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Commercial Mortgage Lending

At, we know Commercial mortgage lending in Alabama, North Carolina, Mississippi, Tennessee and Missouri. Our goal is to assist each of our Commercial Loan clients in making good sound financial planning decisions with the financing of your commercial property.

We offer programs with:

  • High Loan to Values
  • No Balloon payment plans with 30 Year Amortization
  • Fixed 30 Year Rates
  • Adjustable Rate Commercial Loan Programs
  • Commercial Loan Amounts As Low As $100,000 To More Than $10,000,000.

Regardless of whether your Commercial Property is located in Alabama, Mississippi, North Carolina, Missouri or Tennessee, our Commercial Loan Specialists have been helping local businesses finance their commercial properties with exceptional rates and easy repayment terms. No matter whether your financing an office building in Nashville, TN or an industrial park on the outskirts of Kansas City, MO, professionals can make it hassle-free.

For more information about our Commercial Mortgage Lending programs, please feel free to contact us or use our fast and easy Quick Apply application!
877-725-5559 (Fax)

Property Types

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    Multi family     Retail   
  • Garden Apartments
  • Hi-Rise Apartments
  • Mid-Rise Apartments
  • Low/Mod Income
  • Student Apartments
  • Senior Apartments
  • Underlying Coop
  • Regional Enclosed
  • Strip Center
  • Outlet Mall
  • Free Standing
  • Single Tenant
  • Regional Unenclosed
    Office     Health Care  
  • Single Tenant
  • Hi-Rise Tower
  • Mid-Rise Office
  • Office Over Retail
  • Congregate Living
  • Nursing Home
  • Rehabilitation
  • Ambulatory Care
  • Heavy Manufacturing
  • Light Manufacturing
  • Warehouse/Distribution
  • Owner Occupied
  • Multi-Tenant
  • Self Storage
  • Special Purpose

Small Business Commercial Mortgage Programs

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Small Business Mortgage Product:

  • Loan size: $100,000 up to $3 million.
  • Credit: 580+ credit scores for primary borrower or primary guarantor.
  • Loan-to-value: Loans up to 97% of property value.
  • Seller can carry 20% CLTV 95% Subordinate financing
  • Seller seconds up to 20% of property value:
    • Tier I 95% LTV
    • Tier II 90% LTV
    • Tier III 90% LTV
    • Tier IV 85% LTV.
    • Subordinate Financing not available on the Interest-Only Program.
  • Loan purpose: Rate/term refinance, cash-out refinance or purchase.
  • Occupancy: Owner occupied or investor properties are acceptable. Investor loans for commercial properties are slightly higher on rates
  • Loan types: 6-month adjustable; 2, 3 and 7-year fixed, then adjustable; declining fixed rate and interest only programs are available.
  • Terms: 15, 20 and 30-year fully amortizing loans are available on all
    property types.
  • Target Borrower: 580+ middle credit score, low debt relative to income, willing and able to fully document their income, at least 2 months of principal and interest payments in liquid assets, no bankruptcies within the last 7 years.
  • Rates: Pricing based on property type, LTV and amortization.
  • Timing: 48 hours pre-approvals; 30-45 day closings.
  • Rate locks: Rate locks are automatic on the 6-month adjustable, 2 and 3-year fixed programs.
  • Prepayment fees: 5% for 5 years for all programs. Other choices upon request
  • Closing costs: Mortgage closing cost fees can vary, $595 processing fee, $500 lender fee. All third party costs including appraisal, title, environmental insurance and survey (if required) are paid by borrower. $250 fee paid at closing if borrower declines automatic payment.
  • Guarantee: Personal guarantees are mandatory for all eligible borrowers including individuals, corporations, partnerships, LPs, LLCs and certain trusts.
  • Escrow's: Tax escrow's are required. Insurance escrow's may be required.
  • Other Attributes: No lender points, yield maintenance, mandatory lockouts, loan committees and loan to one borrower limits.


Commercial Lending Qualification

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We at will work exceptionally hard on your behalf to facilitate the approval and funding of your commercial loan; please be sure you understand the minimum requirements and risks.

Questions to Ask Yourself

  • Are you and your business credit worthy?
    -Your personal and business credit ratings will be analyzed.
  • What kind of money do you require?
    -Short, long, intermediate term money or equity capital.
  • How much money do your need?
    -Present exactly what you need and what it is for.
  • Do you have sufficient collateral?
    -Your collateral must equal the loan amount at a minimum.
  • Do you understand our lending rules?
    -Review the Loan to Value's and Debt Coverage Ratios.
  • What kinds of limitations will be set by you?
    -Know your comfort level with rate, payment, and term.

Please share all of your honest answers to these questions with us so that we can best assist you with your commercial loan. For more information, just send over a Quick Apply application!

Commercial Loan Underwriting

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Commercial Financing is underwritten on a case by case basis. Every loan application is unique and evaluated on its own merits, but there are a few common criteria we look for in commercial loan packages no matter whether the loan is in Hattiesburg, MS, Charlotte, NC, or in any of the other metros where we provide commercial loans.

Financial Analysis

A key component in making an underwriting evaluation of a commercial property in Murfreesboro, TN or in any of the other cities where we make commercial loans is the debt coverage ratio. The DCR is defined as the monthly debt compared to the net monthly income of the investment property in question. Using a DCR of 1:1.10 we are basically saying we're looking for a $1.10 in net income for each $1.00 in mortgage payment. This ratio will vary according to borrower and property type. Typically we will determine the DCR ratio based on monthly figures, the monthly mortgage payment compared to the monthly net income. The higher the DCR ratio the more conservative we will be.

With a commercial loan, we will never go below a 1:1 ratio (a dollar of debt payment per dollar of income generated) without a significant borrower cash investment due to the extensive risk that such a ratio creates. Anything less then a 1:1 ratio will result in a negative cash flow situation for the commercial property in question. DCR's are set by property type and what we believe the risk to be. As of today, apartment properties are considered to be the least risky category of investment lending. As such, we are more inclined to use smaller DCR's when evaluating this type of loan request.

Loan to Value

Unlike residential lending, commercial investment properties are viewed more conservatively. We will typically require a minimum of 20% of the purchase price to be paid by the buyer and, in some instances, more. The amount of down payment/your investment is subject to the quality of your financial picture and the commercial property itself. Loan- to-value is the percentage calculation of the loan amount divided by purchase price of the commercial property to be financed. Knowing what our LTV requirements are, you can calculate the loan amount by multiplying the purchase price by the LTV percentage. Keep in mind that the purchase price must also be supported by an appraisal. In the event that the appraisal shows a value less then the purchase price, the lender will use the lower of the two numbers to determine the amount of the loan that will be made.

Credit Worthiness

For businesses less than three years old, personal credit of principals will be evaluated. This may hold true for longer periods of time for tightly held companies. For corporations with a proven track record, business performance and credit ratings will be evaluated.

Property Analysis

Fair Market Value and Fair Market Rent will be analyzed for the specific commercial property type. Special use property may require additional underwriting. Age, appearance, local market, location, and accessibility are some other factors lenders consider in evaluating commercial property loans in Decatur, AL and in the other cities where we originate such loans.

The bulk of the time spent "processing" your commercial loan is merely an attempt by the lender to verify the numbers that go into the numerator and denominator of the 3 ratios lenders use when making underwriting decisions.

The Loan-To-Value Ratio (LTVR) is defined as follows:
Loan-To-Value= Total loan balances (1st mtg+2nd mtg+3rd mtg) / Fair market value (as determined by appraisal)

Loan-To-Value Ratios are seldom allowed that exceed 80%, but in rare instances exceptions can and will be made dependent upon DCR.

The second ratio lenders use when underwriting a loan is the Debt Ratio. The Debt Ratio compares the amount of bills you must pay each month to the amount of monthly income you earn. More precisely, the Debt Ratio is defined as:
Debt Ratio = Monthly Debt Obligations / Monthly Income

Obviously someone whose Debt Ratio is 150% is in trouble. A Debt Ratio of 150% would mean that a borrower's obligations are one and a half times his income. Debt Ratios seldom are allowed to exceed 40% in practice.

The final ratio lenders use is the Debt Service Coverage Ratio (DSCR). The Debt Service Coverage Ratio is a sophisticated ratio only used for large loans on income producing properties. It is defined as:
Debt Service Coverage Ratio = Net Operating Income / Debt Service

Net Operating Income is the income from a rental property after deducting for real estate taxes, fire insurance, repairs, and all other operating expenses; and Debt Service is the mortgage payment on the property. Most lenders typically require this ratio exceed 1.0. A debt service coverage ratio of less than 1.0 would mean that the property did not produce enough net rental income for the owner to make the mortgage payments without supplementing the property from his personal budget. Let help your through the Commercial Loan Underwriting Process! Don't wait, give us a call or use our fast and easy Quick Apply application!

Debt Ratios

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When analyzing the personal budget of a borrower, lenders use two different debt ratios to determine if the borrower can afford his obligations. These two debt ratios are:

  1. Top Debt Ratio
  2. Bottom Debt Ratio

The "top" debt ratio is defined as:
Top Debt Ratio = Monthly Housing Expense/Gross Monthly Income

By "monthly housing expense" lenders mean either the borrower's monthly rent payments, or if she owns her own home, the total of the following -

Monthly Housing Expense

  • 1st mortgage payment on home plus
  • Real estate taxes (annual cost/12) plus
  • Fire insurance (annual cost/12) plus
  • Homeowner's association dues(if home is a condo or townhouse) plus
  • Second mortgage payment (if any) plus
  • Third mortgage payment (if any).

You will often hear the term P.I.T.I. It refers to (P)rincipal, (I)nterest, (T)axes and (I)nsurance. While P.I.T.I. is not exactly the same as Monthly Housing Expense because it does not include homeowner's association dues, the two terms are often used interchangeably.

Lenders have learned over the years that a borrower's "top" debt ratio should not exceed 25%. In other words, a person's housing expense should not exceed 1/4 of his income. They will often stretch this number to as high as 28%, traditional lending theory maintains that anyone with a debt ratio in excess of 25% stands a good chance of developing budget problems.

The second ratio that a lender uses to determine if a borrower can afford their obligations is the "bottom" debt ratio. It is defined as follows:
Bottom Debt Ratio = (Total Housing Expense + Debt Payments)/Gross Monthly Income

The only difference between the two ratios is the inclusion in the numerator of "debt payments." Debt payments include the following:

Debt Payments

  • Car payments
  • Charge card payments
  • Payments on installment loans, for example - a payment on a washer & dryer that the borrower purchased.
  • Payments on personal loans, for example - a signature loan from the borrower's bank.

What is not included in "debt payments" is Utilities such as PG&E, water or telephone and payments on real estate loans. Real estate loans are usually offset first by the net rental income from the property. If the borrower has a net positive cash flow from all his rentals, then the net income is usually added to his "gross monthly income." If the borrower has a net negative cash flow from all of his rental properties, then the amount of the negative cash flow is usually added to the numerator of the "bottom" debt ratio as if it were a monthly debt obligation, like a car payment.

Traditional lending theory maintains that a borrower's "bottom" debt ratio should not exceed 33 1/3%. In other words, the total of the borrower's housing expense and debt obligations should not exceed 1/3 of his income. We often will stretch on this ratio to as high as 50%. Obviously a loan with a debt ratio of 40% is a far more risky loan than a loan with a debt ratio of 32%. Have Questions? Want to talk about Debt Ratios? Give us a call today or use our Quick Apply application for a fast response.

Debt Service

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The most important ratio to understand when applying for an Commercial income property loan is the debt service coverage ratio. It is defined as:
DSCR = Net Operating Income (NOI) / Total Debt Service

To understand the ratio it is first necessary to understand the numerator and the denominator. We'll take a look at net operating income (NOI) first.

Net operating income is the income from a rental property left over after paying all of the operating expenses:

Gross Scheduled Rents                 $100,000
Less 5% Vacancy & Collection Loss     $5,000
Effective Gross Income:                $95,000

Less Operating Expenses 
Real Estate Taxes
Repairs & Maintenance
Reserves for Replacement
Total Operating Expenses:             $30,000

Net Operating Income (NOI)            $65,000

Please note that the lender will always insist on some sort of vacancy factor regardless of the actual vacancy rate in an area to cover collection loss. In addition the bank always insists on using a management factor of 3-6% of effective gross income, even if the property is owner-managed. The lender's logic is the fact that they would have to pay for management if they ever took back the property. Finally, NOTE THAT LENDERS DO NOT INCLUDE LOAN PAYMENTS AS AN OPERATING EXPENSE.

Next let's look at the denominator, Total Debt Service. This includes the principal and interest payments of all commercial loans on the property, not just the first mortgage. NOTE THAT WE HAVE NOT INCLUDED TAXES AND INSURANCE. They were already accounted for above when we arrived at net operating income (NOI).

To calculate the debt service coverage ratio, simply divide the net operating income (NOI) by the mortgage payment(s). For the sake of simplicity, let us assume that there is only one mortgage on the property:

$500,000 First Mortgage
11% Interest, 30 years amortized
Annual Payment (Debt Service) = $57,139


DSCR = Net Operating Income (NOI) = $65,000
Total Debt Service $57,139
DSCR = 1.14

Obviously the higher the DSCR, the more net operating income is available to service the debt. From the bank's viewpoint it should be clear that they want as high a DSCR as possible.

You, on the other hand, want as large a commercial mortgage as possible. The larger the loan, the higher the debt service (mortgage payments). If the net operating income stays the same, and the loan size and therefore the debt service increases, then the lower the DSCR will be.

Life insurance companies are very conservative and generally require a 1.25 or 1.35 DSCR. This means that their loan-to-value ratios are low. Savings and loans (S&L's) generally only require a 1.20 DSCR, and they sometimes will accept a DSCR as low as 1.10.

A DSCR of 1.0 is called a break even cash flow. That is because the net operating income (NOI) is just enough to cover the mortgage payments (debt service).

A DSCR of less than 1.0 would be a situation where there would actually be a negative cash flow. A DSCR of say .95 would mean that there is only enough net operating income (NOI) to cover 95% of the mortgage payment. This would mean that the you would have to come up with cash out of your personal budget every month to keep the project afloat.

Generally lenders frown on a negative cash flow. In some instances, a bank will allow a negative cash flow if the loan-to-value ratio is less than around 65%, the borrower has strong outside income such as an electronic engineer, and the size of the negative amount is small. Rarely will a lender allow negative cash flows on loans over $200,000. Lets talk about your Commercial Loan! Give us call today or try our Quick Apply application for fast results!

Commercial Loan Checklist

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The following list will help your potential lender to make an informed decision about your business.

  • Three years income tax and financial statements
  • Year-To-Date Profit & Loss and Balance Statement
  • Personal Finance Statements
  • Projected Cash Flow Statements for next 12 Months
  • Pro Forma for next 12 Months/Length of Loan
  • Federal and State Tax Information
  • Collateral Sheet
  • Well Written Business Plan

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