Where are Commercial Real Estate Rates now? Which loans can finish in 30 days?
We're bidding on a warehouse space which could go for $2M. The space is bank owned and the purchase agreement is non-negotiable. We only get 30 days from the auction date to close. The space will be owner occupied. 

* Since our time frame is so 'delicate', which type of loans are possible?

* Assuming LTV 80% what is a decent rate on a conventional 20year?

* Is it advisable to get a Bridge Loan so we can apply for an SBA?

Overall our company has no debts and it's financials are very healthy so we feel confident we would qualify for some preferential terms. We plan to use this space for a long time (10+ years) so we're very much interested in a long term low interest loan, but the tight closing deadline is making it more difficult. Any advice is appreciated. Thanks!
[{"id": "f7mjupq", "text": "Bridge debt.\n\nIf you can't get it done (and depending on who you guys are as a company), I can close it how ever fast you would need and would be happy to lease it back to you.", "replies": [{"id": "f7mm24a", "text": "What do people normally pay for Bridge Loans? We'd need to cover ~1.8M for a few months while we're applying for a permanent loan. \n\nMy instinct is an SBA would have better rates and a longer term, or we could negotiate a better loan since we have more time. However, if the bridge loan cost is super high it could negate the advantages.", "replies": [{"id": "f7mnw1j", "text": "It depends on your financials and the deal itself.  If it's a killer deal and you have solid financials obviously it'll be cheaper and vice versa.  I'd figure on 6-12%.  It's  a huge spread but I know nothing about you", "replies": [{"id": "f7msl4w", "text": "Even at 6% it would be hard to justify spending that upfront in order to try to recover it by getting a loan with a better rate.", "replies": [{"id": "f7mum3f", "text": "Just work the numbers to a price that works for you.\n\nI found the property that you're looking at.  You should get that for a lot less than $2.5m.  I would say somewhere around the $1.5 range.  Of course there is some due diligence to do and that could change what this building is worth by a lot but still, $2.5 sounds high.  And to be honest I would like to be in for less than that with those 4 month to month rents sitting on the books.", "replies": [{"id": "f7mw833", "text": "Yes I was just estimating for simplicity. I don't expect we'll bid over 1.5M plus we have to pay a 5% fee to the broker. \n\n&gt;  And to be honest I would like to be in for less than that with those 4 month to month rents sitting on the books.\n\nSorry I don't follow this one. You mean the month to month tenant?", "replies": [{"id": "f7mx7gh", "text": "Yes.  The tenant is 'never' going anywhere until they do.  Banks HATE this kind of risk.\n\nYou may be able to comfortably pay more for the building as an owner user, than me as an investor.  So take that into account.", "replies": [{"id": "f7myehg", "text": "Yes it works to our benefit.", "replies": [], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "f7mopvs", "text": "If there\u2019s a cost-savings you have on the P/P (from market price) by closing quick on this REO deal, you could theoretically look into applying for hard money/bridge to close, while applying for SBA to refi. I don\u2019t think SBA can close that quick, but certainly will allow you to have a much lower rate. \n\nWhat you\u2019ll end up paying by financing this way will be points on the hard money/bridge loan, which could be 1-3% (so, 18k to 54k?). The points are negotiable, so see if it makes sense. \n\nI know a SBA lender who does more \u201ctricky\u201d deals if you need an SBA guy. He\u2019s based in OC, California.", "replies": [{"id": "f7msu5c", "text": "Thanks, do you know if the SBA would then be considered a refi on the bridge loan? I'm kinda surprised banks don't have a bridge-&gt;SBA option since SBAs tend to take much longer than most real-estate deals allow.", "replies": [{"id": "f7mt3yx", "text": "Essentially a refi, yes. SBA lenders do refis as well. \n\nJust make sure there\u2019s no prepay on your bridge/hard and you should be fine. Negotiate down the points on the loan if possible. \n\nIt just takes longer to underwrite SBA. They assume that you\u2019re able to secure a PSA that accommodates the loan underwriting. Most SBA loans aren\u2019t for a REO or distressed asset, usually the purchase is for a  listed or on-market property.", "replies": [{"id": "f7mvynn", "text": "Who do you recommend for a bridge loan? I see the term SBA Bridge loan being used, but that appears to be something else.", "replies": [{"id": "f7mwlzg", "text": "As far as I know, an SBA bridge loan doesn\u2019t exist. The superior terms of an SBA loan (rate, as well as LTV) is subsidized because historically an owner-occupied business that qualifies for the SBA program will occupy their space and pay off the loan over 10, 20 years. (Thus a lender can count on servicing the debt better than a typical commercial loan).\n\nThat runs directly contrary to a bridge loan. For a bridge loan, you usually need a higher down payment, will pay more for the loan fee, and rates will be higher. \n\nBUT, you close much sooner (less approvals necessary).\n\nIf you\u2019re trying to minimize your down payment, then I would recommend finding a bridge loan that will qualify you based on cross-collateral (ie., you have other assets that the lender can go after in the event of default) that would minimize your down payment, but still allow you to close within the timeframe. \n\nOR, expect to up your equity contribution. 35-50% down payment will get you more favorable bridge terms to close, while you concurrently work your SBA loan. \n\nOr you can also just ask/pay for extensions to your Escrow if you only want to pursue SBA. See if you can string the seller along for 45-60 days FC. \n\nYou could theoretically tie it up and ask for more time, and drop out of escrow if the extension isn\u2019t granted (lose $10k for the appraisal, phase 1). \n\nA few options.", "replies": [], "depth": 7}, {"id": "f7mwq56", "text": "PM me, I can put you in touch with some lenders I\u2019ve used. I do commercial investments in OC.", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f7mz2up", "text": "I don't understand the need to do this large capital expenditure for a business that seems to be new enough not to have developed an existing banking relationship.\n\nIf you do not have to buy, then don't and rent. I know that there is the temptation of getting a bargain, but true bargains are rare. You might be getting a few thousand in the purchase price, but you are tying up a lot of capital and impacting your cash flow more than if you were just paying rent.", "replies": [{"id": "f7mzp14", "text": "We've been in business since 2013. We have rented warehouses for 4 years and we're out of space again. We have several accounts with Chase, but I don't see how that's going to ensure a better rate (it didn't with my mortgage). Our current rent is more than a monthly payment on an owned space that is 5x's the size, so I'm not seeing the downside. \n\nThe only catch is we want the best possible loan and the 30 day window makes it more difficult. If we absolutely had to we could cover the entire purchase in cash and wait for the SBA financing to roll in.", "replies": [{"id": "f7n2x1i", "text": "If you\u2019re sitting on $2MM in cash you may not qualify for SBA. And don\u2019t focus on the rate, your cost of capital on the term debt is not that material. Focus on a bank that can get the deal done.\n\nHowever, I don\u2019t know of a bank that could get a purchase done in 30 days. \n\nDon\u2019t sacrifice the viability of your business for this property. Another will show up.", "replies": [{"id": "f7n6zt3", "text": "&gt;If you\u2019re sitting on $2MM in cash you may not qualify for SBA. \n\nWhy? I see Net Worth &lt; $15M and Net Income &lt; $5M/year. What requirement are you referring to?\n\n&gt; And don\u2019t focus on the rate, your cost of capital on the term debt is not that material. Focus on a bank that can get the deal done.\n\nSeems many banks can do the loan, I don't know if any can knock it out in 30 days. So if I can bridge it, why not get the best rate possible?\n\n&gt; Don\u2019t sacrifice the viability of your business for this property. Another will show up.\n\n If we don't have a clear path to getting financing we won't bother bidding. I'm mainly asking which options we have. Is it unheard of to do a bridge before getting an SBA?", "replies": [{"id": "f7n7ty8", "text": "For a relatively large capital purchase like this you\u2019re probably looking at a 504 loan, but a traditional 7a may also work. However, for SBA, there has to be a reason why the loan don\u2019t qualify for traditional financing. Usually that is accomplished by the business only having capital for a 10%-20% down payment. If you can buy the building in cash, you may not qualify for the sba programs - not saying you won\u2019t qualify, just that you may have to find a lender that will work with you. \n\nIf you do the bridge loan idea of short term capital to purchase, you may also run into a road block with sba. Refinances are also more difficult as the SBA requires the loan being refinanced to be seasoned, usually 24 monthly payments, and other sba requirements. Lots of covenants with sba too.\n\nBased on what you have described it seems traditional bank financing might be the best route for you. you pay cash then refinance with a bank to replenish your capital. Or do a 50% LTC loan with your bank for the purchase. That should be easy to approve and move pretty fast. Assuming the property doesn\u2019t have any issues and appraises. \n\nTraditional loan will likely be cheaper net of fees too. Simple deal maybe a 5-7 year fixed, 25 year amortization.  Pretty much any bank can do that.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f81u2vx", "text": "CMBS is probably going to be the lowest you can get but it\u2019s likely going to be a 10 year loan with a 30 year amortization. We just closed a loan at 3.86% with 3 years IO. 75% LTV is also highest you will get with a CMBS. You\u2019re best off getting a debt broker", "replies": [{"id": "f82eezl", "text": "I guess I'm confused why we would want to do a balloon/CMBS over a permanent SBA504 since rates are low now. Don't you worry the rates will be significantly higher in 10 years?", "replies": [{"id": "f82ffb3", "text": "I mean I guess it\u2019s a different if you\u2019re an owner user. It can make the asset more difficult to sell if there are massive prepayment penalties too. What if you want to refi? We only do 10 year loans so not super familiar with SBA504 but will tell you that CMBS is probably lowest rate you can get if that\u2019s the goal.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]