If a bank asks for 25% equity on a $3,000,000 loan and we want to put down 10%, is there a product that will guarantee payment to the lender for the other 15% in case of a default??
If so, who offers such a product?
Where can I find an product for commercial mortgages, similar to PMI on home mortgages?
Answers
Yes, its usually a letter of credit, however, you must have great credit and a good banking relationship. The only other way to cover the equity shortfall is a second lien loan, although, they are also difficult to arrange.
1
Thank you!
There is commercial mortgage insurance available but the type you need depends on whether your commercial property is owner-occupied or an investment property. If your business occupies 51% then you are considered owner occupied. Which one are you?
This property will be owner occupied
I'd strongly suggest looking at an SBA commercial mortgage loan. This product gets you the desired LTV position and provides a bona fide guarantee to the lender. This sounds like a typical SBA transaction that fits well into this product. I've had many clients who swear by the product.
1
Thanks, but we are a non profit and as such can't qualify for SBA- Sorry I didn't describe our situation more clearly, but I certainly appreciate your assistance!!
Filed Under:
Strategy