Owner-occupied Commercial Real Estate Loans

Whether you are looking to buy, refinance, or expand an existing owner-occupied piece of commercial real estate, we have a wide variety of lenders willing to fund your transaction. There are many lenders interested in providing owner-occupied financing, but if the financials of the operating company are not structured properly or there are issues, sometimes getting the right financing can be tough. And even if the operating company is doing well, often times through some positioning, packaging of opportunities and competition, much better terms can be achieved than a Borrower might already have. The sources we have available to us are as follows:

a) Traditional Banks – We have many traditional banks ranging from small community banks to large national banks looking to make owner-occupied commercial mortgage loans. For loans typically under $1 million, and for true relationship banking the best Banks are community banks. They will offer the most flexibility, be the most responsive, and provide the most assistance. However, they are the most expensive. Larger regional and national banks tend to put loan requests under $1 million through set underwriting programs. If you qualify under their program, the Borrower will typically get a superior rate, term and fee over that offered by the community banks, but the loan will be littered with conditions, covenants, and the documents won’t allow much flexibility. Also, the loan officer won’t have much control over the relationship. Picking your lender here is often about taste and desire, and we work with our Borrowers to help them find the best option that fits their long-term business needs and desires. For larger transactions typically over $1 million, some community banks can do the transaction, but often times larger regional and national banks are the better fit. They offer more competitive terms, quicker turn-around times, and their lenders for larger transactions have more ability to work with the Borrower. But still at times there are some really good community bank fits available. We work with the Borrower to find the best fit for them, create some competition amongst lenders for their transaction, and work to secure them the best financing possible not only from a rate and term perspective, but also from a relationship and desires perspective. We are seeing interest rates as low as the low 4% range for larger full-relationship owner-occupied properties and as high as the mid 6% range for smaller, weaker loan requests. Typical terms are five-years, although in some cases we have seen seven and ten year terms. Typical amortizations are twenty-five years, but on occasion for more special-use owner-occupied properties terms have been twenty-years or less. Advance rates vary quite a bit, but can be as high as 85% with the SBA 504, SBA 7A, or when the USDA lending programs are utilized. Without those programs typically advance rates are up to an 80% loan to value based on the lesser or appraisal or cost.

b) Private Lenders – We have a variety of private lenders that are willing to fund owner-occupied commercial properties. These lenders are typically utilized when a Borrower’s business is struggling, they have issues with their personal credit and / or financials, or there is a lack of liquidity which traditional banks just cannot get around. When this happens these private lenders step in and typically fund the request at a higher interest and a shorter term. Typical private lender interest rates run from 8% to 16% depending on the loan to value and how risky the transaction is perceived to be. Typically the loans are interest only, but in some cases are amortized over twenty to thirty years. Terms vary quite a bit depending on the risk, the lender, and the program available, but often times they are one-year but in some cases run as long as five years. Advance rates for private loans are typically 65% of value or purchase price if it is for an acquisition.