90% LTV/LTC PERMANENT FINANCING SBA 504/7A PROGRAM
Fico: 680+. If any credit dings the reason why must make sense. Lender is looking for borrowers with good credit, decent liquidity & direct industry experience is a must! Most SBA lenders want a 680+ mid fico score or higher.
Credit Issues: If borrower is on a payment plan with the IRS this lender can work with this sometimes. SBA funds cannot pay off delinquent liens or pay roll taxes.
Loan Terms: Up to 25 years amortization. Different Fixed Options Available
Loan Size: $350K to $5M
Max LTV: 80-90%. SBA lenders can cross collateralize other properties and even the borrowers' personal home to get the desired LTV.
Debt Service Ratio: 1.15 DSCR for prior year of financials or in the projections (Pro-form), if this is a projection-based loan. Can sometimes do projection-based loans!
Interest Rate: 5.5-7%
Property Types: Any commercial property that is 51% or more owner occupied, meaning the borrowers business has to take up 51% or more in the property. Lender specializes in Gas stations, car washes, hotels, assisted living, franchise properties & special use properties. Can only do restaurants if they are a franchise. Cannot do non-profit businesses and no gentlemen’s clubs. Can finance land if it is a ground up construction loan or if the land has something to do with a businesses’ expansion.
Pre-Payment Penalty: Only for 3 years. 5% of loan amount in year 1, 3% of loan amount in year 2, and 1% of loan amount in year 3.
Use of Funds: Purchase, Refinance & Ground Up Construction. This program can be used for partner buy outs!
Territory: Nationwide even in HI and AK!
Foreign Nationals: Foreign nationals can apply, but there are restrictions. Lender needs to see succession and a very strong management team. The company has to have a 51% owner that is a US Citizen, or a US citizen that is a manager in the business and not a partner can sometimes guarantee the loan on behalf of the entity. Foreign nationals don’t need to have fico scores.
Post closing liquidity: Case by case but lender does like to see borrowers that have a steady cash flow and can clearly cover the mortgage payment.
SBA Guarantee fee: This is a fee that goes to the SBA at closing for them to guarantee the loan. This for is 3.5% of 75% of the loan amount and is financed into the loan.
Required Loan Docs: Lender Loan Application, Executive Summary, Current rent roll, Past 3 years tax returns (personal and business), Past 3-years operating statements & Current year to date operating statement, Business debt schedule, Pictures of property, Tri-merge credit report & PFS on every principle. Once the lender has these loan documents their underwriting process takes about 5 business days.
Closing Time Frame: Typically 45 days. 90 days on ground up construction.
Lender Closing Fees: 3.5% SBA guarantee fee that goes to the SBA. The lender only takes a $2,500 packaging fee upfront and the cost of 3rd party reports. If the borrower decides not to take the loan, any of that un-used packaging fee is returned. 3rd party reports can include a business valuation, equipment appraisal, property appraisal, environmental, title work, etc. These are the lenders only closing fees!
Extra: This is only a program for For-Profit companies. No non-profits/churches. Lender specializes in lending to local business owners. Lender also does business acquisitions. Does some solar financing. The 7a is a general purpose loan, for equipment, real estate, etc. The 504 program is for financing assets such as real estate. Lender can someone times do USDA loans as well.