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SBA has announced its Guarantee Fee and Lender’s Annual Service Fee for the fiscal year beginning on October 1, 2023.
The fees are effective for all SBA 7(a) loans approved between October 1, 2023 and September 30, 2024. All fees are based on the gross loan amount.
This new fee structure is good news for borrowers with loan requests under $1,000,000. Please contact your Account Executive to run your loan numbers.
The following is a summary of the fees. A link to the SBA Information Notice is provided below.
Guarantee Fee For loans of $1,000,000 or less: 0.00%
For loans of $1,000,001 to $2,000,000: 1.45% of the guaranteed portion of the loan up to and including $1,000,000, plus 1.70% of the guaranteed portion of the loan over $1,000,000
For loans of $2,000,001 and greater: 3.50% of the guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of the guaranteed portion of the loan over $1,000,000
We are just at the beginning of the reset in the market. A decline in credit availability is just the tip of the iceberg. With the recent blow up in small banks and now spreading to some large institutions, look for credit availability to continue to decline. In the short term, real estate closing volumes will decline, but the real pain will be in the long term with a substantial reset in prices as credit continues to dry up which will ultimately lead to a cooling economy.
Approval rates - Recent bank collapses alongside another increase in interest rates continues to shift the industry to increasingly stringent lending standards. With higher credit requirements, fewer businesses will qualify to obtain a loan in the full requested amount. As lenders slow their loan approval rates, small businesses may need to wait longer to receive any loan amounts for which they receive approval.
Credit Cards Average 20% interest - Credit card interest rates have reached an average of 20%. Since most credit cards have a variable interest rate, yesterday’s rate increase directly impacts credit card interest rates. 20% rates reflect an all-time high from March 2022, when the rates hovered at 16.25%. For small businesses that have relied upon credit cards, the interest rate on the cards creates an even larger challenge for businesses that struggle with cash flow.
Inflation Challenges - The Fed’s decision to raise interest rates yesterday is an indication inflation is still a major factor with which to contend. Keeping business growth in pace with the rate of inflation has been exceptionally difficult. Owners would need to grow business profits by 6.0% annually to match inflation rates. For those whose businesses have not grown as rapidly, owners are left to cover the additional cost of goods.
To face adverse market conditions, business owners are urged to secure capital before they need it. SBA loans offer a haven to entrepreneurs. Since SBA loans’ underwriting and credit requirements do not shift with market conditions, they continue to provide the lowest interest rate loans with low monthly payments.
According to the latest Biz2Credit‘s Small Business Lending Index, small business loan approval percentages at big banks slipped again in February, falling from 14.4% in January to 14.2%. This marks the ninth consecutive month in which big bank approval percentages have declined. Meanwhile, approval rates of business loan applications at small banks also dropped in February to 21.3%, down one-tenth of a percent from 21.4% in January 2023.
Last month, the Wall Street Journal published an article titled "Pandemic Loans Are Coming Due, But Some Businesses Aren't Ready to Repay." As those payments come due, some business owners argue that they did not understand the terms of the loans and that as the economy weakens, they are not well positioned to repay the loans. Business owners must understand that these loans are an IOU to the U.S. government.
The key to being approved for a mortgage as a self-employed individual is to provide the bank with ample evidence regarding your financial stability. Being the expert in mortgages, K2 Commercial Finance will provide you with all the information about mortgage options at your disposal and how to deal with lenders.
Get Fast Commercial Mortgages on all property types. SBA Loans and Stated Income Loans are our specialty. NO Upfront Fees.
Commercial real estate lending activity surged in the third quarter of 2021, reflecting a healthy rebound of property acquisitions activity, according to the latest research from CBRE.
The Green Street Commercial Property Price Index increased 0.4% in October, continuing a run of all-time highs, the Newport Beach-CA advisory firm reported Thursday. The all-property index has increased 18% this year and is now 9% higher than it was before the pandemic.
Everyone should remember that the Covid related benefits for traditional SBA lending expire on September 30th. The benefits include no guarantee fees, and the government will make the first three months of payments on your loan up to $9,000 per month. SBA loans can be uses for purchasing or refinancing owner-occupied real estate, working capital, debt restricting, partner buyouts, startups, and or acquiring a business.
Keep in mind that the September 30th deadline is for a loan to be funded. So to take advantage of the benefits, the clock is ticking to get your application in.
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