What types of deals are funding?

SBA loans! As most of you know, the SBA 7a loan goes up to 2 mm and you do not need to own the real estate and the SBA 504, where you do own the real estate, has a loan limit of 5mm.

We recently funded a Firehouse Subs and an ACE Hardware franchise deal and the key to getting this done is working with a lender that does not charge up front fees! Borrowers are afraid of being raped by the unscrupulous broker or banker who charges these fees. So, my advice is to NOT refer yourself or your client to brokers or bankers who charge upfront fees for SBA loan placement help. Also, you should avoid any broker or banker who charges more than 1pt for origination. The active lenders are paying YSP's of 1 point to their preferred brokers. Isn't 2 points for compensation enough?

Fact: Most local banks are on the sidelines still but there are several lenders that avoided the sub prime residential catastrophe and the irrational exuberance that took place in the commercial loan markets and are actively funding deals in conjunction with the SBA.

If you are looking for some small balance commercial business I would focus on working with business owners that qualify for the SBA loans and franchise's that are already approved by the SBA.

Please share with me loans and deals that are closing for you! Thanks..

Attack life!

Blaise

Edited: 06/26/2010 at 10:05AM

Joel Soforenko

Real Estate Lender · Springfield, Massachusetts

166 posts
694 Influence
4 Awards

Icon_minipost Nov 09 '09, 12:55 PM

Blaise,

No question SBA loans are good options. However, the minimum and maximum loan amounts can be a real problem for borrowers. Also, the 90% LTV is usually fictional in this financing market - unless the borrower wants to wrap an additional property.

As we all know, right now cash is king. If a borrower has the requisite 20 - 30% down payment plus credit qualifies, investment property financing is available.

3 to 5 year fixed loans have the best rates and pre payment penalties. Non bank lenders have the best amortization (25 and sometimes 30 years). With a caveat, local and regional banks will do more with their money then institutional lenders.

As we all know, strategy and planning is the most important part of the loan process.

Edited: 06/26/2010 at 10:27AM

Jeff S

Private Money Lender · Los Angeles, California

219 posts
3430 Influence
7 Awards

Icon_minipost Nov 18 '09, 02:32 AM

Scary Joel.

With such short term loans, the next 3 to 5 years will be the fastest in your life if you haven't properly planned how to pay off those balloons BEFORE you borrow the money!

Edited: 06/26/2010 at 10:34AM

Monty Busch

· Dallas, Texas

7 posts
23 Influence

Icon_minipost Dec 23 '09, 11:52 PM

local banks are the answer for longer term. I focus on private / hard money. my investors and i make the underwriting decisions and base it on sound real estate with only small importance on borrower, we let thier cash in the deal do the talking.

deals that have a "story",, meaning there is upside and you are buying at a discount for good reasons .we see too many people willing to jump in and buy someone elses problem

income property that makes sense, land and in solid areas are still being funded at 40 50% ltv.

we focus and do see smaller deals (our avg deal is about 500k) fund with regularity.

Monty

Edited: 06/26/2010 at 10:57AM