Purchasing commercial real estate can give a small business greater control over its location, occupancy costs, and long-term growth. However, many business owners find that commercial loans require large down payments or an existing banking relationship. We offer a small business lending program with financing up to 90% of the property’s value and loan amounts ranging from $1 million to $10 million. The program is available for a broad selection of commercial property types and does not require a depository relationship with the lender.
Small Business Lending Program Highlights
- Loan amounts from $1 million to $10 million
- Financing available up to 90% LTV
- Minimum 680 credit score
- Amortization terms available up to 25 years
- Five-year adjustable-rate structure
- Balloon payment due at the end of 10 years
- Lifetime interest-rate floor established at closing
- No depository relationship required
- Available for numerous commercial property types
- Loans must close in a single-purpose entity
Eligible Commercial Properties
- Industrial properties
- Manufacturing facilities
- Warehouses and distribution buildings
- Self-storage facilities
- Retail properties
- Professional and medical offices
- Restaurants
- Daycare facilities
- Assisted living facilities
Up to 90% Commercial Real Estate Financing
Many conventional commercial lenders require borrowers to contribute 20% to 35% of the property’s purchase price. For a multimillion-dollar acquisition, that down payment can consume capital the business needs for equipment, inventory, payroll, improvements, and ongoing operations. Financing of up to 90% can significantly reduce the initial equity contribution. This allows qualified business owners to preserve more liquidity while acquiring the commercial real estate needed to operate or expand their businesses.
Loan Terms and Amortization
The program offers a five-year adjustable-rate loan with amortization available for up to 25 years. The loan carries a balloon payment at the end of 10 years. A longer amortization schedule can reduce the required monthly principal-and-interest payment compared with a shorter repayment period. Borrowers should nevertheless plan for the balloon maturity, when the remaining balance must be paid, refinanced, or otherwise satisfied. The lifetime floor rate is established when the loan closes, giving the borrower a defined minimum interest rate for the adjustable-rate term.
Required Income Documentation
- Two years of personal tax returns
- Two years of business tax returns
- Year-to-date business profit-and-loss statements
- Additional business and financial documentation when requested
Tax and Insurance Escrows
Tax and insurance escrow accounts are required on every loan. A portion of the property’s annual real estate taxes and insurance costs will be collected with the regular loan payment and held for payment when those obligations become due. Borrowers should include the required escrow payment when calculating their total monthly property expense.
Single-Purpose Entity Required
All loans must close in the name of a single-purpose entity established to own the subject property. Depending on the transaction and lender requirements, this may be an LLC or another approved business entity whose primary purpose is holding the financed real estate. The borrower should consult appropriate legal and tax professionals when establishing the ownership entity and determining the best vesting structure.
No Depository Relationship Required
Some banks condition commercial real estate financing on the borrower moving operating accounts, deposits, or other financial relationships to that institution. This program does not require a depository relationship, allowing the business to maintain its existing banking arrangements.
Contact us to discuss the property, business financials, proposed ownership entity, and amount of financing required.
