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Conventional (Owner-User) Loans

This product is designed for business owners that will occupy at least 25% of the property, can show stabilized financial statements and must also be able to support the requested loan amount.

Small businesses need money for many reasons and there are several ways for entrepreneurs to gain access to necessary capital, with small business loans from banks being the most common. Conventional Owner-User loans are a viable source of capital for companies in need of additional funding. These loan options differ from the programs provided by the U.S. Small Business Administration (SBA), which are made by banks and non-bank lenders and guaranteed by the federal government. While commercial banks provide conventional loans, the funds are not guaranteed by any other entity.

Since these loans are not guaranteed by the federal government, banks prefer to lend to companies that demonstrate a strong ability to service the debt and have significant collateral to cover the loan if the company ultimately cannot pay back the loan. In addition, business owners seeking these loans are usually required to have exceptional FICO scores, a reasonable debt to worth ratio and be able to show lenders a solid business plan and projections especially for a speedy approval process.

Rates and terms can differ significantly between conventional and SBA loans. Conventional loans can be priced off of several different interest rate indexes or internally by a bank, while SBA loans are typically priced off of the Prime Index plus a spread. Banks and lenders will typically determine the loan product during the underwriting or analysis of the loan transaction. They may prefer to make an SBA loan because of the guarantee from the U.S. government. Or, they may choose to use a conventional loan product if the loan request is not eligible for SBA financing.

There can be advantages for small businesses taking out conventional loans.

With conventional loans, banks will work with owners to develop a package that works best and fits the needs of companies. This may be in relation to the interest rate or term/amortization structure, or prepayment penalties of the loan.

Conventional loans may be easier to negotiate down the road as the borrower has developed a relationship with the bank or lender.

In certain situations, conventional loan options can cost less than those provided by the SBA. Conventional loan interest rates and origination fees may be lower.

Which program is right for you? Schedule a free consultation and we’ll go over all the options available to you.

CONVENTIONAL OWNER-USER LOAN GUIDELINES

  • Typical Project Structure
  • Maximum Loan Amount
  • Amortization
  • Maximum LTV
  • Use of Proceeds
  • Eligible Property Types
  • Rate Option
  • Ownership Requirements

50% to 70% LTV

30% to 50% Applicant equity

$4,000,000

Up to 25 years

Multi-Use – 70%

Special Use – 50%

To purchase or refinance commercial owner-occupied real estate

Multi-Use owner occupied properties are preferred

Office: Professional, Condominium, Medical, Dental and Veterinarian

Industrial: Heavy and Light Manufacturing, Warehouse and R&D Flex

Retail: General

Special Use: Auto Related, Assisted Living Facilities, Adult Care, Day Care Facilities, Funeral Homes, Select Restaurants

Variable rate options based on WSJ prime rate adjusted quarterly as well as 90-day and 1-year Libor indexes

Fixed rate options based on 3 year and 5 year Libor Swap Rates

Prior ownership and management experience required

Minimum FICO of 680

1.25x Minimum Debt Coverage Ratio (DCR) for the most recent FYE and interim period required

All loans are full recourse and require personal guarantee of any and all individuals or entities holding 20% ownership interest or more.

No historical bankruptcies

Contact Us

First Commercial Funding Corp.
1420 Renaissance Dr.
Suite 310
Park Ridge, IL 60068

Email Address
info@fcfloans.com


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  • Home
  • Conventional Loans
    • Conventional Owner-User Loans
  • Unconventional Loans
  • Rehab Loans
  • Portfolio Rental Loans
  • SBA Loans
  • Business Loans
  • Contact Us
First Commercial Funding