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Hi, I’m Chris Hurn, the co-founder and CEO of Mercantile Capital Corporation and if you
are watching this video that means you are probably a real estate professional- a commercial
real estate broker or mortgage broker. The bottom line is, I want to talk to you a little
about our new initiative which is our www.SBA504InterimLender.com website. We are now actually making public
what we have done for a couple years in working with about three dozen other banks and providing
Interim financing for them to facilitate what I think is the best kept secret in commercial
real estate financing world, the SBA 504 loan. Some of you may think that as soon as I say
“SBA” that means it’s a bad thing. I will tell you these are tremendous commercial
loans. I have one myself so I can speak from first-hand knowledge. There probably are not
too many other bankers out there that are smart enough or entrepreneurial enough to
use their own commercial loan products but, I do. The reasons I do are very simple. There
are three basic reasons.
Number one, it is less capital down. It is usually ½ - ? the capital required from a
conventional bank. That makes a big difference because small business owners are always about
capital utilization and how they can stretch their dollar as far as they can. Number two,
it has the least expensive financing option available out there in the marketplace for
small business owners. That second mortgage piece is a bond, a government guaranteed bond
that is issued every month. Basically, taking Wall Street and bringing it to main street.
The interest rates are below market. They are fixed long term. This month, for instance,
that I am doing this it is fixed at about 6% for twenty years. There is not a bank in
the country that is doing 6% fixed money for 20 years with only 10% down right now with
“T” Bills having bumped up a little bit. It just doesn’t happen. That is a tremendous
advantage. That is the second big advantage for doing these deals. The third big advantage
is a little bit the longer amortization and repayment terms which means, monthly cash
flows are impacted less. Therefore, monthly payments are not quite as high as they would
be if you’re doing a 15-20 year amortization conventional loan with a bank. The fourth
thing I want to stress to you is that these loans are not that complicated. They are a
little bit extra work on us, as the lender, but they are not that complicated to the borrower
if you are working with a specialist. If your borrower insists on working with a community
bank that has done one or two of these deals in the last year they are going to be a little
bit of a guinea pig and it’s going to make the transaction a little more difficult. Frankly,
I have even seen deals fall a part in situations like that. At the end of the day you want
to get that transaction to closing with certainty and working with experts help you to do that.
I would encourage you to give us a chance. It doesn’t matter where you are at in the
country; we lend all over the country. We have now closed loans in 31 states, Puerto
Rico, and the District of Columbia. We are very experienced have closed multiple loans
in most states, so give us a shot!
Here is where the Interim loan program really comes into play. This is something where the
borrower, your client, can probably still utilize their existing bank if they want to
be the permanent first mortgage lender on a 504 loan but may not want to do the Interim
second until the government guaranteed bond, funds. In those instances, give us a call
and let us get involved in the transaction; we will help it get to the finish line and
get the deal done. I think it is pretty important to recognize that we will work with other
banks. Like I said before, we have worked with about three dozen banks over the last
couple years doing Interim loans for them. Do keep it in mind. The SBA 504 loan is the
best kept secret in commercial lending out there. I think if you are a smart, sophisticated
commercial real estate broker, mortgage broker, who you must be because you are watching this
video, then you should understand all of the details about it. Spend a little bit more
time on this channel. Watch some of the other videos about the SBA 504. Learn a little bit
more. Most of the commentary that you hear about it out there are myths and misperceptions
based on a different SBA loan product called a 7(a) which is vastly different and inferior,
in my opinion, when you are financing hard assets like commercial real estate. It is
a great program for working capital but not necessarily for commercial real estate. Until
next time, I will see you later.