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Is your commercial note coming due?
As commercial mortgages expire some property owners are discovering their bank will not rewrite the loan upon maturity. This may have less to do with the client and their ability to pay the mortgage, then the bank itself. New federal regulations have placed excessive restrictions on commercial mortgage loan exposure which banks carry on their books. Forcing banks to deny mortgages to some clients.
Recently, after being a client for 10 years, my bank would no longer renew my commercial mortgage. Even though my business was profitable and I had never missed a payment. My banker informed me they would be able to process my loan through their SBA division. This was not a concern in the past but with the tightening of lending and new regulations the bank would not consider renewing the mortgage without going through the SBA.
Banks looking to reduce their liabilities tend to direct customers to SBA loans they offer. This allows the bank to keep the client and defer most of the liability to the government. The SBA option has its own set of difficulties. The approval process can be daunting, upfront costs can be expensive and investors with multiple properties can easily exceed the maximum debenture of $5.5 million.
So what are your options?
One option is to seek Private Equity Loans. (I'm not talking about Hard Money Loans!) With Private Equity Loans, funds are usually provided by Institutional Investors interested in long term commitments with stable returns, Commercial Mortgages fit this criteria well. These institutions, (usually insurance companies, pension funds and Private Investment Groups) have fund managers which oversee large pools of money. The fund managers work through commercial mortgage brokers, not direct with the public. Brokers qualify clients and facilitate document organization in assisting the fund manager.
Usually acquiring funding through Private Equity lenders is quicker then traditional banks. This is because most fund managers have the authority to approve a loan so the application does not need to be presented to a committee. The borrower will still need to provide similar documentation as required from banks. Any delay in providing the required documentation will have a detrimental effect on the timing.
As with banks, private equity lenders have specific categories of investments they are comfortable with. Here at Commercial Mortgage Provider LLC we have relationships with fund managers from several different lenders, allowing us to connect the borrower with a lender that best fits their needs.
For help with your funding needs go to: Commercial Mortgage Provider LLC
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