SCM Commercial Solutions
Commercial financing guidance, from first conversation to close.
Your single point of contact for commercial real estate financing. We talk through your plans, help you understand what lenders will look for, and introduce you to a capital partner who structures the deal. No advisory fee to you.
A trusted advisor from first conversation to closing
Consult.
We talk through your plans, the property and what you want to accomplish.
Assess fit and timing.
We help you see whether the deal fits, what lenders will look for, and when to start.
Introduce.
When the timing is right, we introduce you to a capital partner who qualifies and structures the deal.
Close.
Your capital partner places the loan and guides it to closing. We stay in your corner throughout.
Commercial lenders underwrite the property first, then the sponsor who runs it
The property's cash flow decides how much a lender will lend. Your experience, liquidity and track record stand behind it. Together they point to the right lender and product.
Income-producing
Apartment buildings of five units or more; retail, office and industrial; self storage
Owner-occupied
A building a business operates in; often financed with SBA 7(a) or 504
Mixed use and hospitality
Properties that combine retail, office and other uses; hotels and other hospitality properties
Land and development
Land; ground-up construction and development
Five deals we see every week
| Your deal | Typical financing | What the lender looks at |
|---|---|---|
| Rental"I'm buying apartments to rent." | Permanent loan, or a bridge loan to stabilize | DSCR, debt yield and LTV on net operating income at current rates |
| Fix and flip"I'm buying it to renovate and sell." | Short term bridge or hard money loan | Loan to cost, loan to after-repair value and projected profit |
| Ground-up construction"I'm building from the ground up." | Construction loan, then a permanent takeout | Loan to cost during the build, then a permanent loan sized by the lower of income and value |
| Owner-occupied"My business wants to buy its building." | SBA 7(a) or 504 loan | Business cash flow and owner debt service, more than the property itself |
| Cash-out refinance"I own it and want to pull equity out." | New permanent loan that pays off the old loan and returns cash | LTV on current value and DSCR on current income, with lower leverage than a rate and term refinance |
Six common commercial loan products
Permanent loans
Bank, life company or agency debt for stabilized properties; 5 to 10 year term, 20 to 30 year amortization; sized on DSCR and LTV; usually a personal guarantee
CMBS loans
Non-recourse, fixed rate; typically a 10 year term; prepayment through defeasance or yield maintenance
Bridge and hard money
6 to 36 months, interest only; priced for speed; for properties that are not yet stable
Construction loans
Interest only, funded in draws against a budget; sized on loan to cost; taken out by a permanent loan
SBA 7(a) and 504
Owner-occupied real estate; as little as 10% down; underwritten on the operating business's cash flow
Mezzanine and preferred equity
Fills the gap between senior debt and sponsor equity; higher cost, subordinated position; available for larger deals
What to expect from a commercial loan
| Topic | Typical commercial terms |
|---|---|
| What gets underwritten | The property's cash flow first, then the sponsor |
| The key ratio | DSCR: net operating income divided by debt service, usually 1.25x or more on stabilized properties |
| Down payment | Typically 25% to 35%, with LTV of 65% to 75%. Qualifying deals may go as low as 10% down, up to 90% LTV. |
| Term | 5 to 10 year term with a balloon payment at maturity. Amortization of 15 or 20 years, or up to 30 years for qualifying deals. |
| Prepayment | Often penalized: yield maintenance, defeasance or a step-down, a penalty that declines each year |
| Guidelines and timing | Each lender sets its own credit box; 60 to 90 days to close. Our capital partners know each box and present your deal to the right lenders. |
Typical ranges only. Terms vary by lender, property type and market.
The Compass
Test your deal in about two minutes
Run your deal before you commit and see it the way a lender will.
No cost to you. The Compass is in beta; results are for planning purposes only.
What to do with your verdict
A strong sign the deal can come together. Next step: an intro call with us, then a capital partner who structures it.
A path likely exists. Let's talk through the options together before you commit.
Not a no. A quick conversation will show you what to adjust and how to get there.
What lenders want in the initial package
Having these ready gets you to a real answer faster. Lenders ask for more after the first review.
| Group | Items |
|---|---|
| The request | Loan amount and purpose; purchase price or current loan balance; target closing date; exit plan for short term loans |
| The property | Address, property type and unit count; current rent roll; trailing 12 month operating statement; appraisal, if one exists |
| The borrower | Personal financial statement; schedule of real estate owned; two years of tax returns; bank statements showing liquidity |
| For flips and construction | Scope of work and budget; pro forma cash flow model; plans and permits; after-repair value comps; resume of similar projects |
Due diligence and what to plan for
| Item | What to know |
|---|---|
| Outside commercial appraisal | $3,000 to $4,000 typical cost; 3 to 4 weeks to complete |
| Environmental due diligence | Required on most commercial properties. Cost and timing are similar to the commercial appraisal. |
| Inspections | Banks may not require one. Buyers may choose to order an inspection. |
| SNDA and Estoppel agreements | Investment properties: banks will require SNDA and Estoppel agreements on third-party tenants, executed before closing. |
| Attorney-prepared documents | Larger CRE loans: outside attorneys may prepare the documents, which can add time to the timeframe to close. |
| No escrow account | Commercial loans typically don't escrow. |
| Investment property documents | Expect questions around expense history, tax returns, copies of existing leases and the rent roll. |
| Construction: rezoning | Is a rezoning request required? If so, you may want to negotiate a longer contract to take this into account. |
| Construction: know the builder | Have a good knowledge of your builder. We recommend engaging your lender early to vet the builder, especially on larger deals. |
Your commercial real estate broker can help coordinate environmental questionnaires and get SNDA and Estoppel agreements executed before closing.
Talk to a Loan Advisor
Send us the deal basics
Tell us the deal basics and we will tell you quickly whether it is a fit. No advisory fee to you.
Not sure if the deal is ready? Test it in two minutes before you call.