Retail

Retail property is a classification of zoning for property that is used for a store, shopping center or service business. Retail properties include free standing buildings as well as strip centers or small shopping centers with multiple local tenants, or large shopping malls with many national tenants.  The property can be an owner or tenant occupied.

Retail

Bank Lender: Investor

Bank Lenders can be an excellent funding source for long term Retail property loans. Banks provide low rates and fees for borrowers who have solid credit and can provide tax returns to document they can afford the loan. Bank loans are generally fixed for 5 – 10 years and payments based on a 20-25 year amortization. These loans are based on the cash flow of the property, plus the financial strength and credit history of the borrower.

Pros

  • Low rates
  • Diverse Property Types
  • Flexible underwriting
  • Variety of loan programs

Cons

  • Extensive documentation
  • Full recourse
  • Shorter amortizations and fixed rate terms versus CMBS or agency lenders
  • Cash out refinances limited

Loan Amount
$500K+

Min. Rate
5.5% – 6.5%

Term Length
Up to 10 Years

Closing Time
8 – 12 Weeks

Max LTV
75%

Amort.
Up to 25 Yrs

Bank Lender: Owner Occupied

Bank Lenders can be an excellent funding source for long term Retail property loans.   Banks provide low rates and fees for borrowers who have solid credit and can provide tax returns to document they can afford the loan.  Bank loans are generally fixed for 5 – 10 years and payments based on a 20-25 year amortization.  These loans are based on the revenue of the business, plus the financial strength and credit history of the borrower. 

Pros

  • Low rates
  • Diverse Property Types
  • Flexible underwriting
  • Variety of loan programs

Cons

  • Extensive documentation
  • Full recourse
  • Cash out refinances limited

Loan Amount
$500K+

Min. Rate
5.5% – 6.5%

Term Length
Up to 10 Years

Closing Time
8 – 12 Weeks

Max LTV
80%

Amort.
Up to 25 yrs

Private Lender: Property Income Based

Private Lenders are an excellent funding source for long term Retail property loans.   Private lenders generally loan to a broader range of property classes, loan amounts, borrower credit scores, and debt service coverage levels than banks.  Private lenders qualify “Ability to Pay” based on the cash flows of the subject property and not the overall net income of the borrower.  Loans are generally risk based priced with the loan to value, credit score, debt service coverage ratio and investor experience determining the borrower cost of financing. 

Pros

  • Based on Lease Income
  • No balloon
  • Unlimited cash out
  • Quick approval
  • Fast closing time
  • Wide variety of property types
  • Limited or no seasoning required

Cons

  • Need fair credit score (650+)
  • Higher interest rate vs. banks
  • Prepayment penalty
  • No construction

Loan Amount
150K+

Min. Rate
6.5% – 8.0%

Term Length
Up to 10 Yrs

Closing Time
4 – 5 Weeks

Max LTV
70%

Amort.
Up to 30 yrs

SBA 504

The US Small Business Administration offers two excellent loan programs to promote the economic development of small businesses. The SBA 504 program may be used to finance the acquisition and/or development of an existing building, ground-up construction, expansion of a building, or heavy equipment.  SBA 504 loans can be an solid alternative to bank and private lender financing for new business start ups or when traditional financing is unavailable.

Pros

  • 90% Financing
  • Low Down Payments
  • Long Payment Terms
  • Reasonable Interest Rates
  • Wide Variety of Uses

Cons

  • Extensive Paperwork
  • Longer Approval Process
  • Need Good Credit

Loan Amount
500K – $20MM

Min. Rate
5.5% – 7.5%

Term Length
Up to 25 Years

Closing Time
8 – 12 Weeks

Max LTV
90%

Amort.
Up to 25 Years

SBA 7(a)

The US Small Business Administration offers two excellent loan programs to promote the economic development of small businesses.  The SBA 7(a) loans are one of the most popular SBA loan programs because they provide the lowest down payment (10%) for real estate acquisitions, are a long term solution with no balloon payment, have competitive terms and a variety of uses. Small businesses can utilize the SBA 7(a) program to acquire their own office, warehouse, store, or other commercial real estate, or even construct a brand new facility. Other uses for SBA 7(a) loans include equipment purchase and working capital. SBA 7(a) loans can be an solid alternative to bank and private lender financing for new business start ups or when traditional financing is unavailable.

Pros

  • Up to 90% Financing
  • Low Down Payments
  • Long loan Terms
  • Reasonable Interest Rates
  • Wide Variety of Uses
  • No balloon payments

Cons

  • Extensive Paperwork
  • Longer Approval Process
  • Need Good Credit
  • No Personal Cash Out

Loan Amount
500K – $5MM

Min. Rate
6.5% – 8.5%

Term Length
Up to 25 Years

Closing Time
8 – 12 Weeks

Max LTV
90%

Amort.
Up to 25 Years

Private Lender: Bank Statement

Private Lenders are an excellent funding source for long term Retail property loans.   Private lenders generally loan to a broader range of property classes, loan amounts, borrower credit scores, and debt service coverage levels than banks.  Bank Statement based loans take into account the gross revenue or stated income of the property.  Loans are generally risk based priced with the loan to value, credit score, liquid assets and investor experience determining the borrower cost of financing. 

Pros

  • No tax returns
  • No balloon
  • Unlimited cash out
  • Quick approval
  • Fast closing time
  • Wide variety of property types
  • Limited or no seasoning required

Cons

  • Need fair credit score (650+)
  • Higher interest rate vs. banks
  • Prepayment penalty
  • No construction

Loan Amount
$250K+

Min. Rate
6.8% – 9.8%

Term Length
Up to 10 Years

Closing Time
3 – 6 Weeks

Max LTV
75%

Amort.
Up to 30 Yrs

Private Lender: Hard Money Bridge

Private Lenders are the primary funding source for Hard Money Loans. Hard Money Loans are often referred to as “Asset Based” Loans where the lender believes there is enough equity in the property to quickly dispose of it if the borrower were to default on the loan. Hard Money Loans are short term loans of 12 – 24 months duration. Lenders generally expect the loan to paid off through the sale of the property or a refinance by another lender. Hard Money loans are very useful when a quick close is required or the borrower is unable to obtain financing from traditional lending sources.

Pros

  • Flexible underwriting
  • Quick Closing
  • Interest-only Payments
  • Up to 2 Yr Term

Cons

  • High Interest Rate
  • Higher Fees
  • Short Term
  • Extension Fees, if more time is needed.

Loan Amount
250K+

Min. Rate
8.0% – 13.0%

Term Length
Up to 3 Years

Closing Time
2 – 4 Weeks

Max LTV
75%

Amort.
Interest Only

Private Lender: Rehab or Restabilization Bridge

Private Lenders are the primary funding source for purchase-rehab market. These lenders provide short term loans which include both the funds to purchase or refinance the property and funds to renovate the property. Pricing and loan amounts are heavily influenced by borrower rehab experience. Rehab funds are typically held in a rehab holdback account and released on draws.

Pros

  • Flexible underwriting
  • Quick Closing
  • Interest-only Payments
  • Pricing Based on Experience and less on Credit

Cons

  • High Interest Rate
  • Higher Fees
  • Short Term
  • Extension Fees, if more time is needed.

Loan Amount
$250K+

Min. Rate
8.0% – 13.0%

Term Length
Up to 3 Years

Closing Time
2 – 4 Weeks

Max LTV
85% LTC

Amort.
Interest Only