FinanceOptions.biz
Logo- Prosper Systems GIF Kenton H Johnson Prosper Systems  Home  •  Resume  •  Brief (Refer and Participate)  •  CRE Due Diligence (Checklist)  •  Inexpensive Consulting (includes Vetted Investors)  •  Group (Join)  •  Blog (Follow by eMail)  •  Development & Finance (CCCC)  •  Buying/Selling (Large Projects/Assets)  •  FREE Overview REVIEW  •  Project Services  •  Referral Income (to 20%)  •  PS Introduction (for info / referrals)  •  Schedule a Call (with Video options)  •  Contact Us

Finance Options - Debt and Equity
FREE Informational LIST
Focusing on Commercial Real Estate (CRE) based Businesses & their Technologies

"We Consult on ALL these options, and Structure, help Prepare then Deliver to the BEST Financial Resources."

LUCRATIVE REFERRAL PROGRAM.

   SCHEDULE a Complimentary FINANCING CONSULTATION  

Table of Contents

  1. Sources
  2. Specialties
  3. Types
  4. Other Sources
  5. Costs
  6. LTV/C
  7. Duration
  8. Buying Businesses
  9. Submittal Requirements
  10. More
  11. Contact Info
 

Sources
  • Conventional Banks
  • Community Banks
  • Credit Unions
  • Non-Bank Lenders
  • Alternative Lenders
  • Bridge Lenders
  • Agency (CDC/SBA, HUD, FHA, FIRREA, FNMA, FHLMC, GNMA, PACE)
    • –––––––––––– Include Equity ––––––––––––                    
  • Pre-Seed
  • Angel
  • Venture
  • Friends and Family
  • Crowd Funding
  • Corporate
  • Retirement Accounts
  • Local Family Offices
  • Insurance Companies
  • Pension Funds
  • Incubators
  • Community Collaboratives
  • Private Money
  • High-Net-Worth Individuals
  • Private Individuals
    •  

Specialties

  • Cash-Flow Lenders
  • Equipment Lenders
  • Vehicle Lenders
  • Single-Family Lenders
  • Commercial-Only Lenders
  • Hard-Money Lenders

    • ↑

Types

  • Conventional (50%-90% Loan to Value, LTV - or Cost, LTC)

  • Small Business Administration (SBA - up to 90% LTV or LTC on Commercial Real Estate or general business development; good interest rates).

  • Housing and Urban Development / Federal Housing Authority (HUD/FHA insured - multifamily - health care, elderly, special needs - several, complex programs)

  • Second (remaining 10%-35% LTV or LTC; higher interest rate; though most CRE lenders don't like to or are not allowed to take or work with a second position)

  • Using Investment Capital for the 10%-30% loan down payments, optimizes your profit perspective - Contact Us for the most-lucrative solutions

  • NEW: Factoring Invoices / AR & Payroll Financing (up to 97%, as an Operating Expense vs Debt)

  • Lines of Credit
    • Revolving Seconds on home or assets; higher interest rate than fixed
    • Under $30K; community banks and credit unions; unsecured, no/low documentation; higher interest rate after promo period
    • Under $300K; services available to float one application to several lenders; some focus on those using the same higher credit bureau reducing inquiry hits; about 10% fee from proceeds; higher interest rate after promo period
    • Note: 0%-interest promotional credit cards are available - but may accrue interest - and normally charge double-digit interest on balance after 0% term

  • Participation Note (allows pre-defined, discounted equity purchases after completely paid off)

  • Syndicated Loan (combines sources to reduce risk,or for very large loans)

  • Hard Money (loan based on asset value versus individual credit history; short term; higher interest rate)

  • Syndication (Equity investment as a Limited Partner [LP], an Active, General Partner / Sponsor [GP], or a Key / Lead Partner / Guarantor [KP])

  • Mezzanine (lender can convert to an equity interest in case of default, subordinate to senior lenders; higher interest rate)

  • Convertible Note (considered an equity play)

  • CrowdFunding (many, often small, contributors / investors, generally through an online portal)
    • Debt or Equity - equity portals require SEC registration
    • Donation or pre-purchase of products or services

  • Contact Us for creative combinations to accomplish 100% financing

"We Consult on ALL these options, and Structure, help Prepare then Deliver to the BEST Financial Resources."
LUCRATIVE REFERRAL PROGRAM.

SCHEDULE a Complimentary FINANCING CONSULTATION

↑

Other Sources

  • Suppliers (who profit from your existence or growth)

  • Customers
    • Give a discount for a year for upfront cash
    • Commit to a subscription model for a year
    • Government contract with big payment up front

  • Grants (Government, Veteran Benefit, Non-Profit, ...)

  • Sponsorships (for sponsors' exposure on buildings/vehicles/marketing/websites, at events, ...)

  • Government Programs that fit into local/national leadership agendas

  • Owner Carry
    • Seller finances the Buyer
    • 1-2 years to launch project or business
    • Longer if mutually beneficial
    • The note can be sold for the lump sum Seller may need or prefer

  • Loan Assumptions

  • Public Offerings - Initial and Subsequent

    • ↑

Costs - approximate

  • Interest
    • Fed Rate + 3% or more (currently 7.5% - 13%)
    • Higher for "hard-money" and high-risk loans
    • Possible adjustment proportional to the Loan-to-Value (LTV) Ratio and Duration
    • Possible buy down with added points (paid by borrower or seller, mainly for cash flow and taxes, since the IRR over 5 years is about 1% reducing 7% interest down 0.25% at a cost of 1 point; about 2% IRR at 10 years; includes additional pricipal reduction)

  • Fees - not all levied
    • Initiation/Consulting - 1-3%, if needed, minimum $2000
    • Origination - 1-3%
    • Bank Participation (SBA) - 0.5%
    • Total - 1-7%
    • Obtain estimate as early as possible
    • Possible negotiation based on volume and intermediaries

  • Pass-Throughs
    • Business Credit Report
    • Verifications
    • Appraisal
    • Survey
    • Title
    • Recording
    • Inspection
    • Travel
    • Permits
    • Legal - 0.05%, minimum $2000
    • Environmental Site Assessments
    • Negotiated Code/Habitability Maintenance

  • At Closing
    • Down Payment
    • Property Taxes
    • Prorated Interest
    • Liens
    • Balance of Current Loan(s)
    • 6-12 months of interst (high-risk loans)

    ↑

Loan-to-Value (LTV) and Loan-to-Cost (LTC) - approximate

  • Normal
    • 50% - 80%
    • Based on current or after-updated / repair / rehab value

  • Government
    • Up to 90%
    • SBA, HUD/FHA

  • Refinance
    • Up to 100%
    • Conventional, Private, Government
     
Duration (Term)
  • Interest-only or Construction, up to 2 years

  • 5-25 years, though may amortize for longer
    •  
Buying Businesses
  • Set up Lenders in advance based on the collateral to be acquired

  • Be their salesman or consultant for equity and subsistence compensation until you own the company
    • Start implementing your growth policies in advance
    • You'll also learn quickly if you want the company

  • Other options
    • Owner Carry
    • Profit Participation

  • Build relationship so Seller wants you at the helm, not an impersonal Buyer from a different region or culture

  • Preparation
    • Coordinate clearly with key employees
    • Seller could finance equipment, real estate, cash-flow, etc to maximum - loans assumed on purchase

↑

Submittal Requirements - not all requested by each Source - We Sequence, Streamline and Optimize Applications

  • Project

    • Name
    • Powerful Description (one paragraph, include remainder)
      –––––– optionals and possible additions follow ––––––
    • Location
    • Govt Approvals (permits, planning commission, etc)
    • Franchise (disclosure documents)

  • Request

    • Purpose (acquisition - full/partial, refinance, cash out; asset, business)
    • Amount (us$)
    • Down Payment (us$, max)
    • APR (maximum / best available; fixed or floating)
    • Minimum LTV (or LTC)
      –––––– optionals and possible additions follow ––––––
    • Other Lenders in play (such as current bank)
    • Other lenders turned down by Client or Lender
    • Owner carry (% range; agreement)
    • Company Name (with Inc, Ltd, Sub-S, LLC, Partnership, etc; registration state)
    • Term (years)
    • Use of Funds (RE, technology upgrades, construction costs, equipment, cash out etc; schedule, by year)

    Make sure all documents are signed (as appropriate)

  • Business Documents (attachment or online link)

    • Overview (condensed Executive Summary - Mission, Market, Mgt Team, Money - financial projections) Reviewed, No Charge/Obligation
      –––––– optionals and possible additions follow ––––––
    • Executive Summary (condensed Business Plan)
    • Pitch Deck (PPT or PDF with video or script; 10 slides of Executive Summary, to be presented in 20 minutes, in 30-point type)
    • Business Plan
    • Private Placement Memorandum (for Equity only, based on Business Plan)

  • Financials (entry, attachment or online link)

    • Profit and Loss statement (2024 YTD; if 2023 tax returns not filed, 2023 P&L; YTD and P&L certified by licensed accountant)
    • Balance Sheet (<90 days old, better <30 days)
    • Debt Schedule (business; current)
    • Financial Projections (_____ years, minimum 3, if not in Overview)
      –––––– optionals and possible additions follow ––––––
    • Sales Tax Rates (if any sales income)
    • Bank (checking, savings, retirement)
    • Tenant financial statements (single-tenant properties)
    • Invested to date (us$M)
    • Planning to invest in future (us$M)
    • Income (last 2-3 years; business and personal with 20%+ interest)
    • Tax Returns (last 2-3 years; business and personal with 20%+ interest)
    • Operating statements (3 years)
    • Check DSCR (NOI / Debt Service; minimum 1.2 to be safe)

  • Sponsor (duplicate for each individual or entity with 20%+ interest)

    • Full Name (with title in company)
    • Credit Rating (personal/business; source; actual/estimate)
    • Bio/Resume (for new ventures)
    • Service Address (if not in Bio/Resume; rent or own)
    • Citizenship
      –––––– optionals and possible additions follow ––––––
    • IRS Issues
    • Mortgage Lates
    • Felony Convictions
    • Last IRS filing (year; filed regularly)
    • Other Investment / Rental Properties / Assets
    • Liquidity (us$ or % immediately available, to be verified by Bank Statements)
    • Industry background (properties/businesses owned/managed, etc.)
    • Foreclosures, bankruptcies, criminal issues (explanation)
    • Net Worth (us$M)
    • Corporate Tax ID
    • Passport
    • Accept recourse (full or partial)

      • We Sequence, Streamline and Optimize Applications

  • Collateral (duplicate for each; make entry, attachment or online link)

    • Type (RE, vehicle, equipment, patent, precious metals, gems)
    • Other Collateral (for down payment, increase LTV or reduce interest; Type, Location, Value)
    • Address (include county)
    • Estimated value (source; appraisal)
    • Year (built, last renovated)
    • Size (square feet / units)
      –––––– optionals and possible additions follow ––––––
    • Purchase price
    • Date of purchase
    • Mortgage/Lien balances (statements and amortization schedules)
    • Seasoning complete (if not, date)
    • Pictures (number to sequence)
    • Insurance policies (fire, theft, flood, loss, liability, etc)
    • Other information (enhance value, clarifications)

  • Real-Estate-Specific Collateral (personal, commercial)

    • New Purchase (LOI, Agreement, Contract)
    • Zoning (Residential, Commercial, Mixed, Other - specify)
    • Owner occupied (%)
    • Occupancy (total %)
    • Tenants (individuals, business & type, government subsidized, etc)
    • Total Income (rents, vending, etc; annual)
    • Total Expenses (taxes, insurance, maintenance, utilities, management, maintenance reserve, etc; annual)
    • Net Operating Income (NOI - Income less Expenses; annual)
      –––––– optionals and possible additions follow ––––––
    • Rent Roll (if tenant occupied; include extension/termination options, rent steps)
    • Taxes (annual)
    • Insurances (annual)
    • Owners' Association (annual)
    • Rent to Family Members (%)
    • Historical occupancy (3 years)
    • Historical sales per square foot (retail properties, 3 years)

  • Startups (if in business for less than 12 months; special category and documentation requirements)

    • Business Type (real estate, technology, product, etc)
    • Business Documents (see Documentation above)
    • Location (virtual, home, office, facility; base address)
    • Initial Funding (LOCs, credit cards, 2nd mortgages, F&F, suppliers, customers, associates, notes, seed, etc)
    • Legal Structure (sole, partnership, LLC, Sub-S, C-Corp, non-profit)
    • Trade Name
    • Govt Approvals (zoning, permits/registrations/licenses)
    • Patents (submitted, approved)
      –––––– optionals and possible additions follow ––––––
    • Initial Costs (inventory, deposits, equipment, real estate, office setup, accounting, hiring, etc)
    • Business Costs (space, marketing, total payroll, prof services, insurances, vehicle, maintenances, travel, etc)
    • Payroll Registrations (W2, 1099, work comp, disability; local, state, fed)
    • Payroll Compliance (employees, independent contractors)
    • Insurances (officers, fire, vehicle, liability, etc)
    • Accounting System (method, software)
    • Tax Identification
    • Personal Income Requirements (years 1, 2, 3-5)
    • Professionals (attorney, accountant, bookkeeper, consultants)
    • Groups (LinkedIn, Facebook, Meetup, clubs, chambers)

    ↑

More

PROSPER SYSTEMS (.biz)  •  Kenton H Johnson (.com), Founder
 •  PS Introduction  •  Resume  •  Brief (for Referring & Participation)  •  CRE Due Diligence (Checklist)
 •  Inexpensive Consulting (includes one vetted investor per month retained)
 •  Group (Join)  •  Development & Finance  •  Sales  •  Project Services  •  LinkedIn Profile  •  LinkedIn Company Page
 •  Lucrative Referrals Request (to 20%)  •  Rocket Your Startup 2.0™  •  Finance Options (Debt/Equity)

Schedule a Call or Mtg (9am - 7pm USA Mtn Time, by Video Conference, Your System or In Person)

Copyright © 2018-2025, Prosper Systems, Denver CO USA. All rights reserved. Latest update, 1/11/2025, KHJ