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GOAL! (and other soccer words)
It’s World Cup time, which means most of the world is watching soccer with an even greater interest than usual. We, too, have World Cup Fever, but we would never let it get in the way of your commercial real estate financing needs. However, if you do happen to call during a USA match, you’ll probably have to leave a message. Just fair warning. With that lone World Cup caveat, here’s your June 2014 Commercial Finance Update…
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Featured Project:
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Planet Fitness
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Muncie, Indiana
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90% loan-to-cost financing
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$1.18 million total project cost (acquisition and construction)
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26,660 square foot fitness facility
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9 jobs created
Since the World Cup is upon us, it makes sense to feature one of our fitness-related clients this month. Mike Campagnolo is in the process of building 21 Planet Fitness Clubs in the greater Indianapolis area. With seven clubs up and running, he’s well on his way. Mike decided to acquire an aging retail strip center in Muncie, IN, and rebuild it into a state-of-the-art fitness center, and we had the honor of financing his project. We provided both the temporary 1st and interim 2nd mortgages during the construction process (keep reading for more about loan structure). We also participated in a second SBA loan to finance the necessary equipment for the gym. Small business construction financing has become a niche specialty of ours, so call us when you or someone you know has a construction project we should take a look at.
Visit our blog to see videos of the construction process for Planet Fitness in Muncie! You can connect with PF in Muncie via their Facebook page.
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Tip of the Month: Don't price-shop.
Choosing a commercial lender solely on price is unwise. It’s sort of like having surgery: you wouldn’t pick the doctor who charged the lowest price to operate on you, right? When you’re evaluating lenders for your commercial real estate project, it’s important to look at their level of expertise. Do they specialize in the type of loan you need? How many of this type of loan have they closed? Have their clients been happy with their experience? It’s worth the extra effort to find a lender who has a reputation for being the expert in providing the type of loan you need. We’ve been small business commercial real estate specialists for more than a decade, so call us first when you or someone you know is interested in owning commercial property. We’ll be more than happy to cut your lender search short so you can get back to doing what you do
best.
Learn more...
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For Small Businesses (Owner-Users): The SmartChoice Commercial Loan
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Up to 90% loan-to-cost financing for owner-occupied commercial real estate.
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Property types include office, industrial, medical, flex, daycare, retail, flagged hotel, and self-storage facilities.
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Total project costs up to $15 million.
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Makes commercial property more affordable for small business owners.
Learn more...
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Loan Structure & Rate:
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Our SmartChoice Commercial Loan has a three-part structure, which is ultimately beneficial for both our small business clients and for third-party lenders we work with. A typical project has a 50-40-10 structure, and we're dealing with the total project cost (purchase price of land and/or existing building, construction costs, soft costs, closing costs, and equipment).
The 50% 1st mortgage is an ordinary commercial loan provided by a third-party lender. This is at market rates and can have up to a 30-year amortization. Current rates for this piece will be in the 5.25%–6.25% range. The 40% 2nd mortgage is a below-market, fixed-rate bond with an SBA guarantee. This piece is fixed for 20 years and has a 20-year amortization. Current rate is 5.08%.
Small business owners are required to put down as little as 10% of the total project cost, which is two to three times less than ordinary commercial loans require. Equity in land (if it's already been purchased) and soft costs (like architectural and engineering fees) can count toward the equity requirement. The interest rates from the 1st and 2nd mortgages blend to an effective rate that's hard to beat with ordinary commercial real estate financing. For a total project cost of $10 million, the blended rate would be 5.40% and the approximate monthly payment would be $57,730 (all rates and figures are current estimates at time of issue).
Learn more...
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Featured App: The SmartChoice Commercial Loan Calculator
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Okay, so our Featured App is our only app, but it’s a good one. Our SmartChoice Commercial Loan Calculator has been downloaded by more than 6,600 people and is available for iOS and Android devices. In addition to being incredibly helpful, it costs absolutely nothing. It gives you instant and accurate estimates for down payments and monthly payments and automatically does the loan structuring calculations for you! Try it today and see just how handy this tool can be...
Get the app from iTunes or Google Play...
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Oh, and one last thing...
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