My New Blog

Just in the last few weeks I have begun working with a new lending entity that fills an enormous niche. As you know, banks are lending to only the top 10-15% of all commercial properties nationwide. They (the banks) site a myriad of reasons for not lending, but it is usually one or more of the following issues that cause a decline from a bank:

•  Debt service coverage (which is related to NOI)
• LTV or loan to value
• Credit score
• Liquidity
• Global cash flow
• tenant stability or finances
• Lease term
• Vacancy
• Inability to provide documentation
• Location of property
• Condition of property

This new loan program, which I plan to market very heavily, is more flexible in almost every respect. The pricing also falls between hard money and bank money with rates from the sevens to the high eights, and points priced likewise between 2 -3 total.

Among other things, this lending program allows:

• LTV to 75%
• Debt service coverage to 1.15
• credit scores to 660
• minimal reserves
• does not consider global cash flow
• focuses on repayment and exit
• Does not examine tenant financials
• Less stringent regarding lease terms
• Less strict regarding building condition and location

This is a very exciting new program that should work well for a large number of commercial properties that are just missing bank financing terms. Avoids the 10-11% rates of hard money and the hard money costs of 4-6 points.