90 LTV Commercial Loans Options and Alternatives

You're considering a 90 LTV commercial loan, which can be a great option for businesses looking to expand or refinance existing debt. A 90 LTV loan allows you to borrow up to 90% of your property's value.

The benefits of a 90 LTV commercial loan are numerous. You'll have access to a larger loan amount without having to tie up a lot of your own capital. This can be especially helpful for businesses with limited cash flow.

Some common 90 LTV commercial loan options include hard money loans, private money loans, and bridge loans. These types of loans are often used for short-term financing, such as renovating a property or covering unexpected expenses.

Hard money loans, for example, typically have shorter loan terms and higher interest rates than traditional commercial loans. They're often used for fix-and-flip projects or other short-term investments.

Commercial loan options are plentiful, but not all offer 90% LTV. HUD 221(d)(4) and 223(f) loans offer up to 90% LTV for multifamily properties.

These government-backed loans have their own set of requirements, with HUD 221(d)(4) loans starting at $4 million and 223(f) loans starting at $1 million. Loan terms can range from 35 to 40 years, with some programs offering up to 43 years of interest-only financing.

Some hard money lenders and private lenders also offer 90% LTV loans, often with higher interest rates and origination fees. They may require more intensive background checks and higher credit scores, but can offer more flexible loan structures and faster closing times.

For businesses looking to acquire property or equipment for non-owner occupied use, a mortgage can be a viable option. The loan amount can be up to $5 million for regular loans and $5.5 million for Public Policy Goal loans.

This type of loan is perfect for businesses that need to finance land and existing buildings, site improvements, building renovations, leasehold improvements, new construction, and machinery & equipment with a useful life of at least 10 years.

Interest rates are based on the sale of U.S. Treasury Bonds and change every month until the loan is disbursed. Once the loan has been disbursed, it then becomes fixed for the life of the loan, typically ranging from 6-6.5%.

To qualify for this loan, existing businesses must provide a minimum of 10% of the total project cost, while new businesses or new ownership of businesses must provide a minimum of 15%. If the project involves special use assets, an additional 5% will be required.

The loan term can be up to 25 years, and the loan to value ratio can be up to 90% of the appraised value. This means that you can finance up to 90% of the project at a long-term fixed rate, which can be beneficial for businesses looking to preserve working capital.

A leasehold improvement loan is a type of financing that can be used to cover alterations, renovations, and repairs to leased facilities that increase their value. This type of loan can be a game-changer for small businesses that need to make improvements to their leased space but don't have the funds to do so.

The first thing you'll need to do is establish collateral for the loan. Since the loan is for improvements to someone else's property, you won't be able to use the property itself as collateral. Instead, you'll need to look at other assets, such as equipment or other real estate property.

Leasehold improvement loans can be secured with a variety of collateral, including other business assets, equipment, and even personal assets like a home or investment property. The value and existing liens on these assets will play a big role in determining the loan's terms.

To qualify for a leasehold improvement loan, you'll need to obtain an Assignment of Lease and Landlord's Waiver. This document gives the lender access to the leased premises and allows them to liquidate the collateral in case of default. It's a crucial step in the loan process, and one that's often overlooked.

A leasehold improvement loan can be used to finance a wide range of improvements, including new equipment, renovations, and working capital. This type of loan can be a great option for businesses that need to make improvements to their leased space but don't have the funds to do so.

Leasehold improvement loans typically have a term of 5 to 7 years, depending on the scope of the project. Interest rates are usually fixed and will depend on the lender's assessment of the business's risk.

HUD 223(f) loans offer up to 90% LTV for properties utilizing the HUD Section 8 Housing Assistance Program (HAP).

These loans have a maximum loan amount of $100 million+, and start at $1 million, with some exceptions.

HUD 223(f) loans are fully assumable with a 1% fee and lender approval, making them a viable option for some borrowers.

Their fixed-rate, fully-amortizing, non-recourse loan terms can go up to 35 years, providing a stable financial foundation for investors.

HUD 221(d)(4) Loans offer up to 90% LTV for properties utilizing the HUD Section 8 program.

These loans have fixed-rate, fully-amortizing, non-recourse loan terms up to 40 years, including up to 3 years of interest-only multifamily construction financing.

The loan terms are quite flexible, with minimum DSCR requirements as low as 1.11x for Section 8 properties, 1.15x for affordable properties, and 1.18x for market-rate properties.

The loan amounts can be substantial, with a minimum of $4 million and an average loan of $15 million+.

The maximum loan amount is $100 million or more, making it a suitable option for larger projects.

The downside is that loan processing times can be lengthy, taking 6-12 months to close due to the required documentation.

However, thanks to HUD’s MAP program, loan processing times have sped up recently.

HUD 223(F) Loans are designed for purchasing or refinancing stabilized multifamily properties. They offer up to 90% LTV for properties utilizing the HUD Section 8 Housing Assistance Program (HAP).

These loans have fixed-rate, fully-amortizing, non-recourse loan terms up to 35 years. HUD 223(F) Loans are fully assumable with a 1% fee and lender approval.

The minimum loan amount for HUD 223(F) Loans is $1 million, with some exceptions, and the maximum loan amount is $100 million+.

Some hard money lenders and private lenders will finance properties up to 90% LTV, or even 100% LTV in some scenarios.

These loans may have higher interest rates, often close to 20%, and may include higher origination fees (5%+).

Higher leverage loans may involve more intensive background checks, higher credit scores, borrower net worth or income requirements, and higher minimum DSCR requirements.

They may also require additional third-party reports like appraisals or environmental assessments.

Some 90% LTV loans may be available for construction financing, and may even allow for additional loan proceeds to fund the construction process.

Hard money or private lenders may offer similar loan structures for non-multifamily commercial assets, such as industrial, office, and retail properties.