Sofia Capital Ventures is your Concierge for Private Commercial Lending. Through our curated network of private commercial lenders, we can provide financing for a wide variety of commercial property types, loan sizes and challenging financing situations. Below is a guide to loan programs that are currently available.
COVID-19: During the global pandemic and economic slow-down many lenders have cancelled or modified their lending programs. In general, Lenders are looking for excellent borrowers with excellent properties in excellent locations. In some sectors, property has been devalued by as much as 20%. Agency loans, such as Fannie Mae/Freddie Mac, SBA and HUD/FHA remain relatively stable but tend to be available only to the best (A-paper) borrowers with full documentation, high net-worth and significant liquidity. In an era of cautious lending, loan to value (LTV) has been reduced across the board, interest rates may be slightly higher, and some lending sectors, such as hospitality, retail and office may have reduce lender interest.
Commercial Real Estate Loans
Long-term, fully amortized commercial loans can be used for the purchase or refinance of commercial real estate when the property is stabilized. A stabilized property is one that has full occupancy with market rates (or equivalent) and is of good physical quality with no immediate need for renovation.
For many Multifamily investors, an Agency loan, such as Freddie Mac/Fannie Mae or HUD/FHA is a good option. Fannie/Freddie loans come with strict requirements for both the property and the borrower, including a net worth equal to the loan amount and minimum cash reserves of 9 months of interest. HUD requirements are a little looser. In addition to multifamily, HUD loans can be used for senior housing, student housing, low income housing, work force housing and assisted living. The advantage of Agency loans is low interest rates and high LTV, up to 85%.
For other multi-tenanted commercial property as well as multifamily, several of our lenders offer comparable financing, with 25-year amortization, relatively low rates and initial fixed term of 7 to 10 years. Loan to value will be a little lower than multifamily (up to 75%) and rates will be slightly higher. These loans all require full documentation on the borrower, the borrowing entity, and the property.
If your property under-performing or not fully occupied, then a bridge loan is the answer. Bridge lenders offer interim solutions that afford you the opportunity to stabilize a property by increasing occupancy, or improving a property by renovating it, raising rents or improving amenities. The advantage of a bridge loan is usually flexibility. They are easier to qualify for and often have no pre-payment penalty, which allows you to refinance in a relatively short period of time into a permanent loan.
Bridge loans often require interest payments only, so do not build equity in the property. They also rely more heavily on the property’s physical characteristics and performance, rather than the borrower’s strength. Bridge loans are usually quicker to close, some in as little as 2 weeks, and carry a higher interest rate and lower LTV than permanent financing.
SBA loans are a great option for owner-occupied properties. SBA loans can be used to purchase a building, refinance a building, or for new construction to be used by the business itself. While SBA loans have a reputation as being difficult to qualify for, Sofia Capital Ventures has an excellent track record in this area. We offers access to both the 7(a) and 504 SBA Loan Programs through non-Bank SBA Preferred Lenders and several privately owned banks that are also SBA Lenders. SBA 7(a) loans cap at $5 million; SBA 504 loans cap at about $11 million.
COVID-19 UPDATE: If you close on an SBA loan by September 27, 2020, the SBA will make the first 6 months of loan payments for the business. If you’re thinking about buying or refinancing a property that your business already owns, CONTACT US immediately!
Sofia Capital Ventures has strong lender relationships for land, development and construction loans. During COVID-19-related economic recession, lenders have tightened their lending on construction projects, but there is still plenty of money being deployed.
The ideal construction borrower will have:
- Previous experience in developing the same asset category
- Land already under contract or ownership
- Equity already raised, or committed to the project
- A construction/development plan
- A clear exit from the construction loan
Developers note: since the onset of COVID-19 economic slowdown, construction lenders are devaluing commercial property in certain sectors, especially hospitality. SCV can still access construction money for hospitality through private sources. Multifamily development continues to be a strong sector.
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