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Here you can find quick answers to some of our most common questions. If you can’t find the answer to your question on this page, contact us and we will help you with any unanswered questions you may have.

Commercial loans are somewhat more complicated that residential loans. The underwriting process examines both the physical and financial characteristics of the property being offered as collateral, and the financial and management strength of the borrower. A conventional commercial loan can take 60-90 days to close. Some loans can close in as little as 30 days. The most time-consuming parts of the process are i) the borrower getting all of their paperwork in to underwriting; and ii) the appraisal, which can take 3 weeks or more.

Yes. In addition to our ‘concierge’ service of lender introductions, Sofia Capital Ventures offers certain consulting services. These are fee-based services. We pride ourselves in sending well-presented packages to our lenders, and are routinely told that our files are easy to work with. If you need assistance in putting together your loan request and supporting documents, including business plan, financial projections, resumes, and other parts of your presentation, please contact us

Sofia Capital Ventures offers a free evaluation of any loan request. In order to provide a meaningful review, we use a simple two-page loan intake form to gather information from the borrower about their loan request, their property and their own financial position. We provide each borrower with a full analysis of the strengths and potential challenges with their loan request, from the lender’s perspective.

Yes. If you are a commercial mortgage broker and have a loan request from a borrower that you cannot place elsewhere, the private lenders we work with may be able to help. Sofia Capital Ventures has an active referral program and we offer commission sharing to our referral partners.

Most of our lenders are U.S. only. Some lenders will also lend in Canada and the Caribbean. We do offer construction lending, alternative energy financing and conventional commercial loans in these areas. All loan applications must be in English and all financial information in U.S. dollars.

Sofia Capital Ventures works with several lenders who specialize in financing for alternative energy production companies such as solar farms, wind farms, bio-fuels, waste to energy and biomass. Ideally, the project will have an off-take agreement, or power purchase agreement with a strong buyer. A number of different programs are available.

Yes! Sofia Capital Ventures works directly with a company that specializes in start-up financing for new businesses that are pre-revenue.

To quote one of our lenders, “100% financing died in 2008.” In today’s economy, while there has been some recovery and growth, lenders are still somewhat cautious and conservative. They generally want to see the borrower have some “skin in the game” for at least 10% of the total costs of the project or property. Some lenders require down payments of 20% to 30%. If you are seeking a high loan to value (LTV), there may be Joint Venture opportunities or you may qualify for SBA financing.

That depends. Most construction loans are offered based on the completion value and the construction costs. Most construction loans will go up to 70% of the completion cost. Some lenders will go higher, but they will usually ask for equity or other collateral in addition to the property being developed. For existing buildings that the owner wants to renovate, the loan amount will be determined primarily by the existing cash flow of the property and how much debt it can cover.

Sometimes borrowers ask if they can get a pre-approval before they make an offer on a commercial property. That is not done in commercial lending. The reason is, even the preliminary approval is dependent on the property and the cash flow of the property to determine value and credit-worthiness.

The other issue is that if the lender makes a loan offer on a property that you accept, and then it turns out that you do not control or have an equitable interest in the property that you are offering as collateral for the loan, this can be considered loan fraud and makes you liable to the lender. I do not want to see anyone put in this position.

You may find some hard money lenders who will give you a “proof of funds” or other such evidence of funding so that you can make an offer. Nine times out of ten, I’ve seen these types of loan “approvals” fall out when you actually go to close. Plus, they will cost you 18% APR, or more. That is not something we offer. We are legitimate, conventional commercial lenders, funding from private sources rather than banks.

Unlike residential lending, where the borrower themselves qualify for the loan, in commercial lending, the property must qualify for the loan. There are many types of commercial properties and many different loan criteria that must be met. Factors such as geography, type of building, occupancy rates and cash flow all affect the type of loan a property can qualify for and what interest rate and other terms will be offered. The borrower needs to present as complete a picture as possible to help the lender understand their needs and offer the best terms.

We ask the borrower to sign an nondisclosure and non-circumvention agreement for two reasons. We want to assure the mutual respect for the privacy of the borrower’s personal and business financial information, and we need to protect the privacy of our lenders. We also ask the borrower to agree include us in any future dealings with the lenders we introduce them to.

Our lenders have closed many deals. Because of privacy and confidentiality, we cannot give you many details about other loans that we have closed. We have general descriptions of many loans that have recently been closed by us and our lenders.

Yes, we work directly with private money sources. We are not brokers. We do not shop your deal. We have strong relationships with a number of private lending sources. We work directly with the fund manager or underwriter. We work to understand your loan request in detail and match you with the best lender to meet your needs.

Private lenders fulfil an important niche in the commercial mortgage industry. Unlike banks, that lend out depositors’ money, private lenders make loans from their own money. Because of privacy laws banks don’t generally give out references. Neither do private lenders. However, once a private lender has had an opportunity to review your loan request and is ready to make you an offer, they generally provide a proof of funds at that time.

Non-recourse means the borrower is not required to personally guarantee the loan. Non-recourse loans are available for well-qualified borrowers on certain types of property. For construction loans, which are riskier to the lender, the borrower is generally asked to provide a personal guarantee.

The only time a borrower is asked to pay fees is when they accept a loan offer from a commercial lender and are completing the underwriting process. The majority of fees are paid out of closing. However, lenders will require deposits and commitment fees to be paid in advance of closing. This covers out-of-pocket expenses and shows good faith on the part of the borrower.

Unlike banks that have employees, private lenders use third-party companies to perform the due diligence required to underwrite a commercial loan. They require the borrower to pay these expenses out of pocket. Private lenders often ask borrowers for a commitment fee as well, as a sign of good faith that the borrower actually intends to close the loan with them.

There are many fees associated with commercial real estate loans. This is sometimes a surprise to people who are only familiar with residential borrowing. Because we work with private lenders, they will usually require the borrower to pay some of these fees in advance of closing. This is because they must hire third-party sources that actually do the work—like an appraisal, a site inspection, a market analysis or an environmental report. In addition, all lenders charge origination points. These are usually paid at closing. In most cases, Sofia Capital Ventures is included in the lender’s points.

In commercial lending, interest rates are tied to a key rate like the prime lending rate or LIBOR, plus a risk premium. There are many factors that go into the interest rate that is offered for a commercial real estate loan. These factors reflect how risky the lender thinks this loan will be for them. They want to know how well the property is performing in terms of the income it generates for the owners. They also want to know that the borrower has some financial strength outside of the project or property. So the question is, what interest rate does your property qualify for.

We don’t give rate quotes. we can give you a general range of interest rates based on the type of loan the borrower is seeking and what loan programs are available. In order to get a rate quote we would have to see what the borrower qualifies for – fill out the Intake Form.


5 Easy Steps to Getting Financing

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