Commercial

Many of our commercial options are based off of the business or property type for income, and not based of off the personal income. We also offer full recourse meaning you are personally guaranteeing the loan and non-recourse options. In non-recourse lending the borrower(s) are not personally guaranteeing the loan and are not liable personally in the event of a loan default. These are more common with the larger loan types.

This is decided on a case by case bases. Most of our multi-family products still are considered residential even though anything over 4 units is classified as commercial. Because of this we rarely have any front charges outside of third party fees and work on these loan types, only getting paid upon the successful closing of the loan. In certain cases underwriting fees that vary from $1,000 to $5,000 depending on the loan size are paid prior to submitting the loan to underwriting by the borrower(s) and appraisal fees that also vary from that same range are paid up front. In cases where a Phase I or Phase II environmental are needed, these are also paid directly by the borrower(s) up front. Certain loan types can have attorney fees, survey fees, and title fees up front as well but many of those fees can also be allowed to be paid at closing. For certain loan types and larger loan types there are business plans, loan packages, and extensive loan processing work that is done by us or a 3rd party company to get a loan submitted. In these cases there is a contract done up front and those charges are agreed upon by both parties, signed, and paid prior to those loans being worked on and submitted to underwriting. This is on a case by case basis and very situational to the loan size, loan type, and client(s) needs so please contact your loan officer for more information about this.

Most commercial loans involve a pre-approval process where certain documents about the borrowing entity or borrower and property are submitted. A letter of intent to lend or commitment letter is then obtained from the lender(s) and issued to the borrower(s) prior to staring the loan process. In most cases this can be obtained before the borrower(s) incurs any third party related fees. Once this is agreed upon third party reports and services are agreed to, ordered, and paid for by the borrower(s). Once those documents and processes are back in the loan is submitted back for final underwriting. At this time all final items are re-submitted back to underwriting for final approval and clear to close. Depending on the loan type and lender used most loans go to some sort of committee for final loan approval and once approved are setup for closing and funding.

Conventional – this is the most common type of commercial lending options and applies to anything from a multi-family apartment complex to a gas station deal.

Multi-Family – 5 to 35 units – these properties are more unique with less options overall due to their smaller overall size in the commercial lending arena. At Skyridge Lending, we have several options that will work with these property types. We are able to deal with all credit types on this product and typically use the rent rolls to determine the Debt Service Credit Ratio without getting into debt to income ratio of the main primary borrower(s). We have many 30 year amortization options with 5, 7, 10, and 30 year fixed rate options. These are typically full recourse loans.

Multi-Family- over 35 units – these are generally larger deals with bigger overall loan sizes and do allow for many different financing options. These are usually non-recourse loans with amortizations of 30 to 35 years.

FHA – The FHA is primarily used in the commercial realm for large multi-family projects. The refinance options are 207 and 223(f) options work on existing multifamily rental housing. They are usually non-recourse and do permit the completion of non-critical repairs after closing so this option works for property renovations as well by funding those out of loan proceeds in certain cases. This option also usually allows for a 35 year amortization as a GNMA mortgage back security. This option is allowed for both for profit and not-for profit organizations.

The purchase options are the 221d(4) if for profit and 221 d(3) with not for profits. This product option will also work for new construction and is a one-time close product. It works for apartments, assisted living, skilled care nursing, and critical access hospitals. This product offers up to 40 year fixed rate loans, eliminating interest rate risks, maximizes leveraging with up to 87% loan to values, and is non-recourse, reducing personal liability. There is fair housing counseling involved for the primary owners and these loans do take several months typically to get done.

The FHA 232 provides financing for new construction or rehab of healthcare properties, also known as residential care facilities. Property types include skilled nursing, intermediate care, assisted living, and other special care properties. These allow up to 40 year fixed rate terms at 90% loan to cost, one closing with fixed rate locked in prior to construction, and is fully non recourse.

The FHA 207 is for construction or rehabilitation of manufactured home parks with financing up to 90% loan to value loan to cost, up to 40 year terms, locked in at closing prior to construction, and non recourse.

Click here for more detailed information about what HUD allows. (link to https://www.hud.gov/program_offices/housing/mfh/progdesc/purchrefi223f

Fannie Mae and Freddie Mac – in the commercial world this is typically used for multi-family larger apartment complexes. Since 1988, Fannie Mae and its lender network have provided more than $510 billion in liquidity to the mortgage market to finance more than 9.1 million units of multifamily housing. Freddie Mac also offers financing typically from $5,000,000 to $100,000,000 with non-recourse except for standard carve-out provisions.

SBA – SBA is the Small Business Administration. The SBA works with lenders to provide loans to small businesses. The agency doesn’t lend money directly but sets guidelines for loans made by partnering lenders, community development organizations, and micro-lending institutions. The SBA reduces risk for lender sand makes it easier for them to access capital, thus making it easier for businesses to get loans. SBA allows for generally longer terms with lower money down. They are also very great for new start-ups and allow for financing without real property on terms of 10 to 15 year amortizations. When a business does own real property and occupy at least 51% by their business then the loan term can typically be amortized out to 25 years.

SBA 7(a) loans are so popular because there are very few limitations. With Standard Loans, Express Loans, Community Advantage Loans, and Veterans Advantage Loans, funds can be used for a variety of purposes, including the purchase of equipment, expansion, the acquisition of a business, or working capital. The US Small Business Administration 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. As part of its mission to promote the development of businesses, the SBA offers a number of different loan programs tailored to specific capital needs of growing businesses. The 504 program works by distributing the loan among three parties. The business owner puts a minimum of 10%, a conventional lender (typically a bank) puts up 50%, and a so-called Certified Development Company (CDC) puts up the remaining 40%. Certified Development Companies are established under the 504 as non-profit corporations set up to support economic growth in their local areas. There are a few hundred such CDCs nationwide. The maximum amount of the loan is $5 million ($5 million for meeting SBA-defined policy goals, and $5.5 million for manufacturers and some energy-related policy goals), and if the borrower defaults, the private sector lender is paid off first, reducing the risk to the lender and encouraging loans.

USDA (BandI or business and industry) - USDA B&I loans are used for rural businesses and are typically up to $10 million, and can be used to finance working capital, refinance existing debt, or purchase a business, real estate, or equipment. USDA B&I loans are good for borrowers with a solid credit history who are in need of long-term capital. Rural areas outside of a city or town with a population of fewer than 50,000 people will usually qualify. Loan to value is usually determined as 80% of real estate, 70% of equipment, 60% of inventory, and 60% of accounts receivable less than 90 days. Terms are determined by asset type and loan amount with fixed rates up to 30 year amortizations.

Private Money Loans - Private money loans – or simply private money – is a term used to describe a loan that is given to an individual or company by a private organization or even a wealthy individual. The organization or the individual is known as a private money lender.

A credit tenant lease (CTL) is a form of commercial real estate financing in which a loan is given for a property with a long-term lease (usually 10+ years), and is typically held by a nationally-recognized tenant with a high credit rating.