Posted 1 year, 1 month ago at 4:30 pm. 0 comments
By definition, Bridging Finance or Bridging Loan is a short-term loan used to purchase commercial property. This is something that can come in very handy, depending on your particular situation. There are two main points that you need to consider before you opt for a Bridging Finance package, your needs and the state of the property market.
One of the major benefits of Bridging Finance is that it will allow you to close on a property and purchase a new property before you sell your existing one. You will need to evaluate your current situation to determine if your needs justify taking on this type of finance. Will you lose the new property if you can’t offer a deposit? Would you be eligible for a discount on the purchase price if you can come up with the cash fast?
What are the existing market conditions in regard to the sale of your existing property? Is it going to be possible to sell your existing property in the time frame set out in your finance package? Most Bridging Finance typically runs for one year and will need to be paid in full at the end of the term unless it is possible to convert it into a Commercial Loan. You will also need to be aware that the interest rates will be higher on a Bridging Finance package.
If the market is slow and you do not have an urgent need for the new property, it may not be in the best interest of your business to take on this type of loan. On the other hand if the property market conditions are good, you can be out from under a Bridging Loan fast. However, it is still something that will need to make sense for your business.
If you feel taking on this type of loan is the right thing to do, you will be far better off going through a specialist Commercial Lender.
They will shorten the entire process as a specialist will know the market and they can quickly make a judgment on the best loan for you, based on your particular circumstances. Be sure to check that the loan can be converted into a conventional Commercial Finance package. You will also want to check on the type of interest rate and the costs you will entail if you do have to convert.
Most Commercial Lenders will be willing to extend the terms of your Bridging Finance package. Let’s say, for example, you have a buyer and you are waiting for the sale to close. Bridging Finance in general is much more flexible and accommodating than you might expect in this respect.
Paying back your Bridging Loan at the end of the loan term more often than not depends on your ability to sell your existing property. If it does not sell in the required time, you will be paying the existing loan on your current property, your new property and the newly converted Bridge Finance as well. If you believe this may be a possibility be sure to take a package that can be converted to a Commercial Loan if the need arises. Otherwise you may have to come up with the full Loan sum at the end of the finance term.
Need Bridging Finance in the UK? Commercial Lifeline are Bridging Finance and Commercial Mortgage specialists.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Posted 1 year, 1 month ago at 11:07 am. 0 comments
Those who need vehicle for their commercial purposes would quite like going for the commercial vehicle finance. These loans are specialized in providing the best services by letting people get any vehicle of their choice, whatever the cost of the vehicle is. Though certain conditions of the borrowers will matter while offering these finances, still its help is worth mentioning.
For a commercial business to be successful the presence of vehicle is quite necessary. Without a vehicle the marketing, production and distribution tasks will left undone and therefore, these loans are quite necessary for those who cannot afford to buy commercial vehicles.
For buying any vehicle you will first have to choose from among the secured and unsecured loans. For achieving the secured loans the borrower must be capable of offering collateral. Without putting anything as security no one can borrow money in these forms. It will enable you to afford costlier vehicles as the money offered in it is big. Also the rate of interest of these loans is quite low.
The unsecured loans will assist you in buying low rates vehicles which can be used for light commercial purposes. Though the amount offered is small and the rate of interest is higher, you would like to go for it as these do not demand for collateral. For avoiding the higher interest rates, if you want, you can choose other loans available in the loan market.
Such loans use to offer 90 to 100% of the real value of the car as collateral. So, you can choose any of the two forms of loans based on your choice and capacity and get any car you want.
Commercial vehicle finance is securable by the bad credit holders too. For that they may have to pay a bit higher interest rates. But other than this all other facilities will be enjoyed by them. CCJs, late payment, bankruptcy, skipping of installments, defaults or arrears are allowed in it.
Elizabeth Swann is currently working as an expert author for Commercial Loan Finance. She writes for loans and finance and provides advices on such issues. For more details commercial vehicle finances, Business loan finance, Business loan finance UK, Real estate finance visit http://www.commercialloanfinance.org.uk/
Posted 1 year, 3 months ago at 3:09 pm. 0 comments
By definition, Bridging Finance or Bridging Loan is a short-term loan used to purchase commercial property. This is something that can come in very handy, depending on your particular situation. There are two main points that you need to consider before you opt for a Bridging Finance package, your needs and the state of the property market.
One of the major benefits of Bridging Finance is that it will allow you to close on a property and purchase a new property before you sell your existing one. You will need to evaluate your current situation to determine if your needs justify taking on this type of finance. Will you lose the new property if you can’t offer a deposit? Would you be eligible for a discount on the purchase price if you can come up with the cash fast?
What are the existing market conditions in regard to the sale of your existing property? Is it going to be possible to sell your existing property in the time frame set out in your finance package? Most Bridging Finance typically runs for one year and will need to be paid in full at the end of the term unless it is possible to convert it into a Commercial Loan. You will also need to be aware that the interest rates will be higher on a Bridging Finance package.
If the market is slow and you do not have an urgent need for the new property, it may not be in the best interest of your business to take on this type of loan. On the other hand if the property market conditions are good, you can be out from under a Bridging Loan fast. However, it is still something that will need to make sense for your business.
If you feel taking on this type of loan is the right thing to do, you will be far better off going through a specialist Commercial Lender.
They will shorten the entire process as a specialist will know the market and they can quickly make a judgment on the best loan for you, based on your particular circumstances. Be sure to check that the loan can be converted into a conventional Commercial Finance package. You will also want to check on the type of interest rate and the costs you will entail if you do have to convert.
Most Commercial Lenders will be willing to extend the terms of your Bridging Finance package. Let’s say, for example, you have a buyer and you are waiting for the sale to close. Bridging Finance in general is much more flexible and accommodating than you might expect in this respect.
Paying back your Bridging Loan at the end of the loan term more often than not depends on your ability to sell your existing property. If it does not sell in the required time, you will be paying the existing loan on your current property, your new property and the newly converted Bridge Finance as well. If you believe this may be a possibility be sure to take a package that can be converted to a Commercial Loan if the need arises. Otherwise you may have to come up with the full Loan sum at the end of the finance term.
Need Bridging Finance in the UK? Commercial Lifeline are Bridging Finance and Commercial Mortgage specialists.
This article comes with reprint rights. Feel free to reprint and distribute as you like. All that we ask is that you do not make any changes, that this resource text is include, and that the links above are intact.
Posted 1 year, 3 months ago at 10:22 pm. 0 comments
Borrowers with bad credit that are seeking commercial loans will often face a difficult process, expensive loan options and many “no’s”. Even though it is a tough situation, borrowers should try to not get discourage and to stay patent as their solution may be just around the around the corner.
What are the potential commercial loan options for borrowers with bad credit? If the borrower operates their business out of the subject property than one of the best programs will be the SBA commercial loans. This often comes as a surprise to many that have shopped for SBA loans and found the underwriting criteria as difficult as conventional sources.
The thing to keep in mind here is that the SBA does not dictate any credit score type restrictions. It’s the lenders themselves that establish credit score minimums. So borrowers need to find the SBA lenders that will have flexibility with this component. For example we work with a few SBA Lenders that will go down to 580 and a few that will lend to borrowers with scores in the low 500’s with good compensating factors. The key here for borrowers to remember that it’s not the SBA that dictates the credit score criteria but the funding bank.
Compensating factors include high liquidity, strong business cash flow, solid experience and often a good story behind the credit issues. Lenders will often be more satisfied and more willing to lend to borrowers that had, for example medical issues, that have been resolved and that the borrower has managed to turn their situation around (even though there score may not yet reflect it). Borrowers that can’t document a turn around and or can’t give a good reason why their score is low will have a much harder time getting a bank to consider their request.
There are two types of SBA loans the 504 and the SBA 7a. The 504 is geared for purchases only and the minimum loan amount is often $2,000,000. Borrowers with bad credit will have a harder time getting approved for this loan. The SBA 7a loan will often be more geared towards borrowers with credit issues. The program will often go to 85% or even 90% loan to value in some cases. The typical loan amount will range from $400,000 - $2,000,000. Some lenders will allow borrowers to roll in other business debt (such as business credit cards) which can often help improve borrower’s credit score.
Not all SBA lenders are the same and for borrowers with bad credit seeking commercial loans this is a very important idea to keep in mind. You will need to call many lenders to find the one that is willing to hear the “story”.
Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial real estate loans or commercial mortgage broker store or commercial loan rates
Posted 1 year, 3 months ago at 6:24 pm. 0 comments
The B&I Guaranteed Loan Program is a little known government sponsored loan for business and investors where the property is located in a rural community. The point of the program is to improve and develop business/employment, again in rural communities. Like SBA commercial loans, the B and I program guarantees banks and lenders so that they are more willing to lend in small town communities.
Again the primary goal of the program is to stimulate the economy, so virtually all borrowers are eligible, as long as they:
1. Provide employment,
2. Improve the economic or environmental climate
3. Promote the conservation, development, and use of water for aquaculture
4. Reduce reliance on nonrenewable energy resources by encouraging the development and construction of solar energy systems and other renewable energy systems.
The way the loan proceeds can be used must be in alignment with above. In addition, the proceeds can be used to prevent the failure of a business and or the prevention of job loss. Also, funds can be used for business conversion, enlargement or the purchase of land, buildings or equipment, supplies, etc.
Normally most banks are not interested in lending in smaller communities due to the lack of diversification of the economy. Values can fluctuate widely. The program guarantees banks up to 80% of the loan balance, for loans less than $5,000,000, in case of borrower default. The guarantee drops as the loan amount increases.
General Detail of the B and I Loan
The loan limit is normally capped at $10,000,000 though exceptions can be made to $25,000,000. Loan terms are general 30 years , while machinery or equipment may not exceed the useful life. Working capital cannot exceed 7 years. Rates can be fixed or adjustable at the lenders discretion.
B and I loans are still viable and many banks and lenders are pushing borrowers to go this route so that they can be assured via the guarantee. Due to the credit crisis this maybe the best option for borrowers in the market.
Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan a national commercial mortgage brokerage firm. 248 885-8797. He also has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $5. Check it out commercial real estate loans or business and industry loans
Posted 2 years, 4 months ago at 9:26 am. 0 comments
As you may have guessed restaurant loans are taking a serious beating in the current credit crisis. A year ago, and even 6 months ago there were many options. In fact, 30 year fixed programs on restaurant loans where an option, stated income commercial loans where available, borrowers with very low and or no net income could still get decent restaurant loans. Even borrowers with other issues like bad credit could find restaurant loans.
Now almost all of these creative options have frozen up and or are simply gone. What’s left are traditional loans. Primarily SBA commercial loans and a few, scattered, and only for very strong borrowers, conventional commercial mortgages. With these types of options, restaurant owners are going to have to start planning for the future and be more conscious of playing the traditional game. In other words, you’ve got to show some income! If you don’t show any income on your tax returns you’re not going to get a loan.
If for example you know you have a loan ballooning soon or if you’re in the process of expanding locations you’ve got to tell your CPA now to start showing some income. Yes you might increase the amount of tax you will have to pay but the alternative could be much more expensive.
We get calls all the time from borrowers that have had a restaurant loan balloon, and have now simply not been able to secure a new loan. They go to multiple banks and lenders and all say the same thing “you don’t prove that you make any money, sorry”. Their existing lender starts the foreclosure process and the borrower continues to shop with no luck. The existing bank hikes up their rates in an effort to further “motivate” them to find another bank and to cover their risk. It goes on and on and gets uglier for all involved.
Bottom line, despite restaurant owners enjoying cash related business; you’re going to have to start playing the game to secure traditional SBA loans and conventional financing. In addition most banks will want to see a debt coverage ratio of a 1.3 on restaurant loans, so you’ll have to show a decent amount of cash flow.
Click here to see current commercial loan rates Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial mortgage loans
Posted 2 years, 6 months ago at 9:26 am. 0 comments
As the commercial mortgage industry continues to get throw around like a rag doll, due to the issues on Wall Street many commercial loan officers and brokers seem to be having a come to “Jesus Moment”. Should I get out? Should I get that MBA I’ve been thinking about for so long? How about that trip to Prague I never took? You get the idea.
I say hold on there. Commercial mortgages are still closing. Private money, portfolio lenders and SBA commercial loans are three very solid examples of funding sources that are still doing deals. These sources of capital are holding their own as they are not directly tied to the issues on the secondary markets.
For those that are just entering the business, perhaps considering making the switch from residential to commercial, don’t get intimidated either by the credit crisis or the ego’s that so many players have. Bottom line, most commercial deals have the same amount of complexity as a lot of residential loans. But in just different ways. There are just different guidelines and different rules that you obviously have to learn if you want to succeed.
One area that must be mastered for aspiring commercial mortgage brokers is how to read financial statements, such as tax returns and profit & loss statements. This is essential and you just can’t “cheat” on this one. You have to know how to calculate the cash flow that the borrower has and that can be used to pay for the mortgage that you’re trying to close.
If you don’t know how to calculate the cash flow (referred to as the Net Operating Income aka NOI) your dead in the water. You have no idea if the deal is doable or not. Keep in mind that the most important component of commercial mortgage underwriting is the NOI. Cash flow is king. Other areas like LTV, business trends or credit score are secondary.
Side point here is that many residential players are often shocked to learn just how many deals are not doable. Many if not most of the deals you’ll look at will not close as there just won’t be any lenders that will do it, and or that the borrower will accept. You don’t want to work on loans that can’t close.
As far as calculating the NOI, this can be a complex area depending on how much the borrower has going on. If he owns a single business and owns it through a sole proprietorship it won’t be that hard to figure out. On the other hand if the borrower owns five separate businesses with five additional real estate entities you’ll have your hands full. What you have to learn is how income is passes through one entity to the next and what items, like depreciation, interest and the existing loan can be added back. With this knowledge you’ll be able to calculate the NOI and figure out if you want to invest your time into the deal.
Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial loan training or commercial mortgage loans