Commercial Real Estate

At RLJ Management Consults, our experienced partners provide financing for commercial owner-occupied and investment properties, for construction to permanent projects, purchase money, and refinancing of an existing property.  

 

The information below is an overview of the various types of real estate financing we assist our clients in securing for their particular commercial real estate project(s). 

 

I. SBA 7(a) Loan

 

Loan Amount: Up to $5MM

Loan Term: 25 Years

Down Payment: 10%

Time to Funding: 60 - 90 Days

Personal Credit Score: 680

Time in Business: 3 years

Prepayment Penalty: 1%-5% of the loan amount during the first five years of the loan

DSCR: 1.25

Owner-Occupied Loan: 51% of the space must be occupied by the operating business or 80% of the space must be occupied by the operating business for construction to permanent deals

SBA Guarantee Fee: 0% – 3.75% (on SBA amount)

Closing Costs: 2% – 5%

Appraisal Fee: $475+

These fees are typically taken directly out of the loan and don’t come out of pocket.

II. CDC / SBA 504 Loan

 

Loan Amount: Up to 90% of Purchase Price

Loan Term: 10 - 25 Years

Down Payment: 10%

Time to Funding: 60 - 90 Days

Credit Score: 680

Time in Business: 3 Years

Prepayment Penalty: 1%-5% of the loan amount during the first five years of the loan

DSCR: 1.25

Owner-Occupied: 51% of the space must be occupied by the operating business or 80% of the space must be occupied by the operating business for construction to permanent deals          

SBA Guarantee Fee: 0% - 3.75% (on SBA amount)

CDC Processing Fee: 0% - 1.5% (on CDC portion)

Appraisal Fee: $475+

These one-time fees are typically taken directly out of the loan

 

It’s important to note that the loan is actually financed by two parties:

A traditional bank or lending institution

A Certified Development Company (CDC)

This causes the commercial real estate loan to have two loans. The first loan is financed by an approved bank up to 50% of the purchase price. The second loan is financed by a certified development company (CDC) up to 40% of the purchase price. The remainder is the borrower’s down payment.

 

Further, CDC / 504 loans have the following unique requirements:

 

Company’s net average income must be less than $5,000,000 for the previous two years

The company cannot have a tangible net worth greater than $15,000,000

Loan amount cannot be more than the personal assets of the business owner

Finally, in order to qualify for a CDC / 504 loan for commercial real estate, companies must create or retain 1 job for every $65,000 issued.

III. Traditional Bank Mortgage

 

Loan Amount: Up to 75%-80% of LTV

Loan Term: 5 - 25 Years

Down Payment: 20%-25%

Time to Funding: 60 - 90 Days

Credit Score: 680

Time in Business: 3 Years

Prepayment Penalty: 1%-5% of the loan amount during the first five years of the loan

DSCR: 1.25

Owner-Occupied or Investment Property: 51% of the space must be occupied by the operating business or for investment property the tenant(s) must have a minimum 5 year lease in place and 100% of the property must be leased

 

IV. Hard Money Loan

 

A commercial hard money loan is a short-term loan used to purchase and sometimes renovate an owner-occupied commercial property before refinancing to a long-term mortgage. Commercial hard money loans are similar to commercial bridge loans in that they help businesses close fast and offer interest-only payments throughout the life of the loan.

 

Maximum Loan Amount: Up to 80% LTC

Up to 90% LTV

Minimum Down Payment 15% - 35% of Purchase Price

Interest Rates: 8% - 13%

Origination Fees: 2% - 5%

Closing Costs: 2% - 5%

Prepayment Penalty: 1%

Typical Loan Term: 1 - 3 Years

Time to Approval / Funding: 10 - 15 Days

Credit Score     680+

Prior Commercial Projects:1 – 3

Lender Fees: 2% – 5%

Closing Costs: 2% – 5%

Appraisal Fee: $475+

 

Call us today to discuss your commercial real estate financing needs. 

240-997-4024 office

240-670-7385 fax

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