Government Programs

Government Programs

We work with a number of government lending programs that help to bridge the gap for many Clients with traditional banks. Below is a summary of some of the main government lending options we have available to us:

Fannie Mae – One of the largest residential mortgage origination and servicers in the Country, Fannie Mae also provides multi-family / apartment financing for properties five-units and up and on loan amounts $750,000 and above. Fannie Mae offers five, seven, and ten year fixed interest rates, and is a great way for Borrowers to lock in long-term financing for their apartment buildings.

Freddie Mac – Another one of the largest residential mortgage origination and servicers in the Country, Freddie Mac also provides multi-family / apartment financing for properties five-units and up and on loan amounts $1 million and above. Freddie Mac offers similar programs to Fannie Mae, but also currently has an interest only program for properties with loan amounts $5 million and up at interest rates substantially below market.

SBA 504 Loan Program – The SBA is the Small Business Administration and they have several programs to help business owners get financing. By working in partnership with both SBA 504 lenders as well as traditional banks, for Owner-Occupied (over 50%) commercial properties, including industrial, office, retail, and some special-use properties, we can get up to 90% of total cost financing done for our Borrowers. Costs can include tenant build-out and equipment, although the equipment will sometimes get amortized quicker than the mortgage portion of the loan. Under the SBA 504 Program, the owner puts 10% equity into the project / property, a traditional bank funds 50% of the loan, and the SBA funds the remaining 40% of the loan. The SBA portion of the loan is fixed for twenty-years. The traditional bank must provide a ten-year loan term, but the loan can be re-priced after five years. The SBA Guaranty is good for up to $5 million in financing, which covers projects of up to $12 million.

SBA 7A Loan Program – By working in partnership with local banks and the SBA, we can get up to 90% financing for tenant build-out, equipment financing, working capital, owner-occupied real estate, business acquisition, business start-up, or any combination of these items. The 7A loan terms vary depending on the purpose of the loan, the loan amount, and the Bank approval. Both low fixed rate and variable rate options are available. Under the 7A program a traditional bank lender makes the loan and the SBA guarantees the loan. This program allows many projects with tight cash-flow or some other risk to get financed through traditional banking sources. The SBA guaranty is good for up to $5 million in financing, which with an 80% guaranty will cover loan requests up to $6 million. However, the loan requests can even be higher than that with the SBA guaranty never exceeding $5 million.

USDA Government Guaranty Program – The United States Department of Agriculture has a commercial loan guaranty program available for rural communities. In order to qualify a property must be located in a rural community, which we can verify here at CLX. The loan then must be used to support business growth. The program is a guaranty program like the 7A program where a traditional bank makes the loan and then the USDA guarantees up to 90% of the loan amount (the guaranty amount varies depending on the loan type and size). However, unlike the SBA 7A program, the funds can be used for a wider range of projects and is not restricted to owner-occupied properties or to operating businesses. The funds can be used to promote development in general, which may include the construction of retail centers, office buildings, and other non-owner-occupied investment properties. Lastly, the available guaranty limits are much higher on the USDA loan program all the way up to $50 million and in some cases even higher. But under the USDA guaranty program, the percentage of the loan guaranteed by the USDA goes down as the overall loan amount goes up.