Commercial Property Loans – Institutional Differences

There are key differences between institutional lenders regarding commercial property loans and commercial mortgage refinance.

Business Plans

A bank will generally require a business plan which can be costly. Non-bank lenders usually do not require a business plan.

Loan Programs

Banks typically fund loans that have a balloon payment due after 3, 5 or 10 years. Non-bank lenders generally have long term amortized loan programs with no balloon payments.

Down Payment

Banks usually require 20-25% down payment while non-banks may allow 10-15% down or 85-90% loan to value.

Second Liens

Most banks will not allow a second lien financed by the seller. Non-banks often allow a seller second resulting in a combined loan to value up to 90% of the property value.

Stated Income/Asset Loans

Banks generally don’t use Stated Income/Asset Loans (no tax returns, no income verification) for commercial loans. Non-bank lenders typically offer stated income/asset loans for the self employed business borrowers who may be unable to document their income.

Assumable Loans

Most banks will not allow assumable commercial loans, whereas non-bank lenders may offer assumable commercial loans.

Cash-Out Refinancing

Banks are very conservative in loan amounts for a cash-out refinances. Non-bank lenders offer significantly larger cash-out amounts when refinancing business properties.

Loan Amounts

Banks usually will not finance business loans under $250,000 and many will only finance much larger loans.  Most non-bank lenders will finance loans as low as $100,000. Masses sometimes come in stress with huge amounts of loan and think to play real money pokies australia games to win big.

Cross Collateralization

Banks- require cross collateralization of personal property. This means that, in addition to pledging all of the businesses’ assets and real property as collateral, the borrower must pledge their personal property also. Non-bank lenders do not require the borrower to pledge his personal property.

Closing Times

Banks generally take from 3 to 9 months to close, whereas a non-bank averages a 45 day closing time.

Loan Covenants

Banks often require more than just the monthly payment after closing. Many require annual or quarterly income statements and tax returns. They also require covenants, or promises you make that your business will meet certain criteria in future- positive cash flow, certain debt-to- cash flow ratio, etc. Non-banks typically don’t require additional financial reporting once the loan has closed. Are you thinking to get loans?? Then you can also can have a chance to win big amount at  where you can get free spins, bonus etc.

Environmentally Sensitive Properties

Banks require extensive costly documentation for environmentally sensitive properties such as auto repair shops, dry cleaners and other manufacturing businesses.  Non-banks require less stringent reports which are significantly less costly. The above is a quick primer on some key differences between a traditional bank lender and a non-bank lender.  Talk to us about your business needs and financial profile to determine which lender would work best for you.

Frank Nadia
the authorFrank Nadia