Commercial real estate loans, and the industry in general, have gone through a tremendous amount of volatility in 2009. Huge banks have gone out of business and many more have ceased lending. Many of the banks that are still lending have created such conservative programs that very few borrower can even qualify. Many of those that can quaily won’t accept the terms as they are to harsh. Borrowers have become baffled as they take their perfectly good loan request to their previous sources only to hear “no and no and no…”
The market is bad, you know this. We estimate that literally 80% of all previous banks and lenders are either out of business or are not lending. For example the conduit market was down 98% in 2008 compared to 2007.
However, there still are commercial real estate loan options out there. None of them are perfect but a few of them are viable. For folks that operate their small business out of their commercial building, or at least 51% of it, they will have some of the reliable loans in the nation.
These programs are government guaranteed and go beyond just SBA loans. As you probably guessed, because the government has step up and further guaranteed the loans, it makes it a much safer, and attractive for the banks to take on the risk of a new loan.
Further the secondary market for these types of loans has become stronger, year to date. We are currently back up to about 60% of where we were in 2007 (Up from about 10% of where we were in the beginning of the year). This is where banks sell mortgages to one another. So the returning of the secondary market and the stability of having the government backing has kept this segment of the industry alive.
As far as terms, by far the biggest benefit of these loans is high levels of financing available. For example, most conventional lenders will now only go up to 60% loan to value, while most of the government programs will still go up to 80% – 85% on refinances or 80% – 90% on purchases. This high level of financing makes a huge difference in a market such as this where property values are declining. Many conventional deals are getting killed as the bank lowers there loan to value guidelines and at the same time, property values decline.
Another benefit is the amortization schedule offered. Government programs are typically amortized over 25 to 30 years while most banks are reducing their amortization schedule to 15 or 20 years. The issue here cash flow for the borrower. The difference in payment between a 15 year amortization schedules vs. a 25 year is often 20 – 25%. Most businesses need to keep as much cash flow in their operation as possible. Aggressively paying down their commercial real estate loan is not as important as having enough cash to pay the rest of their bills.
The current market is frustrating for all involved. However, commercial real estate loans are still closing and often loan requests that keep getting declined are often fundable, if in the hands of the right lender/bank. Keep working.
Are you frustrated with the results that your current contacts are providing? Are you concerned that they won’t be able to get your loan closed on time and at the quoted terms? If so, call Jeff Rauth, President of Jeff Rauth is President of Commercial Finance Advisors, Inc, a national commercial mortgage firm. He specializes in Commercial Real Estate Loans between $400,000 - $5,000,000, nationwide. 248 885-8797 or at SBA 7a Loans or Commercial Real Estate Loans commercial loan brokers
Wednesday, June 10, 2009
Commercial Mortgage Loans, This Year
Whether you’re in the business or are a property owner, trying to a get a commercial mortgage loan closed in this market, is akin to having a hyena as a house pet. You can do it, but it will be painful.
Here’s what is going on, from a commercial mortgage brokers perspective. Conventional lending is all but dead. If your property isn’t less than 60% loan to value, you’re going to have a difficult time getting it closed. If you have a typical investment property (non multifamily like office or a warehouse), with a non national credit tenant(s), you had better have enough outside income to carry the loan on its own or you are going to have a tough go at it (though not impossible).
Literally 80% of the banks either don’t want to lend or they can’t lend as their banking ratios have fallen below the feds standards. And or they just don’t have the cash… Many banks including some major national one have gone out of business, as its been well publicized. So you have to work with what the remaining 20%. Often times the offered terms are harsh and expensive. For those of you that are in the business you know that the conduit and or CMBS market is completely broken and nonexistent. It was literally down 98% in 2008 versus 2007. 98%... That’s according the respected Mortgage Bankers Association.
The SBA commercial loans and other more mysterious (and unpredictable government programs) have tried to step up and fill the void. In some regards its working in others it has been disappointing. For example SBA lending was down 60% as of May 2009 compared to the previous year. Ironically, this is when we all thought they would really kick in and save small business.
Commercial Mortgage Loans
Without suddenly sounding optimistic one of the best things you can do for yourself is to work with the RIGHT bank and or lender. You need to only work with the 20% that are still actively lending. Conversely and especially if you are facing a balloon the worst thing you can do is tie up you loan request with a bank that is not aggressively lending. Most of these commercial mortgage loans end up in the decline category wasting months of time and thousands of dollars, at a minimum, for the borrower.
For those that qualify for the government programs such as the SBA business loans, this can be a blessing. 85% - 90% financing is a life saver as property values continue to decline. In addition, the secondary market for these types of programs are the healthiest in the business and continue to improve. Our fearless leader, Obama, has step up the guarantee to banks as well as bought $15 billion of SBA 7a loans that had clogged the system in early 2008.
By the way, the main qualifying component to the SBA loans is that your business occupies at least 51% of the buildings space. Contrary to their reputation, the SBA program have some of the easiest qualify standards out there, compared to other commercial mortgage loans.
Do you have to get it done? Are you frustrated with the results that your current contacts are providing? Are you concerned that they won’t be able to get your loan closed on time and at the quoted terms? If so, call Jeff Rauth, President of Jeff Rauth is President of Commercial Finance Advisors, Inc, a national commercial mortgage firm. He specializes in Commercial Real Estate Loans between $400,000 - $5,000,000, nationwide. 248 885-8797 or at SBA 7a Loans or Commercial Real Estate Loans commercial loan brokers
Here’s what is going on, from a commercial mortgage brokers perspective. Conventional lending is all but dead. If your property isn’t less than 60% loan to value, you’re going to have a difficult time getting it closed. If you have a typical investment property (non multifamily like office or a warehouse), with a non national credit tenant(s), you had better have enough outside income to carry the loan on its own or you are going to have a tough go at it (though not impossible).
Literally 80% of the banks either don’t want to lend or they can’t lend as their banking ratios have fallen below the feds standards. And or they just don’t have the cash… Many banks including some major national one have gone out of business, as its been well publicized. So you have to work with what the remaining 20%. Often times the offered terms are harsh and expensive. For those of you that are in the business you know that the conduit and or CMBS market is completely broken and nonexistent. It was literally down 98% in 2008 versus 2007. 98%... That’s according the respected Mortgage Bankers Association.
The SBA commercial loans and other more mysterious (and unpredictable government programs) have tried to step up and fill the void. In some regards its working in others it has been disappointing. For example SBA lending was down 60% as of May 2009 compared to the previous year. Ironically, this is when we all thought they would really kick in and save small business.
Commercial Mortgage Loans
Without suddenly sounding optimistic one of the best things you can do for yourself is to work with the RIGHT bank and or lender. You need to only work with the 20% that are still actively lending. Conversely and especially if you are facing a balloon the worst thing you can do is tie up you loan request with a bank that is not aggressively lending. Most of these commercial mortgage loans end up in the decline category wasting months of time and thousands of dollars, at a minimum, for the borrower.
For those that qualify for the government programs such as the SBA business loans, this can be a blessing. 85% - 90% financing is a life saver as property values continue to decline. In addition, the secondary market for these types of programs are the healthiest in the business and continue to improve. Our fearless leader, Obama, has step up the guarantee to banks as well as bought $15 billion of SBA 7a loans that had clogged the system in early 2008.
By the way, the main qualifying component to the SBA loans is that your business occupies at least 51% of the buildings space. Contrary to their reputation, the SBA program have some of the easiest qualify standards out there, compared to other commercial mortgage loans.
Do you have to get it done? Are you frustrated with the results that your current contacts are providing? Are you concerned that they won’t be able to get your loan closed on time and at the quoted terms? If so, call Jeff Rauth, President of Jeff Rauth is President of Commercial Finance Advisors, Inc, a national commercial mortgage firm. He specializes in Commercial Real Estate Loans between $400,000 - $5,000,000, nationwide. 248 885-8797 or at SBA 7a Loans or Commercial Real Estate Loans commercial loan brokers
Monday, June 8, 2009
Closed SBA 7a Loan
Commercial Finance Advisors is pleased to announce the recent funding of an SBA 7a loan in Atlanta, Georgia in the suburban community of Buford. The project was a combination of a commercial refinance, construction, equipment and working capital for the borrower, who is a doctor.
“There was a couple of interesting components of the loan. One was that the borrower had already closed on the request with another bank, which after funding part of the loan backed out… It was a construction loan. This put the borrower in a terrible position and to say that he was frustrated and very concerned is an understatement. He had to still make monthly payments on the debt even though the bank did not hold up their end of the bargain.” Comments Jeff Rauth, President.
More info on SBA Business Loans:
“The first bank essentially just ran out of money. They are lucky (the first bank) we were able to get the new SBA 7a loan closed, otherwise the borrower would have had a very good lawsuit and more frustration to motivate him to pursue suing them for damages. Unfortunately we are seeing more loan requests like this cross our desk.”
SBA 7a loans are designed to help small business owners refinance or purchase new building for their business. There are a couple of very strong benefits to the program. One is that they can go up to 85% loan to value, which is a huge advantage as property values continue to decline in most markets in the nation. Another is that the underwriting standards for the SBA 7a loan can be very flexible, which allows loans that don’t fit conventional standards to still get funded.
One of the other major benefits to the program is the ability to roll in many different types of collateral, such as real estate, equipment, and good will. Borrowers are still able to get working capital and to consolidate high interest business credit cards as well.
However, not all SBA commercial loans are the same. Just like a typical commercial real estate loan, borrowers need to know who the aggressive lenders are, and how to submit loans correctly to get them done.
Commercial Finance Advisors, Inc works with borrowers nationwide, on commercial real estate loans from $400,000 - $5,000,000. Most of their clients have dealt with many local banks and are “feed up” with getting the run around and now need to get their loan closed.
“There was a couple of interesting components of the loan. One was that the borrower had already closed on the request with another bank, which after funding part of the loan backed out… It was a construction loan. This put the borrower in a terrible position and to say that he was frustrated and very concerned is an understatement. He had to still make monthly payments on the debt even though the bank did not hold up their end of the bargain.” Comments Jeff Rauth, President.
More info on SBA Business Loans:
“The first bank essentially just ran out of money. They are lucky (the first bank) we were able to get the new SBA 7a loan closed, otherwise the borrower would have had a very good lawsuit and more frustration to motivate him to pursue suing them for damages. Unfortunately we are seeing more loan requests like this cross our desk.”
SBA 7a loans are designed to help small business owners refinance or purchase new building for their business. There are a couple of very strong benefits to the program. One is that they can go up to 85% loan to value, which is a huge advantage as property values continue to decline in most markets in the nation. Another is that the underwriting standards for the SBA 7a loan can be very flexible, which allows loans that don’t fit conventional standards to still get funded.
One of the other major benefits to the program is the ability to roll in many different types of collateral, such as real estate, equipment, and good will. Borrowers are still able to get working capital and to consolidate high interest business credit cards as well.
However, not all SBA commercial loans are the same. Just like a typical commercial real estate loan, borrowers need to know who the aggressive lenders are, and how to submit loans correctly to get them done.
Commercial Finance Advisors, Inc works with borrowers nationwide, on commercial real estate loans from $400,000 - $5,000,000. Most of their clients have dealt with many local banks and are “feed up” with getting the run around and now need to get their loan closed.
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