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"FLASH" of Lightning )
Financial Brokers for Business & Commercial Loans September 2007
In this issue
  • Is there still MONEY Available?
  • Key Commercial Loan Rates
  • Financing the Purchase of "Business" Real Estate
  • Ask the Broker?
  • Recent Loan Funding
  • Hiring Opportunities
  • Greetings Harlan,

    Welcome to "Flash" of Lightning, our monthly newsletter.

    We've written this brief newsletter to keep you, our friend and client abreast of the latest information regarding all areas of financing. We will share with you relevant articles that pertain to financing either commercial projects or business acquisitions.

    Harlan A. Friedman, President & Broker

    Is there still MONEY Available?

    With all the bad news about the economy, everywhere you look mortgage companies, brokers, and residential lenders closing their doors does it still make sense to try to get money for a commercial loan?

    The answer is categorically YES!

    There is a LOT of money available for projects that make solid economic sense. Unlike residential purchases based on emotion, commercial and business purchases need to based on making economic; sense ie. they must cash flow.

    If a lender can determine after all expenses that there is enough coverage between what the project needs to make it stay afloat and what the project needs to support for debt service and operations, a lender will gladly lend the money for the purchase.

    There is never any shortage of capital for projects that will make money.

    One must not forget the major distinction between residential loans and commercial lending, the secondary market. Most if not all residential lenders sell their loans after booking them to a strong secondary market buyer such as FNMA, GNMA or FHLMC.

    With commercial lenders they do not sell the loan to a secondary market provider. They portfolio their loans, which means that they hold the loans as the investor. They have made a very conscious decision to stay part of your deal for the next five, ten or even twenty years.

    They believe in you and your project.

    Because they belive in your strength as well as the projected return that you are reflecting on your loan application they lend you their capital.

    There is and always will be money for economically sensible projects, whether for the acquisition of a new business or an investment property.

    Contact us to show you how to get the money that your project or business acquisition needs.

    Key Commercial Loan Rates

    Key Commercial Loan Indexes

    Fed Prime Rate 8.250%

    10-Year CMT 4.550%

    30-Year CMT 4.850%

    USD 6 MOS LIBOR 5.542%

    As of September 4, 2007

    Financing the Purchase of "Business" Real Estate

    This article deals with how a new business buyer can finance the purchase of the underlying land as well as the business opportunity through the SBA.

    The SBA has a loan program called the 504 program, which is specifically used for the financing of Real Estate oriented transactions, which can be a part of a business acquisition, expansion or refinance.

    The benefit to financing a Real Estate Oriented transaction through the SBA is that a business as a start up can buy real estate as part of the initial operation of the business, or an ongoing business can be sold with the real estate as well without the need for outside collateral, ie., the borrowers home.

    The SBA has a very aggressive program when Real Estate is involved. An SBA loan can be up to $4.0 million for Owner Occupied Commercial Real Estate Transactions.

    Borrower Benefits

    Low down payment of only 10%
    Loan Repayment Terms - reducing monthly payments
    Can be long term fixed rate unlike traditional SBA 7A loans

    Use of Proceeds

    Purchase, refinance, construction or renovation of owner-occupied commercial real estate property.

    Standard Loan Structure

    50% First Mortgage up to 3 million, 25 years fully amortized
    40% SBA 504 second mortgage, 20 years fully amortized
    10% down payment by borrower.

    The above is commonly known as a 50/40/10.

    As you can see there is as great deal of flexibility when structuring SBA Loans, this is just another benefit that SBA financing offers the business owner.

    Ask the Broker?

    I've been talking to my local banker about getting an investment property loan and he keeps mentioning that it has to be a recourse loan. My question is what exactly is a recourse loan?

    B. Rae, San Diego

    To understand what the banker was referring to; you must realize that there are only two types of guarantees or security that the bank will accept; the first type of loan being recourse and the other being non-recourse.

    In a recourse loan the investor is pledging additional collateral over and above the underlying property they are buying as well as personally guaranteeing the loan with any other assets available should they default.

    While the investor who receives a non-recourse loan is only pledging the property that the loan is used for. The bank or financial institution can only go against the property and not the individual borrower should the borrower default..

    Please email your questions to "Ask Your Financial Broker" at

    Recent Loan Funding

    Subway Franchise - SBA 7A Loan for 250K
    Wall Manufacturing Company - SBA 7A Loan for 110K
    Self Storage Construction Loan for 6.6M
    Self Storage Mini-Perm Loan for 5.3M
    Self Storage Bridge Loan for 4.8M
    Shell Gas Station - SBA 7A Loan for 520K

    Hiring Opportunities

    If you are interested in joining our GROWING company please contact Harlan. We are expanding this year and would like to have you join us. For those financially astute individuals we offer a proven system to build your commercial finance business along with comprehensive training.

    UP-Coming Seminars
    Call the Office at 858-592-0659 for upcoming topics, times and dates.

    Quick Links...

    phone: 858-592-0659

    Lightning Commercial Funding, Inc. | 16486 Bernardo Center Drive | Suite 100 | San Diego | CA | 92128