Debt and Equity Financing Procedures
For Managing Expectations of Those Requesting Funds
How we provide financing. Commercial Corp Finance (CCF) and its due diligence team validate and prove requested investment real estate scenarios for those seeking financing either through debt, equity investment or combination of the two. Its funding sources include: Direct loans, specific private individuals and funds that CCF represents, as well as the more conventional sources, such as banks and insurance companies, with which the CCF team is a correspondant and has had long term relationships, some of which go back for decades. Generally, CCF’s financing minimum is $2 million, with a maximum of $150 million. Loans under $1 million are possible with our SBA and Non-Real Estate lending programs.
Funding may be through from CCF directly, with CCF as a servicer of the financing or with a third party entity providing the capital, or combination. In today's market environment gnerally, fewer than 1 in 8 projects eventually get funded, because of market or other reasons, such as delays in providing the due diligence team with timely, accurate and complete information. The most common reason for declines is that the projects and their submissions have not been clearly though out. Absent that, the following relates to timing of well planned, viable submissions.
The time required for funding after the signing of an engagement and delivery of needed documentationwill usually be:
• Agency construction loans: 2 to 6 months
• Agency acquisition and rehab loans: 12-16 weeks
• Agency refinance and acquisition of income property: 8-12 weeks
• Government construction loans: 10 to 12 months
• Agency refinance and acquisition of income property: 8-12 weeks
• Hard money loans: 2 to 4 months
• Equity capital: 2 to 4 months, but varies greatly with project,
• Non-real estate loans: 4 to 12 weeks,
• SBA loans: 30 to 60 days, will vary with quality of submission documents.
The above ranges are estimates and will vary with the nature of the specific project, the quality and availability of records provided by the borrowers and the borrower themselves, and of course market conditions.
Procedures: Those seeking financing can expect the following procedures and time lines, which may vary depending upon the type, location, size and nature of the project.
1) In-take meeting. This may be done by telephone or in person at one of CCF’s offices. There is no cost for this initial meeting. This can usually be scheduled within a three working days.
2) Opening a file. After the initial intake discussion, work will commence after the signing of an engagement agreement and the paying of a modest non-refundable application fee, to cover the initial costs of project evaluation. In addition, the borrower will advance funds for all third party reports ordered by the due diligence team, including, but not limited to a market feasibility study and an appraisal.
3) Preliminary term sheet. Usually within two weeks into the evaluation process, a preliminary term sheet (identifying the source of the funds) will be delivered to the borrower, to either accept or decline. If the borrower declines, the evaluation/due diligence process ceases immediately, with all unused (if any) due diligence funds returned to the borrower. If the preliminary terms are accepted, additional due diligence funds may be required, as part of the term sheet, the amount of which will be determined by what work the borrower already has completed (soil reports, EPA reports, endangered species reports, construction budgets, etc.) ALL completed reports will be reviewed by the due diligence team. Those that are missing will be ordered, to satisfy the terms and conditions of the preliminary term sheet.
4) Final approval and funding. Once the project is approved, loan/equity documents will be drawn, discussed and executed.
Remember, while many projects will not be approved, an early decline saves time, money and futures. However, we are looking for projects with true, well thought out success potential.