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#264445 - 12/13/08 01:42 AM commercial loan, another hurdle!
babmukja Offline

Registered: 09/25/07
Posts: 109
Loc: california, U.S.
Hello, Out There!

"How easy is it to get a commercial loan nowadays"

I came across an investor looking to buy commercial property to generate cash flow. He is very serious about this and only thing that concerns him is the loan situation.

I've never made a buying and selling transaction before and I am bit clueless as to what to start with.

I need to contact commercial loan brokerage or anybody who does commercial loan, but I don't know who to contact.
can anyone tell me who would be the best choice as far as the commercial loan is concern.
another question is, once i find a commercial loan broker or agent, what do they generally need from my client?

any feed back will be appreciated. thanks

#264473 - 12/13/08 06:26 AM Re: commercial loan, another hurdle! [Re: babmukja]
super realtor Offline
Major Contributor

Registered: 05/01/05
Posts: 8596
Loc: georgia
One resource is looplender on loopnet which has alot of commercial lenders and brokers.

"How easy is it to get a commercial loan nowadays"

It's not about how EASY it is. It is about debt ratios.

Before when the credit market was free flowing low down payment loans were easy to get. You could put down 10 percent and do a deal. Now lenders want 25 to 50 percent down depending on the assett class.

For example retail might be performing really well in a local market but industrial might be suffering there so the lender would assess a higher risk to funding that type of local project and would want more money down.

You really need to qualify your buyer before wasting time. You will find alot of buyers want to do alot of things but can't.

If the buyer is FLUSH with cash you can still find an owner who will finance the note with a downpayment of 5 to 10 percent.

If your buyer has no cash forget it. They would have to joint venture and find someone to bring funds to the table but your buyer wouldn't bring any value to the deal so it wouldn't happen.

You first have to define what your buyer is looking for. A key giveaway to a NEWBIE investor is is when they say "I just want to cashflow something"

Most seasoned investors will be able to tell you the assett class,where they are looking,and what type of project they want to do from the ground up or buy an already existing product they want to leave as-is or change.

good luck

#266370 - 12/27/08 07:28 AM Re: commercial loan, another hurdle! [Re: super realtor]
Thomas Anderson Offline

Registered: 12/24/08
Posts: 13
Loc: Spain
Yes indeed commercial loans have become very difficult to get eventhough you have a pretty average kind of a credit score.

#402502 - 03/02/12 05:06 AM Re: commercial loan, another hurdle! [Re: babmukja]
Iftikhar Offline

Registered: 01/24/12
Posts: 40
Loc: Pakistan
Commercial property sector always face hurdles. Getting loan had never ever before difficult as it become now a days. After a lot of paper work, submitting different types documents, having a good credit value you can not hope to get it and more strict rules applied for commercial loans.

#417661 - 12/30/12 08:21 PM Re: commercial loan, another hurdle! [Re: babmukja]
porter Offline
Junior Member

Registered: 03/05/12
Posts: 7
Loc: Florida
If the property has adequate cash flow to service the debt, and a sponsor/guarantor with a strong balance sheet, then you won't have any problems finding a loan. The loans with "hair on the deal" are the ones that have a hard time finding financing. What you need to know is that a commercial real estate loan essentially comes down to debt service coverage ratio and loan to value. The lender will figure out a loan amount based on those two approaches, and then take the lesser value. Then, as long as the guarantor is strong (low contingent liabilities, high liquidity, good personal income), the loan pretty much approves itself.

#421029 - 03/03/13 07:47 AM Re: commercial loan, another hurdle! [Re: babmukja]
fsna.heidi Offline

Registered: 02/05/13
Posts: 41
Loc: USA
If you are loaning from a bank then it is really difficult since they will base the loan on debt to income ratio and credit scores too. As far as I know, borrowing from a private lender is an option but you have to know that they charge big interest than banks do.


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