Program Guidelines

Maximum Loan Amount$25,000,000 – 1st Mortgage / Trust Deed Loan Amount
Minimum
Debt Service
Coverage Ratio
Multi-Purpose – 1.10x

Hospitality – 1.20x

Special Purpose – 1.25x

Minimum Global Debt Service Coverage Ratio1.25x+
Post-Closing Liquidity5% of total loan amount (1st + 2nd mortgage amount)
Full RecourseYes (with Personal Guarantees)
Minimum FICO Score 650
Ownership ExperienceTwo years minimum ownership experience demonstrating successful (profitable) operation of same business.
Maximum LTV For 1st Trust Deed
Multi-Purpose50% – 55%(Maximum LTV – Up to 90% on total project cost)
Hospitality & Special Purpose50% – 55%(Maximum LTV – Up to 85% on total project cost)
Maximum Advance Rate70% – 85% of cost
Contingency10% contingency and interest reserve must be accounted for in the project cost.
Post-Closing Liquidity5-10% of total loan amount (1st+ 2nd mortgage amount), available upon completion of construction.
Third Party Cost ReviewBorrower must agree to third-party cost review, contractor evaluation report, and third-party fund monitoring during construction. All related costs may be included in project cost.
Performance BondBorrower may be asked to provide performance bond from their contractor. Subject to third-party review of contractor.
SBA EligibilityThe borrower must be eligible under the SBA 504 or SBA 504 Green Loan initiative programs.
Maximum LTV For 1st Trust Deed
Multi-Purpose50% – 55%(Maximum LTV – Up to 90% on total project cost)
Hospitality & Special Purpose50% – 55%(Maximum LTV – Up to 85% on total project cost)
Cash Collateral(May Be Required)Additional cash collateral equivalent to 5% to 10% of the total project cost may be required during the construction phase if the Borrower and Guarantors do not meet the Global Debt Service Coverage Ratio requirements (0.50x-1.00x from surplus cashflow). Cash Collateral will generally be released upon completion of construction and issuance of the SBA 504 debenture.
Additional Hospitality RequirementsMidscale or upper midscale limited-service or select-service franchises only. Property must be located in an economically diverse community with a population >50,000.
Maximum Advance Rate75% of cost or 70% of stabilized value. For SBA eligible projects, up to 80% of eligible project costs.
Loan Size$1,000,000 to $15,000,000
Loan Term6 months to 36 months – Interest Only
Collateral1st Mortgage or Deed of Trust on land and improvements held fee simple interest
Stabilized NOI
Minimum Debt Yield10.0% for Office, Industrial and Retail Properties
12.75% for Hotels, Assisted Living and other Single-purpose Properties
DSCR1.30x for properties < 10 years old
1.40x for properties > 10 years old
RecoursePartial or Full Recourse
Ownership ExperienceMinimum 3 years of comparable ownership and management experience demonstrating successful (profitable) operations.
Preferred Property Characteristics for Hotel Loans
  • Interior Corridor
  • Limited Service or Select Service
  • < 20 years old
  • Midscale or Upper Midscale Class Franchise
  • Located in an economically diverse community with a population > 50,000

Forms & Pricing Sheets

The following documents are required to prescreen the transaction and issue a discussion term sheet within 3 business days.

Business/PropertyAll federal copies of income tax returns for subject business over the past three years, including affiliate entities in which principals hold 20% or more ownership. For affiliate entities in which principals hold less than 20%, K1 statements are needed for the previous three years.
PersonalAll federal copies of tax returns over the past three years for all parties with 20% or more ownership interest in subject business.
Financial StatementCurrent year to date financial statement for all entities and personal financial statement of all guarantors. Personal financial statement form available here.
Debt ScheduleSchedule of all debts for subject business. Template available here.
ResumesManagement resumes of all principals, Guarantors, and GM. Template available here.

Rates

WSJ Prime

5.50%

1 Month LIBOR

2.48%

5 Year Swap

2.34%

20-Year SBA 504 Rate*

4.36%

Rates shown are updated every Tuesday of each week. On weeks where Monday is a holiday,
rates will be updated on Wednesday. Last updated: April 10, 2019
*As quoted by CDC Small Business Finance.

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