GrowthPOD :: Ask the Expert!

FAQ 1:
How is using a commercial broker different than my bank?

I have two main goals in any transaction and they are 1) to create a competitive environment that forces capital sources to compete for the borrower's loan and 2) to manage the transaction workflow so the borrower can focus on executing their business plans.

Banks are constrained by loan products and underwriting guidelines that don't necessarily fit the borrower's needs. The Bank's loan officers are incentivized to maximize profits while pushing as much of the risk as possible onto the borrower. Banks also force borrowers through a variety of hoops and typically provide only limited assistance managing transaction workflow.

Our approach is fundamentally different. Our obligation is to you, the borrower. Since we are not limited by our affiliation with any one bank, we are able to present your loan to a broad spectrum of potential capital sources and secure the best terms and pricing that the market can offer. Equally important, we remain very much involved in the transaction, sharing the burden of collecting and processing information, coordinating third party reports and driving towards a smooth and successful close.

FAQ 2:
Do we end up paying more by working with a commercial broker?

No, we charge a placement fee of one percent of the loan amount. Banks also typically charge a loan fee of one percent or add an equivalent discounted value into the spread. Because we absorb the cost of originating loans for the lender, we are able to negotiate direct pricing with most lending sources. As a result, borrowers typically incur no additional costs by engaging us to negotiate and manage their transaction.

In addition, we save our clients time and money by creating a competitive environment that forces the market to compete for the borrower's business. Ultimately, clients get all the cost benefits of a more effectively managed transaction without having to accept exorbitant spreads or large loan fees.

FAQ 3:
How do I qualify for a commercial loan?

In the commercial real estate financing arena, lenders consider characteristics of the real estate project and the actual borrower/guarantor. Loan-to-value (LTV) ratio is the total loan amount expressed as a percentage of (divided by) the appraised value of the project. LTVs range from 70% to 80% in most cases, but may be outside those limits depending on the experience and financial strength of the borrower. Some lenders use the loan-to-cost ratio (loan amount as a percentage of the total project cost) to set the loan ceiling. Borrowers (or their investors) put up the difference in cash. For income-producing real estate projects, commercial lenders usually require that net operating income be at least 1.20 times the total debt service (principal plus interest). We can help you assess whether or not your project meets the typical LTV, LTC or cash flow requirements of commercial lenders.

FAQ 4:
Who are our typical lending partners?

The goal is to add value to customer transactions by offering a wide range of financing alternatives and direct access to top national, regional, and local lenders. We have funded deals through agencies, life companies, conduits, and "out-of-the-box" lenders. In addition to permanent debt financing, we regularly structure transactions using high-leverage bridge loans, mezzanine debt, construction loans and straight equity.

FAQ 5:
What are our loan minimums?

We finance commercial loans and apartment financing loans from $100,000 to $100 million. We work around the country and finance commercial real estate in all 50 States.

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