Was offered private money lending for my commerical deal

[Adam Liu]

Hi guys this is my first post on here. I wish I had more to contribute before I start asking questions but I guess I'll just have to deal with the newbie hazing (please be kind!).

I currently have a deal for a commercial deal. I will be owner occupying with one of my businesses and there are several units within the deal which I will rent out. 

Unfortunately I hit a road block with conventional bank financing which I have been pursuing for the better part of the last 3 months. Pursuing SBA loans is a real challenge!

Since time is not on my side I have been looking around for some other options. I so happen to be speaking to a friend of mine about my situation and he offered an avenue of private lending. He knows my business and has some intimate details on my financials and cash flow from my business. He is comfortable and confident in financing my deal. The terms that were initially offered is 9% / 180 months on 700k.

My question is rather broad. This is the first property I am purchasing both residential or commercial. I have been researching and learning about conventional lending for the better part of this year however private money lending I am completely in the dark about. I will be speaking to my attorney about it however any first hand experience would be great.

Is there a common practice in which terms are drawn up? Who holds title on the property? What else should I expect?

I'd love some advice on what I could bring to the table to discuss. 

Thanks very much everyone!

[Jay Hinrichs]

nothing different than getting a loan from a bank...

you have lender  =  beneficiary

you the borrow = Mortgagor or Trustor

Title is in your name subject to paying off the beneficiary.

if there are no points or up front fee's and you can't get money any where else and if the deal works for your business and cash flow then 9% is a fair rate.. and very rare over 180 months if its fully amortized.

SBA loans are a beotch and they are not dischargable in BK so if you business needs to reorg you are forever on the hook.. I would not do a SBA loan ever personally.