Frequently Asked Questions
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|Loan Type|| Project
|SBA 7A|| $1,000,000 -
| Prime + 2.25 – 2.75,
|15 - 25%||Yes||20 – 25 years|
|SBA 504|| $3,000,000 -
|Fixed or Variable||10 - 25%||Yes||20 – 25 years|
|Conventional, US||Any||Fixed or Variable||25 - 40%||Vary||5 – 20 years|
|Securitized (CMBS)||$3,000,000 +||4.5 – 5.5%||30 - 35%||Yes||5 – 10 years|
|Seller 1st or 2nd||Any||6 - 10%||10 -30%||No||1 – 10 years|
|USDA B&I||Up to $25,000,000||Fixed or Variable||10-30%||Yes||20 – 30 years|
Note: Above chart is for hospitality financing and is based on typical standard criteria. Other terms and conditions may apply for various cash injection percentages or rates. Each deal will be analyzed on its own merits by Lender to determine rate and LTV. Cash injection percentages may vary for other property types and higher LTV’s may be possible for non-hospitality.
1. How much of a Down Payment do I need?
This depends upon the loan program and the loan amount. Typically, the down payments range from 20% to 30%, or more for new construction. In some cases, as little as 15% cash from the borrower may be accepted by the lender if additional collateral or subordinate seller financing is available.
2. What are the Interest Rates and Terms?
This depends on the property financials, the buyers' experience and the current level of the prime rate or other rate index used by the Lender.
3. What are the Lender/ Loan Fees?
Fees depend upon the loan size and the loan program. They will be discussed and explained to you once a term sheet or commitment letter is issued.
4. Can I get a Fixed Interest Rate Loan?
Yes, under certain conditions.
5. What is the Minimum and Maximum Loan Amount?
MBA Capital Funding arranges financing for loan amounts ranging from $1,000,000 to $100,000,000.
6. What is the Loan Process, including Timing for Loan Approval and Loan Closing?
- A MBA Capital Funding capital markets advisor makes an initial review of the borrower and hotel financials, history, and other data.
- The borrower engages MBA Capital Funding.
- MBA Capital Funding requests further documentation or information as necessary from the borrower, performs an in-depth analysis, prepares a complete loan package, and presents the package to appropriate targeted Lenders.
- Lenders review the submitted package and may have several more questions or further documentation requests. Once those requests are satisfied, Lenders usually issue a Term Sheet which details proposed loan rate and terms and interest to pursue the loan application further by the Lender. This is not a Commitment Letter, nor a firm commitment to lend. A Term Sheet is issued usually within 7-10 days after the Lender receives the loan package and any further information they requested.
- If the proposed rate and terms are acceptable to the Borrower(s), then the Borrower(s) sign the Term Sheet and the Lender proceeds with further underwriting. A small good faith deposit may be requested by the Lender at this time to cover report costs and/or underwriting fees, and provide assurance to the Lender that the Borrower does want to proceed with only that Lender.
- Lender may request further documentation for review and underwriting. Upon satisfactory review of this information, if acceptable to Lender, a Commitment letter is issued with a firm commitment to lend. The Commitment Letter is typically issued within 15 days of the signed Term Sheet and any requested documentation being return to the Lender.
- Once the Commitment Letter is signed, third party reports such as appraisal, environmental report, survey, and title are ordered and completed.
- Closing of the loan will happen once all Lender due diligence and 3rd party reports are completed. Closings typically are held 30-60 days after the Commitment Letter was signed.
7. What is MBA Capital Funding’s Role in the entire Loan Process?
MBA Capital Funding will work as liaison between the Borrower and Lender, any third party report agencies, attorneys, franchise reps, and any other personnel as required, throughout the loan application and underwriting process. We will coordinate all aspects of the loan up until the last documents are signed at the closing table to ensure that all goes as smoothly as possible. We will:
- Identify and resolve any problems or issues that arise to drive the loan to settlement.
- Execute a myriad of tasks behind the scenes to alleviate the Borrower’s involvement as much as possible, performing the majority of the processing requirements with the lender ourselves.
- Save our clients a great deal of time and stress, and in some cases, money.
- Communicate clearly with our Borrower and update them frequently on the status of the loan, answering any questions or concerns they may have.
“I really enjoyed working with Lynda. She’s very easy to work with and was all over it if I needed something. Can’t wait for the next deal.”
--Jody, Closing Specialist for a national SBA hospitality lender