt service ratio of at least 1.2-1.25 or higher.

In order to prove DSCR, banks and lenders used to require copies of bank statements. However, as a result of the pandemic, we’re seeing lenders ask for recent month-to-date bank statements to give a more accurate real-time look at how your business is keeping up with its payments. (These are truly unprecedented times!)

Tip #3: Add your PPP or EIDL to your Debt Schedule

If you received a PPP or EIDL, you’ll need to secure additional documentation for your application. Make sure to communicate with your CPA on whether or not your loans will be forgiven, and then make sure to add them to your debt schedule.

If your PPP loan is forgiven or WILL BE forgiven, make sure to have all statements, payroll, and other documents on hand to support your claim. If you received an EIDL, treat it as an SBA loan in lien position — as it is similar but not superior to a SBA 7a loan.

Tip #4: Re-Verify Your Business and Personal Credit Scores

One of the biggest mistakes we see during the underwriting process is that the borrower was unaware of changes to their credit scores. It is extremely important, more than ever, to know both your business AND personal credit scores from all of the major bureaus.

And please, we know that the deals right now can be tempting — but hold off on making any major purchases, such as a home or even luxury vehicle, until after your loan is approved!

Tip #5: Provide Statement About COVID-19 and Your Business

Treating your lender like they are your partner in your business endeavors is key. In addition to providing all proper income and credit verification as detailed above, consider also providing a personal statement that outlines the effects of the pandemic on your business. Per the SBA, this statement should include:

  1. How has your business revenue/staffing levels been impacted?
    • Do you have a plan in place to return these levels to “normal” operation?
    • What’s your contingency plan in case those levels are not met for the next 18 months?
  2. How have any restrictions such as “stay-at-home orders” and its limitations impacted your cost projections, clientele or access to supplies, inventory and/or equipment?
  3. What other COVID-19 impacts have affected operational cost of your business? (ie. sanitation supplies, protective gear, and other essential costs for protecting the business and its employees?)
  4. Is there any reliable historical financial information for your business based on the current market conditions that can predict its probable success?
  5. How concentrated or diversified is your customer base? and How dependent are you on those concentrations?
  6. How diversified are your vendors/suppliers? and How dependent is the success of your business on those particular vendors/suppliers?

Whether or not you’re applying for an SBA loan, make sure you have this comprehensive statement ready to go.

In conclusion…

Times have changes, and so must your loan application. By thinking like a pandemic-era lender, and preparing your documents like a pandemic-era invest, you’ll save yourself a lot of time from having to go back to the drawing board… and these days, timing is everything!

Speaking of timing, do yourself one better than simply implementing these tips — consider working with a Commercial Loan specialist, like those at ComCapFL. Unlike a broker who simply finds a loan that matches your requirements, a commercial loan specialist leverages their private funds and industry relationships to find the loan that works for you and your specific goals. Working with a commercial loan specialist from the beginning of your loan process won’t only assist you on elements of the loan, such as the application — but it will also keep you from having to start all over again in the case of push back or denial!

At ComCapFL, if we accept your loan request, we’ll close your loan. To learn more, email us today at info@comcapfl.com or call us at (888)959-1648 and find out what we can do to help fund your commercial real estate or business project.

Blog, Commercial Loan News, Commercial Real Estate, Fast Business Loan, SBA

How the Commercial Financing Landscape is Changing Amid the COVID-19 Pandemic

Surviving Financial Lending Crisis of 2020

…this is the new normal.

There has been a major shift in the landscape of commercial and business lending as result of the recent economic shutdown due to COVID-19. Some of the effects on the economy are obvious, while others are not yet as clear.

On an individual level, our country is witnessing an unemployment crisis. We are seeing the highest unemployment rates since the Great Depression. While some expect to be out of work only temporarily, many will find their job loss to be permanent. While the real numbers are yet to be determined, it’s possible that as many as 20 million Americans will remain jobless in the near term, despite businesses reopening and inviting workers back. Some of the other resulting effects of this widespread unemployment will take months and possibly years before their full impact becomes apparent.

Meanwhile, businesses are facing unprecedented challenges. While many were hoping for a safety net from the CARES Act, most will soon close their doors. While these loans were intended to save small business, lax guidelines for borrowing caused most of the PPP and EIDL money to go to large business and corporations through carefully exploited loopholes. In good news, perhaps some small businesses will find other financing relief as a few private equity and bank-owned funds are getting back to agency and SBA loans. Although SBA loans have been available in both 7a and 504 programs, exposure and risk are now being considered even more carefully. Take SBA 504 loans for example: Currently, SBA 504 programs have become scarce and are no longer available under $1 million. Because of the effects of COVID-19, every lender is treating their due diligence requirements differently and being careful to measure the impact of the recent months on each individual business loan request.

In the commercial real estate markets, most banks and alternative lenders are being overly cautious. Many find themselves running behind from using remote workforces or from trying to keep up with deployment of the PPP loan program. In most cases, they’re prioritizing existing clients in the interest of protecting exposure and portfolios, rather than taking new clients and originating new loans.

In the commercial property space, the jury is still out on retail, office and mixed-use properties in terms of the predominant components of these property types. The least affected property types appear to be multifamily apartments and to a lesser degree, industrial properties. The CLO lenders, who utilize the credit market to originate loans, are sidelined; and unprecedented new rules are being written for exposure, leverage, and cash reserves. Most lenders are adjusting their LTV percentage, with very few going over 65% and virtually none of them doing cash-out or non-recourse loans. While there’s still plenty of money sidelined in private equity, CMBS has been slow to restart, and private equity funds that are top-heavy are carefully examining every risk, with many deals getting pushed to the side. These days, a multifamily commercial loan over $1 million is more likely to come through an agency-backed program like Freddie Mac than from a balance sheet loan.

While we don’t have a crystal ball, at ComCapFL, we do have decades of experience in changing markets. Our read on the current market is that we will continue to see very little aggressive lending from the banks who have grown more cautious steadily over the years, even before COVID-19. However, it will take many months before we start to get a real feel for the overall impact on the US and world economies. A good comparison to the current situation would be the Black Monday market crash in October of 1987, the largest one-day drop since the crash in 1929 that preceded the Great Depression: Whereas consumer sentiment returned to normal rather quickly around 1988, it wasn’t until October 1990 that the economy actually re-stabilized and we entered into an almost 10-year bull market.

Make no mistake about it, our country is definitely in a very volatile position with its rapidly changing landscape for commercial money. That’s why now, more than ever, it’s extremely important that you have a competent and experienced commercial financing professional to help guide you through the current market and lending climate. Going at it alone may prove to be extremely difficult for even the most seasoned investors and stabilized businesses.

At ComCapFL, we’re here to assist you in navigating through these turbulent waters and getting you through these tough times. Give us a call at (888) 959-1648 or email us at info@comcapfl.com to speak to a specialist about real solutions for your business or real estate investment financing.

Commercial Real Estate, Fast Business Loan, SBA

$242,000 Term Loan/SBA – Dental Office Construction

Augusta, GA

Another client of ours, a dentist, was using his personal credit cards for his business expenses. Because of this, the client had a personal FICO score lower than 600. With a low FICO, no lender could close any loans for this client.

This is something we see often in early-stage businesses. Using a “two-step” approach, we moved all his personal debt over to the business (where it belonged), boosting the personal FICO into the 800 range. A follow-up with an SBA Express loan was approved and closed within 3 weeks. With the new loan, the dentist could finally execute his plans for constructing a new office in 2020.

Often, when it looks improbable or even impossible, chances are — we’ve seen the situation before. We’ll know exactly what to do and thus, we have the the solutions to securing you the loan you need.

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