Don't be Afraid of Tax Returns that show Low or No Profits!

Many clients and brokers shy away from loan programs that require tax returns to verify business income. The reality is that these days almost all commercial lenders require tax returns. The days of "stated income" loans are long gone. But not to worry. We do "Add-Backs" as they are commonly referred to in underwriting. What that means is we look for the TRUE CASH FLOW of a business. Not the income that's reported on the bottom line of a business tax return after your CPA gets done utilizing all the deductions that are legitimately available to reduce taxable income. We will routinely add back such expenses as depreciation, compensation to officers, amortization and interest expense on almost every return. And we'll also add back any expense that will be "going away" as a result of the new loan request. For example, if the loan is to buy a new location to replace an office the business has been renting - we'll add back all the rent expense that was deducted. If the loan is being used for "debt consolidation" then we'll add back all the additional income that went to pay those debts that will be going away. You'd be surprised at just how much real cash flow most businesses have to work with when you know where to look. So don't be afraid to show those tax returns, even if they don't look so pretty at first glance.

For more information contact Commercial Capital Lmiited by visiting http://www.commerciallendingpros.com/, emailing us at loans@commerciallendingpros.com or calling 863.298.8900.
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Private Money Loans

Private money loans are loans for situations where traditional banks will not lend. With the credit squeeze going on and banks increasingly less focused on lending, these loans have really grown over the past year. These loans are not for bad borrowers, they are for people who need money quick. Maybe it is a purchase contract that needs to close in 3 weeks, or a tight situation that just needs a short term bridge…these loans are great loans for a quick close. Common sense underwriting is the norm for these loans. There are two basic types of commercial private money loans, often called “hardmoney” loans:

• Cash flowing properties: Apartment complexes, retail strip centers, etc. These are properties that kick off enough cash to support the debt at almost 1 to 1 coverage or better. When that is the case, we have PLENTY of sources available. You may think; why if it is cash flowing does someone need hard money? The reasons are endless. I have one deal where it is a developer who has a bunch of properties working but because of long delays, they are cash poor. He has one property that he owns free and clear that is cash-flowing; we are getting him short term hard money to get him $12 Million to keep things rolling while the other loans close. We have a small $400,000 hard money loan where the guy just needs to close quick because he shopped too long and now his closing date is in 3 weeks and no one can close him. On these types of properties, money is available all the way up to $25 Million. LTV’s up to 75% are possible if the property cash flows strong. These are GREAT loans and can close quickly!
  
• Non-cash flowing properties: Whether it is raw land, or a vacant building that needs to be gutted and rented out or an apartment complex that is mostly empty and losing money, if it doesn’t cash flow, the rates are higher and the availability of funding is greatly diminished.. Excellent credit on the part of the borrower and borrower financial strength is critical on these deals. The lenders will also want a lower LTV, generally 50%. But a good borrower at a low LTV can get the money quick, whether it will be for cash-out, purchase, whatever. Even though these are tougher, we DO have loans available on these products from $200,000 up to $25 Million. Again, closings are generally very quick, 2-3 weeks is the norm.

Remember with private/hard money loans the terms are short. 1 to 2 years is preferred. They often have NO pre-payment penalty because the lenders want to get the money back so they can re-deploy it again. The EXIT STRATEGY IS CRITICAL. How are you going to pay it off in 1-2 years? If the exit strategy is compelling, these deals can close. But if you need money fast, and the banks are saying NO, this is a great option! To run scenarios by us, just call 863-298-8900. Remember, WE HAVE COMMERCIAL HARD MONEY LOANS AVAILABLE FOR CASH FLOWING AND NON-CASH FLOWING COMMERCIAL PROPERTIES FROM $200,000 UP TO $25 MILLION. JUST CALL 863-298-8900 TO RUN THE SCENARIOS BY US – WE CAN GET THOSE DEALS CLOSED TODAY!