All Forum Posts by: Darryl Dahlen

I understand.

Spelling errors, and grammar, are pretty much on the poster to check before they hit the post button so I can't complain about mistakes that slip through there.

Personally, I sometimes want to go back and clarify something I've written that seemed clear to me, but isn't to everyone else.

It isn't a big deal to me. I just thought I'd ask.

I figured the reason was something along those lines.

Still, are there that many posts where the editing is so rampant that it changes the flow of the thread? If so, wouldn't it simply make sense to delete it and give the OP a warning or hit to their influence?

I would think the vast majority of us simply want to make small editing changes to our threads after the fact that have no impact on the quality of the thread.

That, and I would hate to trouble a mod simply to edit a post just because I think it needs a small change.

I did a search and couldn't find an answer to my question. How come you can only edit your post for a short time after posting it?

There are times when I'd like to change a thread due to improper wording, poor explanation, etc., but cannot because I can no longer use the edit feature.

I agree with Financexaminer. If you don't have a strong banking relationship with a bank who will allow for a cash-out, you will be hard pressed to take out that sort of cash with any conventional lender.

However, in situations like this, hard money is sometimes an option. You go to a hard money lender for a loan, hold it for 6 months, then do a rate and term refi with a conventional lender.

Granted, you're going to pay a higher rate, and points, for hard money, but it is about the only way I know where you can do what you're asking.

Thank you.

For a broker, a lot of knowing your market starts with the lenders you have access to. If you don't have any lenders then you should partner with someone who does.

I started this thread to let people know SBA loans are going to be hot once this legislation passes and that borrowers will certainly benefit from it becoming law.

Brokers will be in a good position if they can find SBA loans to originate and send them to lenders who are PLP qualified.

Still, that doesn't mean every restaurant, gas station, or hotel is going to be funded just because the numbers may work on paper for an SBA loan. It is still the banks money so if they don't like hotels either find an SBA lender who does or pass on hotels until you find a lender for them.

At the end of the day, you'll only waste the borrower's time, and money, if you can't help them.

I don't mind sharing what I can for the sake of conversation. In all honesty, my business model is fairly simplistic.

I take the approach that one should only pursue projects that can actually fund. If lenders don't like chicken farms, then you would be foolish to fill your pipeline with chicken farms no? I find it amazing how many brokers work on broken projects that have no hope of funding. Too many brokers look for projects with no lender to take them to, when in reality, they should find the lender(s) first and THEN find the projects those lenders want to fund.

That being said, when it comes to SBA loans, or any for that matter, I regularly talk with my SBA lenders to see what property types they are funding, or in some cases, what they are not funding.

That, and I like to find property types where I can bring in more than one lender since a borrower might need a couple lenders in order to get the job done.

For example, a hard money might be used to fund rehab work(since the SBA won't fund that type of work), and then the SBA can step in as the takeout lender.

So, having several options for a borrower increases my chances of funding a deal and sometimes allows me to having multiple closings over time.

Ideally, I'd like to be able to have at least 2 options available to me when I consider what property type to originate. Those options include; equity, mezzanine, hard money, SBA, USDA, HUD, and factoring along with some conventional financing.

As of late, I've been focusing my attention on assisted living facilities, multi-family, auto repair, and day care centers. I'd like to add medical office buildings, but those borrowers tend to be all set so I don't actively look for them.

Oh, I understand that argument too as there are a lot of good projects out there where the risk can be mitigated through reserves, down payment, strong management, etc.

Still, I don't see non-recourse loans coming back anytime soon.

Also, in cases where you are talking about large projects (5M and up), the dollar amount can become an issue in of itself. Outside of a few players, I see a lot of banks not interested in projects above 2M. I'm talking about loans where the bank is lending their money and doesn't fall under a government program.

In those cases, it is sometimes best to approach one of the many pension funds, insurance companies, hedge funds, etc. who are lending, but they too look for personal guarantees, and are often more expensive money than a bank. They also tend to have a "take it or leave it" mentality. That's why I use a lender who is a correspondant with several pension funds or insurance companies when those options are the way to go.

You see why I'm excited about this new legislation?

Good questions.

I believe one of the big reasons why lenders have abandoned non-recourse funding is simply because it was too easy for the borrower to walk away from their obligations.

With more than 3 Trillion dollars worth commercial paper out there, and about half of that coming due in the next few years, lenders are taking enormous losses trying to deal with foreclosures, devaluations, write downs, etc.

Just about every sector in the commercial arena is down, with hotels and retail properties really taking a hit. This has a lot of banks desperately trying to restructure their books in order to stay healthy, but it doesn't take too many multi-million dollars loans to go south and hurt your bottom line. 215 banks have closed this year alone if that gives you an idea.

As lenders are dealing with issues with the paper they have, write off losses, and re-structure, they need to asses how they issue new loans.

With the FDIC taking a strong interest in how banks learn from their mistakes, it is more important than ever that lenders operate with a sense of responsibility.

Aside from using better criteria to underwrite their loans (increased DSCR ratios, require higher occupancy levels, no cash-out, skin in the game, pre-sales, etc.), lenders now want the borrower to commit to the loan by personally guaranteeing it.

In my experience, a lot of borrowers ask for non-recourse funding, but most have come to terms with the fact they're not going to get it. A year ago it was more of an issue and I would see borrowers shopping for financing a lot more than they do now.

More than anything, I see borrowers not having sufficient liquidity to obtain the funds they need. Typically, this translates into lack or reserves and/or not enough funds to for the down payment.

Bryan- SBA loans are fantastic for most owner-occupied commercial properties where the owner occupies 51% of the space. The SBA is a good fit for office or retail condos too.
The 7a loan is the most used loan the SBA offers. Some uses for a 7a loan include: partner buyout, working capital, refinance high-interest debt, primary debt refinance, purchase, and equipment loans.
Unfortunately, SBA loans are recourse loans where the borrower's credit, and tax returns, are required. Still, having the SBA guarantee the loan takes a lot of focus off of the borrower compared to a non-government backed loan where they are completely under the microscope.
That being said, there is not much in the way of non-recourse funding out there iright now. HUD has the best programs, but as you know, they are not easy to obtain and are primarily focused on multi-family and healthcare projects.

Mitch- SBA loans are for commercial property only, and for owner-occupied properties at that. If a person wanted to buy a commercial property as an investment, a USDA B&I loan can sometimes be a good fit.

The senate passed a small business bill 61 to 37 on September 14th that will greatly help re-invigorate SBA lending. If this bill becomes law, the following items will be of significant benefit to borrowers.

- SBA fees (origination and the guarantee fee) will be waived
- 7a loans will be increased from 2M to 5M
- 504 loans will be increased to 10M
- The LTV will be increased from 75% to 90%
- There will be more uses for an SBA loan

The House has already passed a similar bill so negotiating a final version should not be an issue. From there, the bill can be signed into law.

The last stimulus package ran out out funds back in May after being extended by Congress 4 times. As a result, SBA loan closings fell sharply. There was $1.5 Billion in SBA loans funded in May, but only $400M in June.

This new bill should bode well for those of us who originate commercial loans. Not only will those loans become cheaper for the borrower to obtain, but they will also become easier to close!

If anyone has questions about the SBA and their programs please don't hesitate to ask.