Any TOP Non-Bank $5mm lending options?

Question

My wife and I are first in line to acquire a profitable wedding venue in Illinois.  We need creative/quick financing on a $5mm property.  We have an NDA, LOI, and a contract, so no questions about the property please.

We have a successful wedding officiant service business with 500k in total yearly revenue (265k NET) AND an 800 credit score. We are expanding our business into a wedding venue business that has 900k in total yearly revenue (581k NET with addbacks).

We want our monthly mortgage payment to stay around $30k. The seller is willing to finance between $500k-$1mm and/or provide $500k cash at closing in the form of deposits on unexecuted weddings for working capital.

We need a lender who will release the RE/business appraisal upon completion (not hold it until closing) so that we may use it for any further negotiations. Looking for a 30 year loan at Prime +0, with 10% down (to include seller financing).

There’s a good amount of cash flow here, so we need a lender who can close quickly with minimal conditions, fees, prepayment penalties, etc.   We need to move on this ASAP.

Thank you for any advice and referrals you can provide!   -Brad

Stephanie P. · Answer

Let me see if I have this right.

Quick close.

$5,000,000 purchase price

Minimal conditions.

Minimal fees.

Minimal prepayment penalties

10% down.

Prime +0

Commercial 30 year loan

What you're really saying:

"I know I won't get this at a bank, so I'm going to try a non-bank that has less stringent underwriting criteria.  I want the cheapest loan I can get, with next to nothing out of my pocket, but I want the longest amortization I can get on a $5,000,000 property.  But hey Mr. Lender, make sure to not ask for too much when it comes to conditions.  Also, while you're at it Mr. Lender, since you have such a unicorn loan that has a low rate and low down payment with a long amortization with very few questions asked on a pretty good sized loan, keep your fees to a bare minimum because I know how you lenders like to juice borrowers on commercial venues that have limited uses.  Oh and by the way, please don't have any real expectation of even getting the low interest rate you're charging for very long because I want a short prepayment penalty so if another unicorn comes along, I can leave you and go there."

Best of luck Brad.

Stephanie

Chris Seveney · Answer

@Stephanie P.

I thought the same thing. Prime plus zero… 30 years…  yes because a private lender who is getting double digit rates and 3 points will lend for free.

I think there are a few Nigerian princes who lend at those terms.

Doug Smith · Answer

I've been a banker/lender for 32 years, so I understand your request. That's got SBA written all over it. Most of the time in BP people say "I want to get an SBA loan for my rental home". That's not what the SBA is for. That being said, the SBA is all about making loans to operating entities. It's not my field of expertise, but the SBA is your best option. P+0% based on the narrative you lay out on the deal, unfortunately, is likely not going to happen.

Here's my biggest concern for you. The seller is pumping in your cash injection, not you. That's going to be the downfall of your deal. Lenders are going to want to see skin in the game from you. Lenders aren't stupid. When a seller pumps in money, they are saying "I know the property is only worth $900K, but I'm going to charge the buyer $1M and give them $100K in "closing credits" to get them financed. The default rate for those that don't put in a reasonable cash injection from their own funds (not borrowed or provided as a seller concession) is exponentially higher. If I were person underwriting the deal, I wouldn't do it without a reasonable cash injection directly from you in funds that I can "source", meaning I have a paper trail of where the money is coming from.

I know it's not the answer you want to hear, but it's the true answer from someone that has been in both bank and non-bank lending for 32 years and has a formal commercial credit background. I wish you well in the endeavor and I really hope you can find a way to put it together.

Sam Yin · Answer

@Stephanie P.

That's about how I translated too!

I want to find that unicorn as well...

Erik Estrada · Answer

This was the roast of the year haha

Carlos Ptriawan · Answer

Even my mother would not loan me with prime plus zero :) lolImagine if every private lender is doing this, and your business failed, we are all going to file chapter 7 LOL

V.G Jason · Answer

Depending on where this is in Illinois, If you can show last few years (since 2017), all financial statements. And if it checks out, I'll give you the capital just it'll have a prepayment penalty or a line of credit that will have an initial 6 months of grace period. Draws would have tiered rates and be capped on monthly amounts. Like any draw, you'll need to show receipts. Could cover the sellers financing too at better terms.

Stephanie P. · Answer

No worries.  I wish you all the best.

Brad Hughes · Answer

Sorry Steph, Kindness begets kindness, sarcasm begets sarcasm.   Enjoy!   -B

Stephanie P. · Answer

Brad,

BTW,  I forgot to welcome you to Biggerpockets.  Sorry.

Stephanie Sarcasm here.  Please share with the group which bank you're using for this unicorn.  I'm sure we all would like to send them business because their terms are out of this world.  Where else can we find a bank that will allow the seller hold an under market rate second for half of the already under market down payment (also under market).  We'd all give you a referral fee when the mountain of deals we get close.

Stephanie

Any TOP Non-Bank $5mm lending options?

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