What sponsors ask before they call

Three tests are run and the smallest answer wins: the loan-to-value cap on the appraised value, the loan the property’s income supports at the minimum coverage ratio, and the loan implied by the minimum debt yield. Whichever is smallest is the loan. The sizing calculator on this site shows all three at once and names the binding one.

Debt yield is net operating income divided by the loan amount. It is the only sizing test that ignores both the interest rate and the appraisal, so it is a lender’s answer to the question "what if the value is wrong and rates move?" At a 10% floor, a property with $500,000 of NOI supports $5,000,000 of debt regardless of what it appraises for.

A residential lender divides your debts by your income. A commercial lender divides the property’s net operating income by the annual debt service. Your personal income is relevant to the guarantee, not to the sizing.

Usually not. Most lenders test coverage on the amortising payment even when the loan pays interest-only for the first years, so the loan size is the same and the early cash flow is higher. Some lenders will size on the interest-only constant at low leverage; that is a negotiated point, not a default.

The payment is calculated on the long clock and the loan is due on the short one. At the maturity date the remaining balance — the balloon — is payable in full. On a 30-year amortisation with a 10-year term, roughly 80% of the original principal is still outstanding at maturity.

A charge for retiring the loan early. Step-down declines each year, typically 5-4-3-2-1 percent of the balance. Yield maintenance makes the lender whole on the interest it expected. Defeasance replaces the loan’s cash flow with purchased securities and is the most expensive to unwind. Which applies depends on the capital source, not on the property.

Sometimes. Non-recourse is common on stabilised institutional-quality assets at moderate leverage and always carries "bad boy" carve-outs — fraud, waste, unpermitted transfers and voluntary bankruptcy remain personally recourse. SBA loans are never non-recourse.

Typically tax and insurance escrows, a replacement reserve on multifamily, and on retail and office a tenant-improvement and leasing-commission reserve sized against the rollover schedule. Reserves are deducted from net operating income before coverage is tested, so they reduce the loan as well as the cash flow.

For a stabilised property: trailing twelve months of operating statements, a current rent roll, the last two years of financials, a purchase contract or existing debt statement, and a sponsor summary. For construction: a budget, a schedule, plans and the contractor’s information. The intake form on this site collects exactly that list — and, being a demonstration, does not transmit it anywhere.

This site publishes no closing-time figure, because any number here would be invented. What is true generally: third-party reports — appraisal, environmental, property condition — sit on the critical path of nearly every commercial closing, and they are ordered after a term sheet is signed, not before.

Yes. The lender orders it from an independent appraiser, the borrower pays for it, and neither party may influence the value conclusion. An appraisal that comes in below contract changes the loan-to-value test and therefore may change the loan.

A term sheet sets out proposed structure, pricing and conditions. It is not a commitment to lend. A commitment follows completed underwriting, satisfactory third-party reports and credit approval.

At five units. One to four units is underwritten residentially against the borrower’s income, whatever the borrower calls it. Five and above is underwritten against the property’s income.

If your business will occupy more than half of it, the SBA programmes are usually the better structure — the equity injection is far smaller. The occupancy test is 51% of rentable area for an existing building and 60% at occupancy for new construction, rising to 80% over ten years.

By component. The residential income and the commercial income are underwritten to their own standards, then blended by weight. A building that is 70% apartments by income underwrites much closer to multifamily than to retail.

No. Chordline Commercial Capital is a fictional company invented to present a website template. It has no licence, no NMLS identifier, no capital, no staff and no telephone that rings. Every rate, term, figure and deal on this site is illustrative sample content.

The form validates what you typed and shows a confirmation on screen. Nothing is stored, nothing is transmitted, and nobody receives it. On a real deployment of this template a single submit handler is the only thing that changes.

The arithmetic is correct and is worth using to understand how the constraints interact. The default rates and floors are illustrative figures chosen to be plausible, not live pricing. Nothing on this site is a quote.