Commercial Governement Backed Loans

Talking About Government Loans!

Regardless of political affiliation or how you feel about the government, there is one thing that is very helpful in commercial today, government-backed loans. Because the government is backing them, money is readily available on these types of deals all day. In past newsletters, we have explored SBA loans. But I want to talk today about a much lesser known loan, a USDA loan.

These loans can be used for owner-occupied businesses, like the SBA loan, but can also be used for INVESTOR PROPERTIES! They can go all the way up to $10 Million – much higher than SBA. And they require a lot less down, typically 10%-20%, much less than most banks will lend on – especially on investor deals. And these can be used for construction as well. The key is that they must be in rural areas which is defined by a population of less than 50,000 people in that city. Many lenders won’t lend in towns of less than 50,000 people so this loan program really fills a gap. And with so many banks no longer doing construction loans, this product is HOT. If what you are building will create jobs; it is even better.

For example, say you want to build a hotel in a city that is near a major metro area but only has a population of 30,000 people. This describes a tremendous amount of cities across America – including the city I live in. If that loan size is $7 Million or so you are going to be stuck. SBA only goes to $5 Million, and the big construction money only wants to look at hotels over $10 Million. But the USDA loan can fill the gap and you will not have to put down 35% either! Rates will usually be tied to prime on an adjustable but that puts you in the 5-6% range right now and fixed rates may be available on extremely strong deals. Because it is a government-backed loan, it does take longer to close but this loan WILL get you closed and with a lot less down than a conventional loan. Hey, you can do investor hotels on this deal! We have a loan that just got approved on this program for a saw mill refinance in Arkansas. That broker had been trying to place that loan for 6 months and we are getting it done! Had terms out in two days and initial approval in less than a week after getting docs! If you have a deal that you think might fit these parameters, give us a call today at 866-926-0576 x 704 .