Doug Knows Commercial
Many lenders claim to know about commercial loans, Doug actually knows commercial lending. Doug has a formal commercial credit background and years of commercial lending experience from banks large and small. From multi-family properties to factories, office buildings to retail centers, Doug can help finance the project. Here are just some of the types of commercial loans that Doug can help you obtain. You’ll want to call Doug and talk through your scenario. If anyone can help, it’s likely that Doug can.
INVESTOR LOANS
Television Networks like HGTV and DIY have taken the art of real estate investment and kicked it into high gear. Unfortunately, banks traditionally don’t fancy lending money to fix-n-flippers and landlords. As luck would have it, we specialize in it. We, ourselves, have a great deal of experience as real estate investors and we have relationships with many lenders that are eager to fund your next flip or rental property.
CONVENTIONAL COMMERCIAL LOANS
Commercial Loans that are typically available at banks and credit unions are considered to the be Conventional Commercial loans. The collateral is nearly any type of commercially-zoned real estate. Conventional Commercial Loans are normally broken down into two different types: C&I and CRE.
C&I, or Commercial and Industrial Loans, are usually owner-occupied where the funds that go to paying down the debt come from the business operations of the occupying business. This type of loan is the most common type for community and commercial banks.
CRE, or Commercial Real Estate Loans, are loans on income producing property where the funds that go to pay the debt are from rents paid for that property. Apartment Buildings, Retail Centers, and Office Buildings are common types of CRE Loans.
Unlike residential loans where very specific rules are in place for underwriting of the loans, each commercial loan tends to be unique.
CMBS LOANS (COMMERCIAL MORTGAGE BACKED SECURITIES)
Wall Street provides a fantastic source of liquidity for commercial lenders. CMBS Loans, or Conduit Loans as they are commonly known, usually have very flexible guidelines and provide lenders with options that go well beyond what they could do with a loan that they hold on their books. Loans are packaged into “traunches”, or groups of loans and pieces of the trauches are sold to investors. It allows lenders to make loans to borrowers that might be difficult for them to carry on their balance sheets and, therefore, allows borrowers to obtain loans that they might not be able to get through conventional sources.
SBA LENDING
The SBA works with lenders to provide loans to small businesses. The agency doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions. The SBA reduces risk for lenders and makes it easier for them to access capital. That makes it easier for small businesses to get loans.
SBA 7(a)
The 7(a) Loan Program, SBA’s most common loan program, includes financial help for small businesses with special requirements. This is the best option when real estate is part of a business purchase, but it can also be used for:
- Short- and long-term working capital
- Refinance current business debt
- Purchase furniture, fixtures, and supplies
The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type of loan is best suited for your needs.
Once you’ve decided to apply for a loan guaranteed by the SBA, there are several documents that they require us gather. We’ve found that it is best to collect as much up front as possible. Here is a checklist of items that they might require to process your loan request:
- Borrower Information Form (SBA Form 1919): This form is required for all owners with a 20% interest or more in the business.
- Statement of Personal History (SBA Form 912): This might be required after completing the Form 1919
- Year End Profit/Loss Statement for the Business for the past 3 years.
- Year End Balance Sheet for the Business for the last 3 years.
- A Schedule of all Business Debt
- A Year-to-Date Profit/Loss Statement and Balance Sheet for the most recent period for the business.
- Projected Financial Statements for at least the next year
- Business License
- Articles of Organization
- Meeting Minutes showing that the signers on the loan are allowed to bind the business.
- Personal and Business Tax Returns compete with all supporting schedules for the past three years. Be sure to include any other business tax returns that are mentioned on the Schedule E of any owner’s tax return.
- Include a Resume for any owner with a 20% or more ownership interest in the business or any main director or manager for the business
- A Business Overview: Please provide a brief narrative on the history of the business.
- Business Leases
- For a Business Being Purchased:
- Current Balance Sheet and Profit/Loss Statement for the business being purchased
- Previous 3 years Business Tax Returns for the business being purchased
- Proposed Bill of Sale for the Business
- Asking Price along with the schedule of inventory, machinery and equipment, furniture and fixtures
- Franchise, jobber, or licensing agreements
- Proof of Equity Injection
SBA 504
The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing, while promoting business growth, and job creation. As of February 15, 2012, the $50 Billion in 504 loans has created over 2 million jobs. This program is a proven success and win-win-win for the small business, the community and participating lenders.
The 504 Loan Program provides approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. 504 loans are made available through Certified Development Companies (CDCs), SBA’s community based partners for providing 504 Loans.
BRIDGE LOANS
Often times a borrower might be putting down a great deal or they might have a lot of equity in the property, but for some reason they either can’t get conventional financing or that conventional financing is expected to take to long. That is where a bridge loan comes in. Bridge loans are loans that are intended to be short-term facilities, not long-term financing vehicles. They are usually a bit higher in rate, but they normally rely greatly or solely on the value of the underlying collateral. They tend to close very quickly and form a “bridge” between a short-term need and a long-term solution.
Doug Makes the Process Easy
Simply call Doug and explain what you seek in a commercial loan. He’ll work with you to devise the best program for you, collect the appropriate documents, and guide you through the process to make your dream of a commercial loan a reality.
Loans provided by Douglass A. (Doug) Smith (NMLS #1984040) with Castle Rock Capital Management powered by Groves Capital, 813-727-3621, dsmith@grovescapital.com. Lender and Real Estate Agent are not affiliated. You are not required to use this lender.
About Us
A family owned company; we’ve been helping clients purchase and refinance for several years now. Please click on About in the headers to learn more.
Company NMLS: 1678775
www.nmlsconsumeraccess.org
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Contact Groves
5314 Sweetwater Trails
San Diego, CA 92130
Phone: 619-212-1127
Toll Free: 833-968-0056
Rates and terms are subject to change without notice. This is not a commitment to lend or guarantee of any kind. Groves Capital, Inc. (NMLS 1678775). 5314 Sweetwater Trails, San Diego, CA 92130. Regulated by the Department of Financial Protection and Innovation, Finance Lenders Law License, #60DBO93155. Washington Consumer Loan Company License, CL-1678775.