When you are looking to purchase your own apartment complex and rental units, you most likely are going to require financing a good portion of the purchase price with a commercial real estate loan. Buying an existing community does require you to obtain financial details from the current owners. Commercial Lending Corporation (CLC) needs this information in order to help find you interested lenders. Details they are going to want to know include such items like current occupancy rates, total revenues collected, and net earnings, as these could have a direct impact on the LTV percentage. Your professional loan representative at CLC will let you know exactly what documentation is required, while helping you complete and submit your loan application to their wide network of financial partners.
The LTV percentage is the amount for which a lender is willing to underwrite a loan, based upon the value of the property, as well as the earnings of the apartment complex. For example, one mortgage program available through Commercial Lending Corporation allows qualified borrowers to receive a loan for up to 80 percent LTV. So, if you were purchasing an apartment community appraised at $1 million, you would be able to borrow up to $800,000 and have a down payment of $200,000. However, if you were able to negotiate and reduce the purchase price of the property to $800,000, you might be able to obtain your loan with no money out of pocket, because there would be $200,000 in equity after the sale.
Small businesses have different loan options available through Commercial Lending Corporation. In addition to the conventional programs used by larger organizations, small businesses also have access to programs backed by the U.S. Small Business Administration. These programs are specifically designed to help small businesses with special incentives in order to help owners make their operations successful.
One type of small business loan program is the SBA 504. This program allows you to obtain financing for buying specific fixed assets, such as equipment, machinery, and buildings. The purchase of these items by the business owner through SBA 504 is often well below current market rates. There are specific requirements in order to qualify for a SBA 504 loan program. The requirements vary, based upon the kind of fixed asset being purchased. For example, if you are purchasing an existing building, you must use at least 51 percent of the space for your operations. On the other hand, if you are constructing a brand new building, you are required to occupy at least 60 percent of the facility, initially, and at least 80 percent, once construction is completed for your sole operations.
How the 504 program is designed allows for the loan to be distributed between three different parties. The business owner has to contribute 10 percent of the purchase price. The lender who underwrites your loan through Commercial Lending Corporation (CLC) provides 50 percent of the purchase price. The remaining 40 percent is obtained through a Certified Development Company (CDC). CLC is also able to help you find a CDC willing to supply their portion of the purchase price. CDCs are non-profit organizations whose primary purpose is to help small business owners and promote economic development in local communities.
There are different ways in which you are able to raise capital for your business. Some companies decide to turn a private business into a public business by issuing stock. The initial stock offering results in other people purchasing an interest in the company. In return, the organization is able to raise the money they seek. The process required to be able to issue stock does take some time, because it requires following very detailed federal, state and SEC guidelines and rules.
Another option to raise capital for your business is to look into private placement program offerings through Commercial Lending Corporation. This type of commercial loan program is unique, as it allows private investors to provide you with the money you require. In return, you have to supply the investors something in exchange. You may decide to issue private stock as collateral to give the investors a temporary interest in your company. Once the loan is paid back, the investor releases their interest in your company. It should be noted with this opportunity, you retain complete private ownership of your company.
Most companies seeking a private placement loan will go through the process of creating a Regulation D Offering. The type of offering you decide to make available depends on the amount of capital you need to raise. It should be pointed out that there are rules which apply to private companies raising capital from individual investors. You need to make sure you follow these rules, as well as satisfy federal, state and SEC regulations. Commercial Lending Corporation is able to help you through the process of preparing your offering, as well as additional assistance in securing a private placement loan.
Commercial Lending Corporation offers both recourse and non-recourse commercial loans. There are similarities, and a few differences, between these two loan types. It is important you fully understand the details, as it helps you make informed borrowing decisions for your business. Both kinds involve providing some sort of collateral to secure the funding you require.
The main difference has to do with the types of additional assets a lender may seek in the event you default on your loan. With a recourse loan, the lender is not only limited to the actual collateral provided to obtain the loan, but also additional assets. Should the lender have to foreclose on the loan because you default, they are able to sell the property or other collateral to help satisfy the debt. However, any money still owed on the loan, after the initial collateral is sold, can be collected. The lender has the right to sue to gain control of additional assets owned by the company, as well as the wages of the business owners. Further, in some cases, courts do allow the lender to seize personal assets, such as boats and RVs, and place liens on personal property in order to fully satisfy your original obligation.
With a non-recourse loan, the lender is only entitled to seize and sell the collateral used to secure the loan. Any money still owed continues to be your financial responsibility. However, lenders are unable to initiate additional collection efforts against your other assets. It should be noted, while non-recourse loans are more desirable, they could include higher interest rates and are often reserved for those businesses with the highest credit scores. You can learn more about both of these loans in more detail, as well as others to help obtain the financing you require, by contacting Commercial Lending Corporation.
New construction projects require careful planning and organization to get them off the ground. First, you need to find an available piece of commercial real estate. In some municipalities, you may need to have the zoning changed in order to match your type of business. Once a suitable site has been found, your next step is to secure a commercial loan to purchase the land. Commercial Lending Corporation is available to provide assistance during this early stage in your construction project. They offer loan programs which give you the startup money needed to get your project moving.
After you have purchased your site, your next step in your project is to secure building permits, equipment, supplies and other necessary items to start construction. The costs of construction vary, based upon the type of materials being used, location of the building, and building regulations and codes. For example, in southern and coastal states prone to hurricanes and tropical storms, building codes must satisfy specific requirements to ensure the building is able to withstand these kinds of severe weather events.
Once you have determined the cost estimates for your building supplies and permits, and for hiring your construction company, you often need to secure additional financing. Commercial Lending Corporation is able to provide further assistance, and has construction loan programs available for meeting any financing needs you require. Just remember, there is a cap on the amount of money you may borrow, which is based upon the loan-to-value ratio (LTV), your credit score, and other such factors.
Purchasing commercial real estate is similar to purchasing residential properties, with the exception that the business is making the purchase, rather than an individual. Lenders do require qualified lenders to provide a down payment towards the purchase price of the property. The amount of the down payment will vary, based upon the purchase price of the property, as well as the type of commercial program for which you qualify through Commercial Lending Corporation. As a good rule of thumb, most commercial programs ask for at least 25 percent of the purchase price as a down payment. For example, if your purchase price is $1,000,000, you would need at least $250,000 for your down payment. Remember, this is just an example, and some programs may require a larger down payment, while others might require less.
You will have to provide details about your business during your loan qualification process. Your business has a credit score and history, just like your own personal credit file. For new businesses or business startups, lenders may also ask for your personal credit history, instead, since there would not be a credit file established yet for your business. Some lenders could require you to submit profit and earnings statements, projected earnings, tax returns, and other financial information specific to your business. Your loan representative at Commercial Lending Corporation is available to help offer assistance and let you know exactly what documentation and information you have to supply when you apply for your commercial real estate loan, as well as what programs are available.
Banks and credit unions are able to expand the number of commercial loans they are able to approve, by using outside sources, like Commercial Lending Corporation (CLC). The financial institution is able to evaluate their customer’s loan application and decide whether they want to underwrite the loan or not. In situations where you feel the loan would be too much of risk for your institution, you are then able to refer it over to CLC. CLC is able to either work directly with your bank or credit union, or with your business customer, to help them secure the financing they require.
Commercial Lending Corporation offers access to a wide range of commercial lending programs from their extensive network of financial partners, including direct lenders, hedge funds, private placement programs, insurance companies, and more. Programs are available for all types of businesses, including gas stations, grocery stores, shopping centers, office buildings, hotels, restaurants, apartment complexes, and more. Because of these relationships, CLC is often able to find a loan program suitable for your business customer and to get their loan approved.
Your banking relationship with your customer remains strong, and you do not have to worry about them taking their financial needs elsewhere, because you had to deny their loan request. Further, with your new relationship with CLC, you can turn your bank into a commercial loan solution provider. CLC also offers the option of helping you increase your potential earnings, by supplying referral or mortgage broker relationships directly with your financial institution.