All Forum Posts by: Darryl Dahlen

FYI- I don't know if you are aware of this, but the SBA program is for owner-occupied properties, and even then, you must occupy 51% of the rentable footage.

That said, mixed-use properties are one the best for an SBA loan, but even if you were to owner-occupy the space, the loan amount is very low which will be a turn off to a lot of banks.

Personally, I don't see bridge or hard money lenders playing much of a role in assisting with commercial workout scenarios.

Bridge financing is almost always just a temporary loan until the it can be paid off via an exit strategy (which is usually the sale of a property or another loan from a permanent lender).The key component with a bridge lender being that there is already a valid exit strategy in play PRIOR to them funding their loan.

When you have an borrower who is dealing with declining property values, shaky personal and/or business financials, poor credit, etc. there won't be a takeout lender in play given the borrower is going to have a hard time securing another bank loan. This results in what I call "a bridge to nowhere".

As a result, most bridge lenders would pass on these types of loan requests. They're not going to risk their money on the off chance a borrower might secure takeout financing at some point down the road.

Also, bridge financing has terms fairly similar to hard money. Even if either were offered I think most borrowers would balk at the rates and points involved.

That, and the LTVs that either lender offers would almost always be prohibitive. If someone is going through a commercial workout they're most likey not going to be at 50-65% LTV, which is where bridge and hard money lender operate.

I think I can safetly say that a non-recourse loan is a no-go. Lenders require experience and they still look at a borrower's income and assets on non-recourse loans.

As metioned, have you looked into gettiing a loan or line of credit against your stock/mutual fund portfolio? In cases such as yours it can be a viable solution given your credit and income do not matter.

I'd love to write a long response as this is a topic of interest to me, but I'm short on time right now so I'll keep my thoughts brief.

In general, the commercial sector is wrestling with the mess it's in due to property depreciation that has affected many states, declining business revenues, and borrowers who are often in a weakened financial state.

To add to the problem, you have lenders who are dealing with fixing their balance sheets, trying to get rid of toxic assets, and in some cases, being watched/managed by the FDIC.

When you factor in the billions of commercial paper that is coming due just this year alone, you have a real mess.

However, banks seem to be more willing than before to take a haircut on a loan if they really want it off their books. Partly because it's often to their benefit and partly because sometimes the FDIC is looking over their shoulder.

For some borrowers being offered a reduced payoff often isn't enough. They still need to disclose their business financials and be credit worthy. Unfortunately, for a lot of borrowers they just don't pass muster which leaves them in a very precarious position when trying to secure a new loan.

It's going to be interesting to see what happens as the segment of borrowers who need to find a new loan, but cannot qualify for one grows.

So much for brief, lol.

I don't agree with this. Granted, I do believe that a "culling of the herd" was necessary given how so many institutions were poorly run and/or made horrible decisions, but I firmly believe that the average person benefits from having a pool of lending institutions compete for their business. I'd hate to see how things would undoubtedly change for the worse if you took away that competition.

Also, it's important to point out that there are a wide variety banking needs that need to be met, and few institutions do can do it all. Considering there are credit unions, portfolio/investment/private/online banks, non-depository lenders, etc. you can have businesses in close proximity to each other that have different products and services

Not to mention that every town/city has small(er) banks that make a huge impact within that community. Especially, when it comes to lending relationships or dare I say "common sense" lending.

How many people here would be out of business if their small bank/credit union went out and they had to go to a large bank and apply for funds?

I think this statement about sums it up. On the commercial side, I'm seeing increased lending appetite from banks, but it's a selective appetite and it's just a given these days that in the CRE space that a borrower must be credit worthy.

Unfortunately, there are lot of borrowers who are not accustomed to what it takes to obtain financing in the current market, but that is slowly changing. It can be a rude awakening for someone who's never missed a payment on their chimerical loan to be turned down for a refinance simply because the bank is trying to restructure their balance sheet.

More so with commercial than residential properties it can make big difference knowing what is going on internally with a bank as that can have an impact on what types of properties a bank may be bullish on. Not only can this information impact getting an approval, but in some cases, it may impact the terms of the loan.

Just because a bank may be willing to loan you money doesn't mean you may be getting the best rate, LTV, or amortization.

As someone who owned a nightclub, I can tell you with 100% certainty that Joel's post has some valuable advice that often only comes with hindsight.

If you're looking for suggestions, I'd throw out the idea of owning a hotdog cart. I know two people who own them and they both do well.

One operates their cart outside of Home Depot, but I'm pretty sure they're under contract with a large compay who subcontracts the space out. The other person owns two carts and makes enough in the summer to take the winter off.

I wish I could suggest a bank that is more local to you, but I can't help you there. I did a quick search on a mortgage forum I belong to for HELOCS and both TD and US bank showed up as players. Hope that helps.

TD Bank and US Bank are supposed to be decent when it comes to HELOCS.