What Is the Best Kept Secret of Commercial Real Estate?

Fountainhead 504SBA 504 BlogLeave a Comment

I’ve said for many many years the best kept secret of commercial real estate financing is the SBA 504 loan and the reason for that is the third reason why people would use an SBA 504 loan is the below market long term fixed interest rate on that SBA guaranteed second lien loan. Ok you have 2 loans under a SBA 504 structure you have generally 50 percent of the total project first lien loan and then you have a second lien loan often times it’s 40 percent of the project depending if it’s a special purpose property or start … Read More

Who Can Benefit Most from the SBA 504 Loan?

Fountainhead 504SBA 504 BlogLeave a Comment

The people who benefit the most from SBA 504 loan, our specialty, are small businesses, all the way up to mid-sized companies. We’ve recently closed a loan for a $100 million general contracting company–so we go from that extreme, all the way down to a franchise startup. For a lot of our clients, their annual revenues are in the million to $10 million range, so it’s all over the board really. But the key is, we’re financing commercial real estate for wealth creation for that business owner and that’s what’s really important. We’re taking somebody, in most cases, that was … Read More

What Sizes of Loans Does Fountainhead Finance?

Fountainhead 504About FountainheadLeave a Comment

I’ll often get asked by commercial mortgage brokers, commercial real estate brokers, banks, credit unions, and business owners directly, what size projects do we finance? So far, I’ve done a $26.5 million hotel project with an SBA 504 loan, but our average is probably more in the $2.5-5 million range. We will go as far down a $400 thousand property. We usually try not to do too many of those unless they’re commercial condos and maybe they’re already in our existing commercial condo project. We can possibly do more than just one but that would imply a $200 thousand first … Read More

What Building Improvements Can I Make with the SBA 504 Loan?

Fountainhead 504SBA 504 BlogLeave a Comment

I often get asked, “Should I buy? Should I build? Is there something in between? Should I buy and renovate?” It really comes down to personal preference, but if you want to be the most economical about things, oftentimes it is cheaper to buy an existing commercial property than it is to build it from scratch. That’s number one. Number two, if you can’t really find anything that fits your needs, whether its square footage or layout or location or what have you, maybe you can find something that mostly fits your needs and it just takes some renovations. Renovations … Read More

What to Look out for When Getting Financing from Your Bank

Fountainhead 504Conventional FinancingLeave a Comment

Every day, business owners wake up at 4:00 or 5:00 a.m. They have a lease payment due on their commercial facility later that day and they finally have that lightbulb moment and say maybe I should convert this lease payment into a mortgage payment. Maybe they make a phone call later that morning to their bank where they have their operating accounts and they go in and meet their loan officer at the bank and say, “I’m considering exercising my lease to purchase option on my property or there’s an ideal property down the street that I want to buy … Read More

Why Has the SBA 504 Loan Been Kept a Secret for so Long?

Fountainhead 504SBA 504 BlogLeave a Comment

The SBA 504 Loan has often been in the shadows of the other SBA loan program that a lot of people have heard about, which is called the 7A. It’s unfortunate, but frankly, it’s part of human nature and most providers of commercial loans in America are banks, occasionally credit unions, non-bank lenders, etc. Most people want to do what’s easiest for them, which is provide their conventional product, but unfortunately, that doesn’t always work for business owners because a conventional commercial loan is probably  70-80 percent loan-to-value financing. That means a lot of down payment from the business owner. … Read More

What Fountainhead Will and Won’t Finance

Fountainhead 504About FountainheadLeave a Comment

I get calls and emails all day long from commercial mortgage brokers, which I’m very, very grateful for; however, I want to try and explain very simply what we will finance and what we won’t finance. We have two loan products–the SBA 504 loan and our low LTV conventional loan. We’ll do up to 65 percent LTV. We want to do these on owner/user properties–so, multi-purpose buildings, like freestanding office buildings, industrial warehouses, and commercial condos. Whether they’re retail, industrial, or office condos, those are all our multi-purpose projects that we’ll finance. We’ll also do special-purpose projects. The most we … Read More

What Misperceptions Do Most People Have About the SBA 504 Loan?

Fountainhead 504SBA 504 BlogLeave a Comment

There are a lot of misperceptions and myths out there about SBA financing in general, but also about the SBA 504. Some of them have to do with how long the processes takes. If entrepreneurs and business owners have heard that in the past, my comment would be, they’re living in the past. That is a very old misperception and, frankly, it deals a lot with the lender you chose to do the financing with–or if you heard this from the rumor mill or what have you. It’s all about the lender. If the lender doesn’t specialize in SBA financing … Read More

Why Don’t More Business Owners Buy Their Own Buildings?

Fountainhead 504SBA 504 BlogLeave a Comment

So, why don’t more business owners buy their own buildings? I think a lot of it comes down to fear of the unknown. They don’t know the process; they don’t know how easy it can be; perhaps there’s some concern about dealing with bankers. The reputation of bankers has taken a hit since the great recession. Oftentimes, it just comes down to, they don’t know what is possible and, like a lot of things in our society, working with specialists is probably your best bet. Working with people who know what they’re doing and are probably so focused on something … Read More