Need Some Commercial Financing Advice

[Stephen T.]

I am looking to refinance a commercial mixed use property in Chicago.  I have a local bank willing to loan, but would like to know from those who are knowledgeable about these type of loans if these terms below seem favorable/standard.

Terms of Loan:

Term: 5 years, 25 year amort

Rate: 4.625%

Fee: 1% Fee, plus all third party costs (appraisal, title, etc..)

Max LTV: 75%

[Mike Garland]

Terms are about standard.  I would negotiate the 5 year balloon to 5 year adjustments maturing in 20 years.   This will save you renewal costs.  Also, from the lender standpoint, he/she will not have to spend time going through the renewal process in 5 years.  As a lender, this sucks.   Also, tell them that if it balloons in five years, it incentives you to shop for a better deal and why would they want that if you have been a good borrower?

I will say that one of the above posts said to negotiate on the guarantee.  My recommendation is to not do that, unless you are a A+++ borrower with tons of liquidity and a high net worth and banks are banging down your door to give you money.

When someone starts asking for a non recourse loan from me (no guarantee), the first thing that goes through my mind is "so you want me (the bank) to finance 75-80% of your deal, hence taking 75-80% of the risk and you, the borrower, are not even willing to personally guarantee the loan?  Do you not have any faith in the deal?   Plus loan committees do not like hearing the the borrower does not want to guarantee the loan...

I would also ask them to finance 80% of the cost or 75% of the value, whichever is less.   Hopefully, the cost will be less and you will end up putting down only 20% vs 25%.

The rate is very good btw.

Good luck.