Commercial Line of Credit – Bridge Loan
Commercial Line of Credit
FBC Funding offers a Commercial Line of Credit for Real Estate Investors as part of our Bridge Loan Commercial Real Estate Funding Program. This Commercial Real Estate Line of Credit offers investors an opportunity to have funds available to purchase additional investment property without paying interest on the funds not in use. The Line of credit is facilitated through our Bridge Loan Program.
Bridge Loan with Commercial Line of Credit Functionality
To understand the Commercial Line of Credit you must first understand it is a part of our Bridge Loan Program and the borrower must qualify for the Bridge Loan.
Bridge Loan Core Parameters
➢ $1MM – $20MM funding amount
➢ Rates: 6.25% – 9%, interest only
➢ LTV: 65% – 75% (up to 80% on multi-family and industrial) the maximum LTV is based on the property type
➢ 1-2 year term (up to 3 years, with extensions)
➢ at least 50% of line must be activated upon funding (if paying off existing loan or acquiring property as part of funding, that is included in the 50%)
➢ Interest will only be charged on funds that are drawn
➢ No Prepayment Penalty
➢ Owner occupied and rental commercial properties
➢ Refinance – Rate and Term and Cash Out, or Acquisition,
- Mixed Use
- Parking Lots (income producing only)
How Commercial Line of Credit Works:
➢ We must be in first lien position, so we will need to pay off any existing mortgages/liens.
➢ We establish a maximum funding amount available, based upon property type, property value, DSCR and other variables
➢ The borrower must use at least 50% of the line at time of funding (which can include paying off any existing mortgage, plus any cash out at initial funding, if desired)
➢ The remainder of the available funds (difference between maximum funding amount and funds disbursed at closing) are available as a commercial line of credit to draw against in the future.
➢ We will likely limit the number of draws during the term of the loan.
➢ This product has a maximum term of 3 years (including extensions) so we will need to consider the exit strategy right up front.
➢ The product is a great fit for borrowers that have equity in their property and need cash available in short order.
Commercial Line of Credit Example:
1. Borrower has a multi-family property that is worth $15,000,000 with first mortgage of $8,000,000 and is interested in purchasing additional real estate, wanting the cash available at his disposal so he can move quickly as properties become available.
2. We provide a maximum loan amount of $12,000,000, paying off the $8,000,000 existing mortgage and providing additional available capital of $4,000,000 to be used in the future by the borrower, at their discretion (for the sake of simplicity, this example does not include closing costs). Borrower only pays interest on the initial $8,000,000 funded amount, up until the time he pulls additional cash from the commercial line of credit.
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