Are you expanding your business? Adding a second, third, or even 15th location? OR Are you out of SBA money? Can your new location's debt service of the new loan be covered by your existing business net revenue? DCR needs to be around 1.3

If so, this loan is for you!

1. Allow 1 week for a credit decision.
2. 3 week closing!
3. Only business assets are pledged against the note, a personal guarantee is required of all partners.
4. Fixed rates. 
5. 2-7 year term
6. There is a prepayment penalty.
7. A first month's payment and $1,200 doc fee, and security deposit (last month's payment) is due with loan documentation after initial pre-approval.
8. No closing costs for new builds except 1.5% points and $1,200 documentation fee. You may roll this into the note or pay up front.
9. It is documented on a line of credit. You will accrue interest on any monies paid out. At the end of the project, when the new build is done, we will total all monies paid out and take the note to term and lock everything in. We will roll the interest into your note or you can choose to pay it.

For more information on this great 100% of FF&E and buld out costs, call Brett Swearingen at 800-557-0682

The cash-out for business purposes is a HUGE change!

These revisions are expected to include:

1. “50% RULE” - Removal of the requirement that the first mortgage lender’s portion of the refinancing be at 50% of current value of the fixed assets secured as collateral.  The revised requirement is that the total project be calculated based on the debt payoff balance plus eligible closing costs. 

For example, the current program rules dictate that if the value of the collateral is $2,000,000 and the debt payoff is $1,200,000 then the lender must provide a first mortgage of $1,000,000 (50% of value) and the SBA 504 loan is $200,000.  Under the revised rule, the financing would be split equally between the lender and the SBA 504 loan at $600,000 each.  This greatly improves the lender’s position and allows the borrower to get more of their financing on the low fixed rate SBA 504 portion.

 2. Working Capital – the revised rules will permit a borrower to cash out up to 90% LTV as long as the cash will be used for eligible business expenses currently due but unpaid or due within 18 months of the application date.

For example, if the value of the collateral is $2,000,000 and the debt payoff is $1,200,000, the borrower could get up to $600,000 in cash out for eligible business expenses.  The financing split would be $900,000 (45% LTV) for the lender and $900,000 for the SBA 504 loan with $1,200,000 used to pay off existing debt and $600,000 for working capital.

3. Genealogy of the Debt – we will now only need to be provided with a copy of the current note and lien instruments and not the entire genealogy of the debt in the case where an original loan has been renewed and/or refinanced.  The Borrower and CDC must certify either:

 (a)     Substantially all (85% or more) of the proceeds of the indebtedness being refinanced was used to acquire an Eligible Fixed Asset (e.g., land, including a building situated thereon, to construct a building thereon, or to purchase equipment) and the remaining amount (15% or less) was incurred for the benefit of the small business seeking the refinancing; or

(b)     The loan that originally financed the Eligible Fixed Asset satisfies the 85/15 criteria AND the current commercial loan is the most recent refinancing of that original loan.

There are a few other minor tweaks to the program but these are the major ones that will affect deal structure and eligibility. Please let us know if we can assist you with your commercial refinance requests through the SBA 504 loan program. 

We are here to help you understand the SBA 504 loan program.

Call Brett today for a REFI or purchase of your owner occupied property. 800-557-0682

Banks need to get loans off their books-both non-performing AND, performing and there is NO better time to approach these deals than at the end of a quarter and especially a year.  Discounted note deals that are started now can STILL close by year end even with the holidays.  Bridge loans can close that quickly and many times, a new appraisal is NOT even needed.

We have one client that had an outstanding loan of $1.7 million.  The property values had fallen and, the place only appraised for a million.  The property cash flowed to support a $600,000 loan and, the bank accepted the pay off.  He lopped off $1.1 MILLION in debt!  BECAUSE THE NOTE HAD BEEN CALLED MONTHS AGO AND, THE LENDER DID NOT WANT TO TAKE PAYMENTS.  HE HAD NOT MADE A PAYMENT IN 6 MONTHS!  We did a private money loan through our fund and, closed it in a few weeks.  Six (6) months from now we will refinance him into a longer term vehicle at conventional rates and, the client is fired up! 

It can work on purchases too.  We have one client that is being offered a group of 6 shopping centers that the bank has foreclosed on.  The outstanding loan is $13 million, the properties recently appraised for $11 million, they cash flow net about $850K and, this borrower can buy them for $7 million if he will close in 30 days.  That is $3 million of free equity-HUGE.  We have the resources to close that loan in a couple of weeks with no appraisal!

Properties don’t have to be distressed to need note discount deals although if you have time and, the note is current, there are conventional options available.  We have seen deals where the bank just wanted the loan off their books to improve their reserve requirements even though the loan was performing. We had to document that the loan was performing but, we have done straight refi’s where the borrower was able to lop hundreds of thousands off of what they owed simply by refinancing it off the banks books.  Right now, banks are looking hard at moving some debt off their books.

A global cash flow analysis should help to determine current and

expected cash flow and provide realistic expectations of a borrower’s

ability to meet current and future debt service requirements. A

borrower’s credit history and financial strength are key components

of assessing their willingness and ability to repay, but an institution

shouldn’t forget about management’s ability to operate the company

with a well-thought-out business plan. Loan structures should be

appropriate for the type of credit, and sources of repayment should

cover the expected timing of the business’s cyclical cash flow.

Further, lenders should assess secondary sources of repayment,

such as guarantor’s strength and liquidity. Lenders should ask

themselves: does this guarantor have financial resources, other

means or collateral, or the ability to provide additional capital? An

institution’s risk management practices should provide for written

policies, controls, and a monitoring process for its lending activities,

and provide for accountability to management.

If you have trapped money in your IRA, and need to open a busines, call brett Swearingen at 800-557-0682 to access your trapped IRA money without tax penalties. A Self Directed IRA (SDIRA), is a great way to fund your new business, and to maintain a nice rate of return.

(yes we do smaller deals as well!)

This is a fast growing franchise in the fast casual space like Subway.  These loans are business only loans meaning there is no real estate typically. They are also restaurant start-ups.  In this regulatory environment, there is typically less than 5% of the banks in ANY given state that will even consider this type of loan.

Call Brett Swearingen at 800-557-0682 to get your deal done too!

The stock market sell off of the last two weeks has created the refinance and purchase opportunity of a lifetime in commercial real estate!

Commercial rates are now in the 5% range and even 4%’s are available on select property types. People with balloon notes due in 2 years should seriously consider a refinance and if you are in the market to purchase commercial real estate, you cannot beat the rates available at this time.

Of course, guidelines are still tight and you need to work with someone with a proven track record of actually closing loans but now the rates create a truly unique opportunity.

To find out where the rates are for your property type or situation or to get a quick commercial loan approval for a purchase, call or email Brett Swearingen today at 800-557-0682 or brett@ccofok.com

Who is closing deals today? that is the question I get every day. My answer is; we are! If a deal is a solid make since deal, there is a very good chance we will close it. We get a lot of bank turn down deals, AND CLOSE THEM!! However, we are not a source for bad deals, deals that are cash out and the borrower is barried, or a place for just last reort deals. we are closing loans, but they must be strong. Banks turn down strong deals for many reasons. It may be an area or property type they are loaded with.

Let me look at it. It will be yes, or it will be no, but you will know within about 72 hours. Not a 30 day period to get an LOI, just to find a loan committee didn't all vote yes.

So, send it in, and let me look at it.

Brett Swearingen

800-557-0682

One of the most frequent reasons a commercial loan is denied is because the property does not meet the commercial lender's minimum DSCR requirements. Understanding how a commercial mortgage lender calculates the DSCR can be helpful to know when applying for a commercial loan.

DSCR = NOI/Total Debt Service

A common misconception made by borrowers when apply for a commercial mortgage loan is that the bank or commercial lender only uses the expenses from the property when calculating the NOI.  Commercial Lenders use the actual expenses plus additional holdbacks, such as, off-site management, vacancy, replacement reserves, repairs and maintenance, etc. Commercial lenders add these numbers to the expenses for several reasons, including, should the borrower default - management fee holdback, should the property lose a tenant(s) -vacancy factor, increase in costs, buffer for unexpected repairs, etc.

Calculating the Debt Service Coverage Ratio - DSCR -

Here is a basic example of how a commercial mortgage lender calculates the DSCR for a commercial loan request. The lender holdbacks are highlighted in blue, remember these are not actual expenses, but they are deducted from the property's gross income.

Where:  Fort Pierce, FL

Type:  SBA 504 Daycare Purchase. 

This is a loan that had initial approval from both the first mortgage lender and the SBA on the second, but the first mortgage lender did not perform.  This happens when they are getting taken over by the FDIC or they are getting audited or they just are plain shut down.  Unfortunately, that is happening a lot nowadays. Our loan product replaces that first mortgage using the SBA Second mortgage and get the loan closed quick.  We can even use the appraisal and environmental in many circumstances!  If your SBA 504 loan is dragging, maybe you should consider Commercial Capital. 

We LOVE SBA 504 loans and close them every month. 

Call Brett today at 800-557-0682 Ext 1

Hedge Fund loans:  There is a lot of diversity amongst the hedge funds as to what they look for and what types of properties.  They may be open to special use properties like Hotels but the deals have to be very strong.  Rates can be fantastic and they are almost always full recourse.  For example, I have one fund out of NY that will go to 80% on apartments, even cash-out and will give a rate of 5.25% fixed for 10 years with a 25-year amortization.  They will go to 75% on the other main food groups.  They can close fast-30-45 days but with excellent rates.

Call Brett today to get started on your loan! 800-557-0682

Investor Loans Are Opening Up!

In what I see as a very positive development for the economy, investor loans are beginning to open up again.  As the Capital markets open up to lending, it will flow through to every phase of this economy.

Some conduit lending is already available.  And the rates at this time are unbelievable.  For apartment complexes it gets even better.  Non-recourse apartment loans are now available with 10 year rates in the low to mid 4% range.  This is the agency paper, meaning FNMA and Freddie and FHA. Loan sizes about $1 Million and up.  Non-agency is once again available in major markets with NO Recourse!  Loan sizes really need to be $2 Million and up for that product but the rates are in the low to mid 5’s fixed for 10 years!  NNN office space, grocery anchored retail and class A office may also qualify for non-recourse loans at these same great rates.  The important thing is that these loans are becoming available again.  For a while, they were all but gone.  With rates this low, it is an awesome time to buy investor commercial property and I have seen a big pick up in apartment deals throughout the country.  The larger deals are happening again!

And this past week, we created a relationship with an incredible private hedge fund out of NY that is focusing on the investor market as well.  They will go beyond the major metros to any area that is a growing market.  If the economy and property values are still tanking in your area, this fund will not be an option, but for all major metro areas and sub-markets that are growing like many parts of Texas, North Carolina, OKLAHOMA, etc. this is an incredible loan product.  They will go down as low as $500,000 in loan size, rates start at 5.25% for a 10-year fixed, with a 25-year amortization.  They will go to 80% LTV on apartment complexes and 75% on retail / office / industrial.  And here is the kicker, they do NOT delineate as far as refinancing or purchasing when they look at LTV.  So you can take cash-out on a deal possibly up to 75% LTV on retail/office or 80% on apartments.  And rates in the low to mid 5’s!  WOW!

As a result of all this, volume is picking up again.  In fact, we are slammed with deals.  And that activity will filter to other parts of the economy.  Are all the problems fixed?  Not by a long shot.  There are still a ton of properties that are upside down and struggling and it will take years to get through all the bad paper.  But with the bank’s willingness to sell and discount the notes, with rates this low and investors beginning to buy again, and the big capital markets opening up, the seeds of recovery are in place.  For more information, or to discuss a property that you are buying or need to refinance, just give me a call.  I can usually tell very quickly whether I can help you or not and with just some basic information, can get you an approval in writing in 48 hours.  We are fast, we are nationwide and we are closing loans.  Give me a call today at 800-557-0682 Ext 1 or email me: brett@ccofok.com

Have a great week,

Brett Swearingen

P.S.  Remember, I have 10-year fixed interest rates starting at 5.25% and amortized 25 years from $500,000 to $20 Million on apartments, retail, office and industrial properties.  Underwriting is a bit more lenient as well on debt coverage ratios and I can do refinances up to 75% or even 80% LTV on Apartment Complexes!  To get more info or to run a purchase or refinance scenario by me, just call 800-557-0682.  These rates are fantastic and probably won’t get much lower; the time to act is NOW.  Call me today!

Small Business Bill to Become Law on Monday!

On Monday, the President will sign into law HR 5297, the small business bill. This bill has huge ramifications on commercial lending AND the economy. Most people don’t realize how big this bill is and the ramifications of it on small business lending. Right now, I want to talk about execution – what are the nuts and bolts of executing loans around this new bill. As such I will hit the key provisions and then what we are doing about it.

The key SBA provisions of HR 5297 are noted below:

For 7A:

· Increase to maximum SBA 7a loan amount to $5,000,000 (permanently)

· 90% guarantee through December 31, 2010

· Fee waiver for the rest of 2010 (subject to available funding)

For 504:

· 504 Debenture increase to $5,000,000 for most applications and $5,500,000 for manufacturers (permanently)

· Two year window for refinancing debt (details provided below)

· Two year extension of the First Mortgage Pool (FMP) program from the date of the first pool issuance – first pool issuance expected to be September, 2010

· Fee waiver for the rest of 2010 (subject to available funding)

504 Refinance Provision:

Here is a summary of the provision:

· Property must be owner occupied (51% or greater)

· Debt must be at least two years old

· Borrower in operation for the entire two year period

· Proceeds of which must have been used for 504 eligible fixed assets for the benefit of a small business concern

· Payments must be current for at least one year prior to application

· Maximum LTV on the existing property is 90%

· With additional collateral, the maximum LTV on the existing property is 125%

· Federally guaranteed debt is not eligible for refinancing (7A, 504, USDA)

· Two year window

It is important to note:

· Not every bank will participate in these changes. Chase has already come out and said they will not.

· In addition, I speak almost daily to local CDCs (SBA) and they are saying that it could be MONTHS BEFORE THE CHANGES IN LOAN AMOUNT AND THE REFINANCING PROVISIONS ACTUALLY KICK IN. The bill is vague in its timelines. Basically, Congress has passed it, now the lenders and the SBA need to execute it and that can take a month or two or three.

SO WHAT AM I DOING ABOUT IT?

I have a tremendous amount of SBA loans in process. The 90% guarantee will help 2 marginal loans get done immediately. The savings on the fees will affect all my clients that will be closing over the next 3 months - so that is good. For new refinances, we have chosen to GO AHEAD AND WRITE THE LOANS UP. We will be taking the applications, packaging them and putting them in order in a que so that the very day the refinancings can get executed, we are there with a plethora of loans. Basically, I am marketing the product now and just informing my clients of the wait. But this bill will help us write a tremendous amount of extra business, not just the refinances but the higher loan amounts. There are plenty of deals I have that can only get approved SBA 7A but they were too big - this bill opens that door. It is huge and hopefully, you take advantage of it.

Call me to get started on your loan. Brett Swearingen 800-557-0682 ext 1

SPECIAL REPORT:  Small Business Bill is HUGE!!!!

HR 5297 passed the Senate last week.  It will rush through the house and likely be signed into law by President Obama as early as Friday of this week.  This Bill is HUGE for small businesses, the economy and of course my business and no one seems to be picking it up.  It is amazing that the best thing the government has done all year is not being picked up by the media.  SO here is a super quick run down of just some of the benefits and what they mean to businesses…

There are a lot of little carve-outs in the law regarding extra depreciation on business assets, etc. that I will not get into here. I want to focus on a few of the HUGE changes to SBA and commercial lending and what they mean to the marketplace and the economy. 

-Increase of the guarantee on the SBA 7A loan from 75% to 90%

- What it means: The government will guarantee 90% of the losses on an SBA 7A loan if the loan goes bad. 

- Why it matters: Banks can loan out money on the SBA 7A loan and their total loss risk is capped at 10%.  This makes them much more likely to approve loans.  I have a start-up franchise restaurant loan for example that was 100% backed by collateral but because the client had no experience, no one wanted to do the loan.  With this change, one of my lenders IS willing to do the loan because their risk is so mitigated.  This change made his approval possible and that will be another store hiring 20 or so people that would not have opened without this change!

-Increase the SBA loan limits on the 7A loan from $2 million to $5 Million and on the 504 loan from $1.5 Million to $5.5 million.

-    What it means: Increases the size of loans and the quantity of them that can be done   

on the SBA program.  MANY PEOPLE DON’T REALIZE THIS BUT MOST         BANKS WILL NOT LEND AT ALL OUTSIDE OF THE SBA LOAN PROGRAM. So changes here effects availability of money to all owner occupied businesses.  For example, line of credit loans or debt consolidation loans are almost all but gone unless done on the SBA 7A program.  Same with business only loans for Franchise start-ups.

-         Why it matters: This is HUGE.  This single change is estimated to increase lending by $5 Billion dollars and only cost the government $26 Million by their own estimates.  It allows larger transactions to be done. But it also allows more transactions to be done.  On the 504 program, it will allow loans in excess of $10 Million dollars to be done which allows larger small businesses that need large warehouse space, etc. to have better access to financing. Business only loans, where no real estate is involved, almost do not exist anymore unless done on the SBA 7A program.  By increasing the limits, that successful business owner that has two or three stores but is tapped at the 7A loan limit can now open 3 or 4 more.  More stores and small businesses opening means more jobs and opportunities.  The impact on the economy is enormous here.

-Allows refinancing on the 504 Loan Program-THIS IS A GAME CHANGER. 

-         What it means-simply, that refinancing can now be done on the 504 program which up till now, was for purchases only

-         Why it matters: A business that owns a piece of real estate can now refinance up to 90% of the value of that building to pay off the loan AND consolidate debt on equipment, etc. The blended rates on the 504 program are in the low 5% range right now-this can be HUGE to business owners and free up HUNDREDS of thousands of dollars in cash flow that can then be deployed to marketing, expanding, hiring, etc. 

-Waive the SBA fees- Generally 2% of the loan amount, these fees are now waived until the end of the year.  This makes it cheaper to do these loans and saves borrowers thousands.  One of my clients will save over $34,000 in closing costs!

And much more.  This bill has long reaching ramifications and the benefits of it will be felt for years to come.  Small businesses are the backbone of this country and by freeing up the credit available to them, by allowing them to consolidate and save money, by allowing the better run businesses and the larger businesses access to capital, we will see an increase in jobs, in revenue, and ultimately, in the economy.  Just let me know if you need a full layout of what is in the bill. As for me, I am about to get really busy writing up these loans for these hard working small business owners that are the engine of growth in this economy!

Brett

p.s. DID YOU KNOW I CAN PAY REFERRAL FEES?  Refer me over someone to refinance on the 504 program or to help them with a purchase and I can pay you 25 bps per referral.  On a typical $1mill loan size, that is $2500 when it closes!  Not too shabby for referring a name and a number!  They will get great service and we WILL get them closed!  Just give me a call at 800-557-0682.

Nothing is more frustrating to people trying to get commercial loans done then applying or sending a loan to a bank, getting terms and a letter of interest, then watch the process get delayed for weeks or months only to get a denial from credit committee. Why does this happen?

I have addressed this in the past, and last week I was reminded once again of it. The truth is, that bank was quite possibly not lending from the get go. Your loan never had a chance. 7 out of 10 local banks are currently not lending and the big 5 banks, although lending, are ultra conservative in what they lend on. Over 80% of the loans we close were denied somewhere else first. We are getting them done at normal banks with normal rates. What gives? How is that possible?

You see, a bank cannot advertise, “we are not lending”. They can’t even tell their Loan Officers and tellers – it would be a PR nightmare. But behind the scenes, amongst the owners and/or bank managers and presidents there is another criteria that trumps whether the file is good or not, it is called the “Texas Ratio”. Simply put, it is the amount of debt on the books compared to the amount of assets. Once the ratio hits 1 to 1 they are on the “watch list” with the FDIC. That means more audits, and possibly, the government taking over. Each weekend this year, 4-8 banks get taken over, their assets and liabilities quietly pushed off to other banks. When that happens, the people who started the bank are left with a big old goose egg. They lose everything they put into it. So, if a bank is close to that 1 to 1 it will not loan out any more money unless it is OVER collateralized. They need to build assets and reduce debts. So the underwriters and credit committee quietly deny every loan. On the surface, they look like they are lending. They issue term sheets and approvals. You don’t know they are not until the process delays on, and finally they come back with some crazy denial.

It took 30 minutes on the phone with a client this past week convincing him he was a quality client and that we could get him a loan. We had issued him terms; it is a Firehouse start up. He has great credit, has experience, assets, nothing wrong with him. We close a couple of these a month – We have legitimate sources that are funding these loans. We can get him closed. Yet, he has been to 5 local banks and after initial thumbs up, got denied at all 5 and EACH ONE GAVE A DIFFERENT REASON FOR DENIAL. That alone shows what I am saying is true – they are digging for reasons. You see, the 5 banks he tried really were not lending – especially not business only which goes on the debt side with no corresponding asset. There is nothing wrong with his loan; he just went to the wrong banks. But that many denials had his confidence down. He was considering no longer doing a Firehouse and giving up on his dream simply because of all the denials. “Maybe it was not meant to be” he thought. But he IS qualified, he CAN get done. He just needs to go with someone who has legitimate sources that really are lending. He needs to run with us to get funded and closed!

The banks being sidelined also opens up a TREMENDOUS opportunity for those who have legitimate funding. We are also marketing these banks and having great success getting them to refer their good deals to us because not only can we close them, we do not take the depository relationships so we help the bank keep the assets up. When they deny a loan they risk the client getting funded elsewhere and losing those deposits. When they refer to us they can help their client and KEEP the deposits because we don’t take them! A win-win all around!

I think that is possibly the biggest advantage of joining forces with me in helping your clients get closed. We have legit funding sources, we are closing commercial loans.

Just email me the contact information of your client to get started. My email is brett@ccofok.com. You can also use our Submission form link and complete the borrower information on the top, and any of the lending needs information such as price and business/real estate type. I will complete the rest when talking with the client. Click here for link:

Brett Swearingen

One Reach Number: 800-557-0682

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