What property types does Legis Commercial Capital fund?
We fund most commercial property types including multi-use, (office, retail, industrial, warehouse) and special-use, (hospitality, etc…), utilizing the SBA 7a, 504, or USDA B&I programs. We can also consider investment properties, as detailed below.
What type of investment properties will Legis Commercial Capital consider?
Investment properties do not qualify under SBA 7a or 504 guidelines, but investment properties are eligible under the USDA B&I program. To qualify, the property must be in a rural area as determined by USDA criteria. In addition, we can consider conventional investor property loan requests at a maximum LTV of 50%.
Submitting a Loan and Underwriting
What is needed to start the process of submitting a loan to Legis Commercial Capital?
Please CLICK HERE to see our preliminary requirements.
Who pulls the credit report?
If you have a access to a current credit report you may submit it with the file. However, upon final underwriting, Legis Commercial Capital will need to pull an additional one. The minimum required FICO score is 680.
What are the minimum cash ﬂow requirements?
It depends on the type of property and business but typically annual cash flow needs to be a minimum of 1.25x to 1.40x the proposed debt.
Appraisals and Environmental Reports
Will Legis Commercial Capital accept an existing appraisal?
Existing appraisals are generally not accepted due to their age or purpose of the report, (such as being prepared for the borrower or a broker instead of a lender). If the appraisal was completed within the last six months, the report can be submitted for review, and a determination will be made on a case-by-case basis.
Is the appraisal fee refundable if the collateral is undervalued?
No, the fee is not refundable as the report is performed by a third party. If the value isn’t there, Legis Commercial Capital will determine what other options are available to facilitate the ability to close the transaction.
How does the appraisal process work?
After we receive a signed Conditional Loan Commitment, (CLC), from the borrower and the required expense deposit, we will engage the appraiser. The appraisal generally takes 3 to 4 weeks to complete.
Can I engage my own appraiser?
No. All Third Party Reports, including the appraisal, that will be used in credit decisions must be engaged by Legis Commercial Capital.
Will I receive a copy of the appraisal report?
Yes. Copies of all the third party reports, including the appraisal report, will be provided to the borrower at the time of closing or shortly thereafter.
Does Legis Commercial Capital require an environmental report?
Typically a Phase 1 environmental report is required, but the requirement varies by loan program and transaction type. In some cases, we are able to use a less expensive report, such as a Transaction Screen Analysis.
Who orders the title policy?
Legis Commercial Capital prefers to order title because it enables us to manage the process efficiently. We have relationships with title companies who understand the endorsements we require and are responsive to our needs. If title has already been ordered, we will work with you to ensure there are no problems.
Borrowers, OCs, EPCs
Do all loans require a personal guaranty?
Personal guaranties are required for any individual owning 20% or more of the borrowing entity.
Who will be required to sign on the loan?
Any Operating Company (OC) and/or Eligible Passive Company (EPC) involved in the transaction will be required to provide its authorized signature. Most of our loan programs require full recourse to the principals, (usually defined as any person owning a more than 15%). In cases where there is a minority partner providing the majority of capital for the project, the minority partner may be required to provide their guaranty too.
What is an OC?
The OC is the Operating Company, which is a business owned by the borrower that will occupy the property.
What is an EPC?
EPC is the Eligible Passive Company that will hold title to the real estate and collect rent from the OC and other tenants (as applicable). An EPC should be a single asset entity.
What are your insurance requirements?
With most of our loan programs, fire, flood, and extended coverage insurance for the maximum insurable amount is required. Additional requirements may apply on a case by case basis, depending upon the loan program. Full replacement cost coverage for SBA loans is required. Legis can work with your insurance agent to facilitate the proper coverage.
What is an “Afﬁliate”?
An afﬁliate is any business entity in which the Borrower or Guarantor has a 20% or more ownership interest but is not involved in the transaction. Financial information, such as tax returns and ﬁnancial statements, should be provided for any afﬁliate along with a breakdown of ownership.
What is a CDC?
A CDC is a Certiﬁed Development Company that is authorized to do business with the Small Business Administration (SBA). CDC involvement is required on all SBA 504 loan requests.
How long does it take to close a commercial loan?
Timeframes vary depending on the loan program selected and the degree of cooperation from the Borrower in providing the required documents. Also keep in mind that the appraisal report will typically take 3 to 4 weeks to complete. A typical conventional loan may close in about 30 days if all requested documentation is provided within 10 business days of the issuance of the CLC. SBA 504 loanrequests are a minimum of 45 days.