Loan Program Guidelines
LENDING GUIDELINES
1) SBA 7a PROGRAM OVERVIEW:
- Specifically structured loans administered through the SBA 7a program.
- Targeted for commercial properties where the business owner occupies 51% or more of the property for business purposes.
- Allows owner-users to finance up to 90% of the property purchase price or market value during refinancing.
- Offers 25-year term adjustable loans for various purposes: long-term permanent financing, construction, and rehabilitation projects.
- Interest rates are determined based on the Federal Prime Rate.
2) 5-YR FIXED BANK PROGRAM OVERVIEW
Loan Structure:
- 5-year fixed term with 25-year amortization.
- Fixed rate for the initial 5 years, followed by annual or semi-annual rate adjustments for the remaining 5 years (on a 10-year term).
- Prepayment penalty steps down over time: (5-4-3-2-1).
Fees and Criteria:
- Origination fees typically around 1%, dependent on factors like property type, location, loan size, use of funds, property condition, and sponsor experience.
- Underwriting based on existing or projected property income once stabilized to market lease rates.
- Minimum 1.25x Debt Service Coverage Ratio (DSCR).
- Commercial asset Loan-To-Value (LTV) capped around 60-65%, while multifamily LTV can go up to 75%.
- Personal and business tax returns may be requested.
3) PRIVATE BRIDGE LOAN
- Short-term interim financing for property purchase or refinance until securing permanent financing or property sale.
- Enables stabilization, lease-up, rehab, or meeting obligations for long-term financing or disposition.
- Interest-only terms for 1 to 2 years, potentially extended up to 3 years for loans over $1MM.
- No prepayment penalty in most cases; rates based on Federal Prime Rate or SOFR plus lender spreads.
- Origination fees typically 2% to 3% of the loan amount.
- Uses existing market value for refinances and purchase price for purchase transactions; no seller carry backs.
- Fast closing: 1 to 2 weeks, with an average of 21 days. Rates can be fixed or vary monthly.
REQUIRED FOR TERM SHEET
STANDARD PURCHASE OR REFI
1. Completed Loan Application or PFS
2. Property T12 or Operating Statements YTD & Previous Year
3. Rent Roll
Credit Report (REQUIRED)
Run your own Tri-Merge credit report with all three bureau scores through Experian with no affect to your credit score, then upload your report online. If you have a credit report within 90-days we can use that for preliminary review. REQUEST SOFT CREDIT REPORT
PREPARE FOR UNDERWRITING
General Requirements for Loan Applications
- 3 years of operating statements.
- Personal financial statement.
Non-Recourse Mortgages Include
- 3 years operating statements.
- Rent Roll
- Franchise Agreement and PIP Schedule.
- Cost basis details.
- Personal Financial Statement with Real Estate Owned Schedule.
- Property Website.
- Offering memorandum (if it's a purchase).
Recourse Mortgages Require
- 3 Years Business Tax Returns.
- 3 Years Personal Tax Returns.
- Current Balance Sheet with Debt Schedule.
- Rent roll
- Personal Financial Statement with Real Estate Owned Schedule.
- Resume for primary sponsors.
- Franchise Agreement and PIP Schedule (if it's a flagged hotel).