Christopher Hills, CMPS, SVP Commercial Lending

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 .

With all of the deals that I have seen recently. I can tell people are starting to get desperate. They are starting to to take short cuts, instead of doing things the right way. We need to have good executive summaries. They need to have some thought put into them. Here is a look at how to write an executive summary.

I am also starting to see very hold financial statements. If you are going to submit a loan to be underwriting please don't try to pass off a year old financial statement. All it does is cause the process to slow down.

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We have Money to lend!!! We are in all 50 States and provide Great Service, are Honest and Show Professionalism.

The above information regarding Commercial Lending was provided by Christopher Hills, the Senior Vice President for In-Vision Financial Holdings, LLC. Chris can be reached via email at chris.hills@in-visionfinancial.com or by phone at 508-377-5872 x 704.

I am dedicated to helping you find the right financial solution for the purchase or refinance of your next commercial project

For Commercial lending nationwide see In-Vision Financial Holdings

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____________________________________________________________________________

We have Money to lend!!! We are in all 50 States and provide Great Service, are Honest and Show Professionalism.

The above information regarding Commercial Lending was provided by Christopher Hills, the Senior Vice President for In-Vision Financial Holdings, LLC. Chris can be reached via email at chris.hills@in-visionfinacial.com or by phone at 508-377-5872 x 704.

I am dedicated to helping you find the right financial solution for the purchase or refinance of your next commercial project

For Commercial lending nationwide see In-Vision Financial Holdings

We are starting to close a lot of these loans but I still see a lot of people trying to do loans that make no sense. You need to understand these deals. Hard money does not mean stupid money. THEY ARE NOT FOR LOW CREDIT SCORE PEOPLE. That is one MAJOR difference between commercial hard money and residential hard money. Remember, 50% of all deals in commercial are not fundable.

The private hard money lenders, the guys who really have the bucks to lend $5 Million and close in 2 weeks, are not dumb individuals. Their goal is NOT to foreclose, (commercial foreclosed properties can sit on the market for 10 years), their goal is to get their money back quick with a profit between 13% on the low end to 25% on the high end. That is points and interest rate. The stronger the deal, the less the total points. What these guys are looking for is situations where the borrower needs money quick but only needs it for a short time and has a sound exit strategy or pay back strategy that gets them their money back in less then 2 years. Often, these deals are funding the mortgage payments into the loan.

For example, someone owns a good piece of property and has builders lined up to buy the lots once he gets them developed but needs the money quickly to develop them. Hard money guys can get him 50-70% of the value in a week or two and roll in the mortgage payments and points so the developer gets this thing done with no additional outlay and gets his money in a couple weeks. Or you have a guy who needs to close in 2 weeks or he loses the deal but it is a fundable loan by the local banks. He just needs money quicker then the banks will close. Or any of a thousand types of other scenarios. The thing to look for when screening one of these deals is: 1. A transaction that needs speed. 2. A deal that makes sense. 3. Some exit strategy where the guys loaning the money can get their money back sooner rather then later-almost guaranteed. Saying, "I will use the money to help my credit and then refinance in a year is NOT a hard money deal-they do not see that as a safe risk since so many bad credit people STAY bad credit people.

Again, it is NOT a hard money where the buyer has major credit issues and no real viable plan for re-payment. Where he just needs the money to hold off people, or where the LTV is really high. In residential, hard money is for those really bad borrowers that need to stave off foreclosure. In commercial, they want good borrowers, with good plans, the deals are sound. The story has to work. If the borrower does have bad credit he CAN go hard money in one instance-he has a clear plan to pay off that is nearly guaranteed-such as a contract from another company to buy his property and the company buying it is sound. The scenarios are endless and the good news is that the deals tend to be larger-between $5-$30 million or higher and the closings are quick. We are starting to close a lot of them and we have good lenders for these loans. But they must make sense and the story has to fly.

____________________________________________________________________________

We have Money to lend!!! We are in all 50 States and provide Great Service, are Honest and Show Professionalism.

The above information regarding Commercial Lending was provided by Christopher Hills, the Senior Vice President for In-Vision Financial Holdings, LLC. Chris can be reached via email at chris.hills@in-visionfinacial.com or by phone at 508-377-5872 x 704.

I am dedicated to helping you find the right financial solution for the purchase or refinance of your next commercial project

For Commercial lending nationwide see In-Vision Financial Holdings