Bank debt provides the option for flexible lending on different asset types. Banks have lower up front restrictions and put more significance on the Pro-Forma and the guarantor’s financial strength. Due to their being a wide variety of banks and niches that banks operate in, their terms and rates can vary widely. Having a relationship with multiple banks or with an intermediary that can connect you with a quality bank is vital.

Common Terms

Loan Amount: Under $10MM (larger amounts considered on a case by case basis)
Term: 5-10 years
Interest Only: 0-18 months
Amortization: 20-25 years
Loan to Value: Up to 80%
Loan to Cost: Up to 80%
Pricing: Based on various indexes (WSJP, LIBOR, US Treasury)
Occupancy: No occupancy restrictions
Recourse: Full Recourse
DSCR Requirement: Pro-Forma of a 1.20x or 1.25x DSCR depending on appetite of the bank.

Exit Options:
Assumption: Assumption options vary
Supplemental Debt: Available 12 months from date of closing of first loan
Pre Payment: Varies depending on market