Daily Observation - CASH Flow

Tonight I want to re-examine the word Cash flow. By the way I deliberately capitalized cash flow. Because without cash flow there is no project, simple that's just the way it is today. Where before we could cross-collateralize or pledge additional assets, not any more. No cash no deal. Also what you consider cash flow the lender will definitely reduce that total amount by all their ancillary fees and deductions.

I am going to share with you information from Special Report #5 Understand How Cash Flow is the Number One Determinant if your Loan will be Approved. Get this FREE Report as well as the other nine at loanforbiz.com or getyourloanclosed.com.

What is cash flow?

Cash flow is defined differently depending on what you are acquiring. For example if you are buying a business the cash flow is more aptly called Sellers Discretionary Earnings (money which is left at the end of the month for the seller after all debt service and other expenditures are covered). Actually, business brokers use SDE to determine the selling price of a business, but more about that latter.

If you are purchasing a piece of real estate, then cash flow is that money which is left over after you deduct all your debt service and operating expenses for the property. Once that net amount is determined the lender will allow you a certain percentage of the available cash flow for the new loan. The total dollars that you are lent is ascertained by the calculation known as debt service coverage ratio.

Debt service Coverage ratio is the new loan’s expected annual debt service divided by the current yearly net cash flow. Today more than ever lenders want to know if you have more cash available then is projected to meet your debt obligation.

Another point to ask yourself is…

WHY WOULD YOU BUY A PROPERTY THAT IS NOT CASH FLOWING?

We are currently working with a client that is purchasing a piece of property knowing today that it is currently a poor investment, but they have information a major thoroughfare will be built through the town, so they are betting on the future value of the property even though today the economics don’t make sense.

So how is cash flow really calculated from the lenders point of view? The lender will calculate cash flow very differently than the prospective borrower. I cannot tell you how many times I have a client demonstrate to me that the project is cash flowing at a 1:1.25 ratio, and the lender comes back with their calculations at 1:105, or even less.

Why such a discrepancy? Who is Right?

The reason for the discrepancy is the lender will add in all expenditures and apply them to the bottom line. The key term in the last sentence is all. All means expenses that don’t appear today on the seller’s cash flow analysis, income and expense statement or even in tax returns.

How can these expenses be applied when they do not appear anywhere?

Again the reason is lenders always look at the worst-case scenario, which is, they have to take the property back due to foreclosure. If the lender has to take the property back they will have marketing, leasing and management expenses to run the property. Most borrowers will reduce or totally eliminate these costs. The buyer’s rational is they are going to do the leasing, and marketing of the property. Borrowers also assert they can perform these duties for a lot less than the cost of a professional manager or management company.

I’m not telling you this to scare you, but to prepare you.

As I mentioned previously Cash Flow is King, We want to make sure that you are accounting for all expenditures. By the way any extraordinary expenses such as a new roof or one time only equipment purchases are not deducted against cash flow as they are one-time non-recurring expenses.

Daily Observations - We Need to Share

Tonight's blog is a bit different than usual. Every night I share a new idea or thought about what is happening in Commercial Finance or Business financing. But tonight I don't have anything new to share. BUT I do have a very important point I want to make.

WE MUST SHARE, I have posted 137 new items. But here's the rub nobody is passing the information onto the ultimate person that needs the information. Also the initiator of the new programs is not getting the word out either. For example the SBA has not shared with the average person that the SBA 7A, the mainstay of SBA Loans has changed drastically.

I can hear you saying to yourself, why should they share the info to the public at large, your statement is not really meaningful because there would be no need for the public to know, unless of course they are borrowing money. And yes, I would agree with that premise, so lets narrow the scope of people that need to know. How about the real estate industry as a whole. Do you think it would be beneficial for them to know?

I would. So I spent the last five days calling commercial Realtors asking them if they knew about all the relevant changes to financing and real estate transactions that the SBA is enacting. Guess what they did not know either.

So I narrowed the scope even further and started to call business brokers and asked them the same question, and guess what they had no idea either.

So what I would like to recommend is that if you read something that no one else has shared with you, please tell your friends etc. Only by getting the word out to our potential clients, or centers of influence can we be of service to people in general. And TODAY we all need to help each other.

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Daily Observation - Your Credit

Tonight since it is Sunday when I 'm writing this blog there are no new SBA Updates so I thought I would change the topic and editorialize for a bit. We need to take some action to help prevent what is occurring to every one's credit.

I don't believe the issue that I am going to share with you is an isolated one, and maybe just maybe we can get some political press to help support our claims.

The average person today is facing this situation and we need to act to get it halted. As the value of peoples property which the lenders have takes as loan collateral have been reduced substantially over the last year, their overall credit is being affected drastically because the lenders have limited their amount of exposure to borrowers running up more and more debt. I applaud that situation because the lenders are looking out for themselves which they always do, and so they say they are protecting you and I from going further into debt. A noble response, if I have ever heard one.

But here's the problem. If you are aware and understand the credit scoring models you will immediately see the self-fulfilling prophecy the lenders are creating. They are stating that more and more borrowers are having credit issues so the lenders are freezing credit. Their rationale for freezing credit is that the reporting agencies are lowering credit scores due to the economic situation. However by the lenders lowering your available credit, the ratio to used credit to available credit increases significantly, and that increase causes the credit bureaus to lower your credit score even more.

For example lets say you have a $100,000 line of credit and you have borrowed $25,000,which is a 25% ratio of credit borrowed to available credit. Now the lender arbitrarily reduced your line of credit because your home value statistically may have fallen. So lets say they reduce your line of credit to $50,000, you are now at a 50% ratio, without you doing anything. That original 25% ratio is now at 50% which is going to lower your credit score. Now if the lender freezes your credit at $25,000 you are at 100%; which will significantly lower your credit score.

We need to let the lenders freeze your account if it is waranted but not alter the amount of available credit so that credit scores are not being affected. If the lenders want to protect themselves let them block further usage of credit till collateral values return but don't reduce available credit on paper. The credit score models would not be effected, and the lenders would be protected. A win - win scenario!

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Daily Observation - It's OK to Pay More

If you remember Gordon Geko from Wall Street staring Michael Douglas and Charlie Sheen making his speech to Toldar Stock Holders, Greed is Good, well we are there again. Tonight we continue looking at the changes the SBA is making and the reason for it. As I have been writing about all week, LIBOR is now the new rate of choice for SBA Lenders.

For more on SBA Financing and what this really means visit loanforbiz.com and request our 10 FREE Special Reports which will help you get your loan closed.

But what I have not shared with you till now is the real reason why the lenders will come back to the market. GREED, Yes GREED with a capital "G". If we look at how the lenders fund loans it will become very apparent. Most of the banks are paying LIBOR rates for their cost of funds. So if they can now charge 300 basis points greater than LIBOR and on top of that they can add their spread, its no wonder the secondary market will return.

Now I'm not trying to insinuate that the lenders are not trying to stimulate the economy by lending again, but they are certainly not doing this to be altruistic. Lenders are in the business of lending money and if they can lend their money and make a profit then I say good for them, but more importantly good for us.

I want to close tonight's blog with a snippet from Entrepreneur's Magazine INC.

"The upshot for borrowers is that they'll have to pay more. But in the SBA's view, that's OK. "The challenge small businesses face today is not the cost of capital, it is access to capital,” Acting SBA Administrator Sandy K. Baruah said in a press release. “Interest rates are at historically low levels meaning money is inexpensive, yet lenders aren't lending and borrowers aren't borrowing. This indicates markets are frozen due to liquidity concerns."

Not surprisingly, the downturn seems to have had a greater impact on start-ups, though only slightly so: their share of total SBA loan dollars has fallen a few points, while existing firms' share has grown...."

Daily Observation - More Help for SBA

This evening I again want to stay on the topic of SBA financing. As I wrote yesterday and shared with over 35 people this morning SBA is getting an overhaul. The ultimate goal of the overhaul is to bring back the secondary market. If we are successful in getting the secondary market back, then SBA 7A loans as we knew them a year ago will come back again. The lenders will have a place to sell their loans and then hey will be more willing to lend again.

If the lenders do not have a place to sell their loans then they are left portfolioing the loans and they will continue to remain very skittish on new loans. They will only fund the cream of the crop. Below is a copy of a senate proposal that is being raised to help bolster small business and small business financing.

For more on how we can benefit your small business please visit loanforbiz.com, while there sign up for your FREE 10 Special Reports to help you get your next loan closed.

SOURCE U.S. Senate Committee on Small Business & Entrepreneurship

Sen. John Kerry (D-MA), Chairman of the Senate Committee on Small Business and Entrepreneurship, and Sen. Charles Schumer (D-NY), a senior member of the Senate Committee on Banking, are urging their Republican colleagues to put politics aside and help America's entrepreneurs stressed by a worsening economic climate. Several small business proposals within the economic stimulus package introduced this week would help alleviate the credit crunch, providing much-needed help to small firms.

"As the lifeblood of our economy, small business owners bear much of the burden when our system struggles," said Kerry. "To keep our economy moving we need to help these everyday Americans who are pleading for help as they try to pay their bills and stock their shelves for the holiday season."

When credit from the private sector is frozen, small firms rely on the Small Business Administration's (SBA) loan programs to free up credit. The stimulus provides $620 million targeted to help firms gain greater access to these SBA loans. Of that money, $615 million would temporarily eliminate fees charged to borrowers and lenders who participate in these government-backed programs, helping to support $22.5 billion in loans to entrepreneurs. Additionally, $1 million is provided to support $8.5 million in microloans and $4 million for microloan counseling. These actions would free up credit, give small businesses more outlets for help and allow firms to create and retain jobs in these tough economic times.

"Small businesses are looking to us for immediate help and leadership," said Kerry. "Entrepreneurs can't afford to wait another month, or more, for the rescue package to begin working. And frankly, neither can our economy or the hundreds of thousands in need of jobs.

"With the credit markets tighter than ever and the economy plunging in to greater turmoil every day, we need every tool in the toolbox to ensure small businesses across the country get the loans they need," Schumer said. "For many right now, government loans could be the only option. Our plan will reduce needless fees and streamline the process so businesses don't have to wait months and pay through the nose to get the lines of credit they need."

Copyright (C) 2008 PR Newswire. All rights reserved

Daily Observation - There Is A Choice

SBA has shared more guidelines as to the upcoming change from Prime to LIBOR and in the nutshell a Lender has the option of staying with Prime or changing to LIBOR. I am now going to copy a great deal from the SBA Update Notice that we just received so you can get a true flavor of what is going on and more importantly as to why it is being changed. Enjoy the balance of the article. For more on SBA financing visit loanforbiz.com and make sure you sign up for your 10 FREE Special Reports on Getting Your Loan Closed.

Background

Under SBA’s loan guaranty program, greater numbers of small businesses can obtain loans from banks, small business lending companies, credit unions, and other participating financial institutions, because the Agency provides various incentives and risk mitigators to make these loans profitable for lenders. However, the recent turmoil and uncertainty in the financial markets have seriously affected SBA lenders’ cost of funds, their ability to sell SBA loans in the Secondary Market, and their liquidity. This has led to severely reduced small business access to capital (including SBA lending) at a critical juncture for the U.S. economy.


Due to the globalization of the financial markets, many SBA lenders’ source and cost of funds (and/or internal yield model) is partially or completely based on the London Interbank Offered Rate (LIBOR) rather than the Prime Rate, which traditionally has been SBA’s base interest rate for establishing the maximum interest rate lenders can charge for SBA-guaranteed loans. As a result, increasing numbers of lenders use LIBOR as the base rate for their internal business models and for pricing their loans. SBA’s requirement for lenders to use the Prime Rate to price 7(a) loans unnecessarily complicates their business practices and expands their risk, which increases their costs for making such loans.

Historically, LIBOR rates, which are shorter term interbank lending rates, have consistently been about 3 percentage points less than the Prime Rate, which has historically been the lending rate charged by U.S. banks to their best customers. This 3 percentage point differential between many of SBA’s lenders’ cost of funds and the Prime Rate, which is the basis for SBA’s interest rate maximums, has helped SBA lenders to profitably make small business loans. However, due to the recent volatility and uncertainty of the international financial markets, the 3 percent spread between LIBOR and Prime has been greatly reduced, and on some days LIBOR has actually exceeded the Prime Rate. As LIBOR rates more closely approximate the Prime Rate, SBA’s lenders cannot profitably make SBA loans based on the Prime Rate. As a result, they have substantially reduced or eliminated their SBA lending in recent months.

With the uncertainty in the financial markets, the convergence of Prime and LIBOR rates, and the allowable interest rate charged on SBA loans being based on the Prime Rate, SBA lenders are encountering significant problems with selling their SBA loans on the secondary market. Also, with LIBOR based funds being the source of funds for many secondary market investors, the convergence of LIBOR and Prime Rates has reduced the demand for SBA backed securities. As a result, many lenders are experiencing major liquidity problems and have greatly limited or discontinued their secondary market activities, which has limited their capacity to make SBA loans.

Changes in SBA Regulation and SOP

As a result of these issues, and following discussions with the lending industry, SBA has concluded that allowing lenders to use an adjusted thirty day (one month) LIBOR rate as a base rate for pricing SBA loans will ameliorate several of the factors that are impeding small businesses’ access to capital through SBA’s guaranteed loan programs. SBA is allowing an adjustment of 3 percentage points to the thirty day (one month) LIBOR rate to reflect the historical 3 percentage point spread between the LIBOR and the Prime Rate and to help reduce the uncertainty and the financial risk to lenders and to secondary market participants.

The Agency has therefore revised its regulation at 13 CFR 120.214(c) and, henceforth, the allowable base rate establishing the maximum interest rate lenders may charge for SBA 7(a) loans will be the following: 1) Prime Rate; 2) Thirty day (1 Month) London Interbank Offered Rate plus 3 percentage points; or 3) Optional Peg Rate. The Prime or LIBOR rate will be that rate which is in effect on the first business day of the month, as identified in a national financial newspaper or newspaper website each business day. These changes are applicable to 7(a) loan applications that lenders may currently have in process, but they are not applicable to loan applications that have already been received by SBA.

Daily Observations - LIBOR is IN

The SBA has formally announced today that the new preferred index is LIBOR. As for Prime we are not sure as of this writing if Prime is completely out or the lender has an option to go with LIBOR or Prime. What we do know is that if you have filed for and received an SBA number for deals in transition you will continue to stay at the index that was presented and approved by the SBA.

Should the lender want to change to the more aggressive LIBOR rate they would have to cancel the SBA control number that was issued and re-apply for a new number. SBA will now have to change all of their base assumptions to the following.

Index - LIBOR

Pricing to get to the base index is LIBOR plus 300 basis points

Lender can then add up to another 275 basis points.

LIBOR Rate is the One month LIBOR

Which now means that loans are to be adjusted monthly rather than quarterly as they have been over the last decade or so.

As I shared with you a few posts ago this should bring the secondary market back and thus lenders will start to free up credit to stimulate small business, and thus start to stimulate the economy as a whole. There are also other provision which the new administration is recommending that will also help grow the economy. I will share those as they become available.

As we find out more about the LIBOR change I will continue to bring to this blog that information. Should you want to know more about SBA Financing please visit loanforbiz.com. To get your 10 FREE Special Reports sign up here.

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Daily Observations - SBA Updates

WASHINGTON, DC – In response to the credit crunch, today SBA’s Acting Administrator Sandy K. Baruah announced important loan program changes to help the agency’s lending partners increase access to capital for small businesses.

First, an interim final rule allowing new SBA loans to be made with an alternative base interest rate, the one month LIBOR rate (London Interbank Offered Rate), in addition to the prime rate, which was previously allowed. In the past 60 days, both the prime and LIBOR rates have not yet returned to their historical relationship—of roughly 300 basis points between the two rates. The mismatch between the rates is squeezing SBA lenders out of the lending market, since their costs are based on the LIBOR rate.

"This change will help more small businesses obtain capital to grow their businesses and create new jobs," Baruah said. "By allowing both rates, SBA is making its programs more flexible, increasing opportunities to access capital and giving both lending partners and small business customers more options to meet their needs."

The second change allows a new structure for assembling SBA loans into pools for sale in the secondary market. The enhanced flexibility in loan pool structures can help affect profitability and liquidity in the secondary market for SBA guaranteed loans, especially with the current market conditions. Because the average interest rate is used, these pools are easier for pool assemblers to create, thus providing incentives for more investors to bid on these loans.

"The challenge small businesses face today is not the cost of capital, it is access to capital," said Baruah. "Interest rates are at historically low levels meaning money is inexpensive, yet lenders aren’t lending and borrowers aren’t borrowing. This indicates markets are frozen due to liquidity concerns. This interim final rule is an important step to reenergize the lenders to make SBA-backed loans and will help open the gateway of capital for entrepreneurs."

"SBA moved quickly on these changes after consulting with small businesses, lending partners
and other government agencies," said Eric R. Zarnikow, SBA’s Associate Administrator for the
Office of Capital Access. "We’re confident these solutions will help free up capital so lenders can continue to make SBA-backed loans."

By addressing market issues that were impeding the funding streams for both lenders and small businesses, SBA is making capital more available to America’s small businesses. The SBA will be issuing additional technical guidance to lenders in the coming weeks relating to the implementation of these important changes.

What this means in theory is that the lenders should be returning back to the capital markets, but as I said in theory only time will tell.

Daily Observations - "Games People Play"

Too many people are playing games. The lenders don't want to commit because they don't want to be "stuck" with an interest rate that in the long run is going to have them losing money. For that reason we are seeing less and less fixed rate proposals.

Borrowers are playing games these days as well. I'm not saying that the borrowers don't want to commit but because they are unsure where interest rates as well as this economy is heading they are very skeptical. They want to pull the trigger but something is preventing them from moving ahead. We are spending more and more unproductive time with borrowers that are afraid to move forward.

We have to make sure throughout our due diligence, and project gathering stage that they really want to finance their project. Wanting to finance and doing it are turning out to be two different things. If you are a potential borrower reading this I do not mean to aggravate you, but I do mean to have you personally examine if you want to move forward or not.

Going from lender to lender to get the best deal is no longer an option. In addition the lenders talk to each other and its very easy to find out if you are shopping a deal, especially when the lender checks the credit report and sees various inquiries from their competitors in the same time frame.

As brokers we are also told by our faithful lenders if the client is shopping us. Regretfully once a lender knows they are being shopped they usually do not want the deal anymore. Every lender wants an exclusive, so please remember that.

Lastly if you are a broker show loyalty to your lenders it will pay you back hundredfold when this economy comes back, as we all know it will. Remember to sign up at GET Your Loan Closed for our new 10 FREE Special Reports.

Daily Observations - "Push" the Client

I received an e-mail today from one of my lenders and he ended the e-mail with:

Make this deal happen before it may go away.

What was this lender trying to share with me? Was he saying that if we don't get this LOI executed now, today, that this lender may not be doing these loans tomorrow? Or was he saying that the deal that is strong today will not be considered strong tomorrow, or was he just pushing me to get a deal closed because he has not closed any deals and his job may be on the line?

None of these reasons really matter. The point is we have to now push our clients when lenders are offering to fund transactions. I have never been a "pushy" salesperson, but today I have become one, not for my benefit but for the benefit of my clients. If your clients really want a loan they have to move quickly. No longer can they spend time shopping around from lender to lender, if an LOI is proffered let them sign it and start the process of documentation gathering immediately.

Because tomorrow is another day, and who know what banks are going to fail, or what lender is going to stop lending. Even today I received an e-mail from a new company that is specializing in displaced SBA lenders. They are trying to re-brand them and get them back into the job market. Share this with your clients today, and get them to take action. Anything that you can motivate them with is fair game.

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Daily Observations - Sure Way To Kill a Deal

Tonight I want to share what I thought was common sense, but to my dismay may not be understood by the mortgage community, and certainly is not understood or acknowedged by your clients.

It is a DEAL KILLER if a property that you are trying to get financed is listed in any MLS, or if not in an MLS as a FSBO. If the appraiser goes out to the property and sees a For Sale Sign, your client will get billed for a worthless appraisal as the lender will not move forward. This is not a policy question where may be we could get an override, this is a fact!

No lender is going to lend you money for any refinancing, business expansion, working capital etc, if they know you are trying to sell the building and or the business. Saying that if you are trying to sell the business opportunity only, and the seller is going to keep the real estate you may be able to get around this, providing there has been historical cash flows, etc. to meet the required debt service coverage ratio as well as appropriate net operating income for the loan requirement.

For more on debts service coverage ratio and calculation of net operating income and lots more valuable and timely information sign up for our 10 Free Special Reports, available now.

Daily observations - LIBOR, we Need you now

What am I talking about?

Well I just heard today that the SBA is seriously considering over the next couple of months to move from prime based pricing to LIBOR based pricing. Below you will find an explanation of what LIBOR is. (London Interchange Bank Offered Rate)

An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year.

The LIBOR is the world's most widely used benchmark for short-term interest rates. It's important because it is the rate at which the world's most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based.

So you must be asking why should I care if SBA is prime based or LIBOR based?

The answer in the nutshell is that if LIBOR is the pricing index, then there will be a secondary market for these loans. If we can bring back a secondary market we will once again be able to have aggressive lending in the 7A arena.

So tonight pray for LIBOR, well maybe don't pray but ask persuasively to your guardian angel.

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Daily Obervation - Commercial Real Estate Report

The following information is directly pasted from an e-mail that I received today from the Federal Reserve Bank of San Francisco – Division of Banking Supervision & Regulation. The gist of the report is that the market is tighter than it was six months ago, but there is still opportunity.

Stay focused and open minded as you read this. You may have to read it twice as I did to get the "good" from it. For those who would like the entire report send me an email As my regular readers know I don't usually cut and paste other peoples reports but this is a must read.

CRE Market Conditions & Outlook *
Executive Summary
• Market fundamentals and outlook: The outlook for commercial real estate (defined in this report as income property) is deteriorating due to the slowing economy, the ongoing paralysis in credit markets, wide CMBS spreads, and more costly financing for CRE transactions and projects.

CRE property sales transactions have dropped off dramatically with financing more difficult to obtain and more costly. Vacancy rates are rising and rent growth is slowing as the economy slows.

CRE markets will continue to weaken but should avoid the kind of collapse seen in residential real estate.

CRE markets are not overbuilt as they were in the late 1980s. For example, the office completion rate (as a percentage of existing stock) was a minimal 1.4% in 2006 and 1.7% in 2007, compared to an average yearly rate of nearly 6% in the 1980s.

Supply and demand remain reasonably balanced with vacancy rates expected to increase moderately as tenant demand softens over the next year, but only to levels below those of 2001-2002 period.

Rent growth should remain positive in most local markets as rents rollover from those set in 2002-2003.

PS: The Special Reports that I have alluded to over the last thirty days are complete. Our new website for our book is a week away at most. So please if you want the Ten Secrets Your Lender Does Not Want You To Know send me an e-mail and we should be able to start delivering the free ten reports by Monday. You will need to confirm the return e-mail to opt into this special mailing.

Daily Observation - 7.72% a record High

Explaining the November 504 rate. This is a sizeable jump in the CDC Debenture 20 year bond. We've gone up over 75 basis points from the previous month.

After months of relatively stable SBA lending rates in a highly volatile market, the turmoil in the credit markets has impacted the 504 loan rate.

There are two key reasons for the unusual rate increase for November: - A rise in treasury rates- Record wide spreads in the government-guaranteed debt market

We believe this situation, created by extraordinary circumstances in the credit markets, is temporary. It’s expected that the markets and rates will settle down in first quarter 2009.

The above is a quote from one of our local CDC.

So as you can see as the rest of the credit markets supposedly loosen up, we are seeing SBA rates and programs getting tighter each and every day. Use this to your advantage and "sell" the 504 look-a-like programs which today are still below 7.0%, some lenders that we are dealing with are actually in the 6.75% range. There is no better time for your clients or for yourself to buy that building that you are currently paying rent for, or to stop being a tenant and move your business to your own building.

With 10% down and rates below 7.0% act now! For information on our SBA 504 look-a-like loan visit loanforbiz.

Daily Observations - Stated Income?

Well I found a lender today that was still doing stated commercial loans at what price though.

With Silverhill and Interbay very limited on their exposure to the lending environment, someone or some companies had to pick up the slack of what I personally referred to as quasi-hard money lenders. Those lenders that charge between three and five percent higher than the going rate as well as increased points but not to the extent of 14 to 18% and eight to twelve points as some of the hard money rates I've seen quoted.

They were running between 9 1/2 to 11 1/2% depending if we are able to go full doc or not. if we went stated income we were well into the 10% rate at par to us. But why am I talking about this tonight, the reason is for you to know that there is still a viable alternative in the stated income arena. Expensive yes, but still available.

To go stated income this lender requires that you be self-employed for at least two years. If you can substantiate through proof that you were self-employed for at least the last two years they will allow you to proceed under their stated income program.

Because they are a direct lender they can afford to hold the paper and be selective of the deals they want to look at. Requirements are basically the same as traditional lenders except that they are going to take out a larger percentage from the net operating income for TILC, as well as vacancy and management. Lastly their pre-payments are going to be much stiffer than traditional commercial loans. But the bottom line is if you have a client that is in desperate need for financing this quasi- hard money lender may be your answer.

Please do not deluge me with questions as to who this lender is, just know that there are quasi-hard money lenders that will take a look at stated income under the right circumstances.

For more on our lending programs visit loanforbiz.