We are a diversified commercial lending advisory with a vast network of almost 70 bank and non-bank lenders as financial partners, not to mention a highly experienced support team. Some of our lenders are quite conventional – others are more cutting edge, use innovative technologies, and offer exciting new lending products. And together, we are committed to getting the deal done based on ethical, principled practices in all business dealings.
At Pendleton Financing, we are about transparency and integrity. Our mission is simply to help people realize their business dreams. We walk you through the often-confusing world of business lending and make recommendations for the type(s) of funding you need. Our job is to listen, gather your information, analyze your specific needs, and devise a plan before targeting specific partners to whom we will present your loan request package.
The lending world is constantly evolving. Even seasoned businesspeople don’t often know what kind of loan they need, nor that they can often combine different loan products to start or grow their business.
For example, did you know that you can 1) Get an SBA loan, 2) Use your qualifying retirement funds without penalty as a down payment, AND 3) Obtain an unsecured business line of credit?
Bounce your business ideas off us because you may be unaware of the options you have right now in order to grow your business or get through a rough patch.
Nothing. It costs no more to do business with us than it does to go directly to a bank. Probably less in total costs since we present you with more options. A lot more.
With us, there are no hidden fees, no extra commissions, nothing. It’s similar to using a buyer’s agent when looking to buy a home. The seller’s agent simply splits his commission with the buyer’s agent – but the price you pay for the house doesn’t go up.
In addition to a solid educational background (a BA and 2 Master’s degrees, one in business), Eric Pendleton has almost seven years formal commercial lending experience, several years of real estate sales, five years of credit analysis experience, and several decades’ experience operating a small, family business. (See About Us for additional information.)
Plus, we have almost 70 financial partners, not to mention, a super support team with 75 years combined commercial lending experience (who are also direct lenders). We are proud of our services and we are proud of our entire team!
The most important step is to contact us. (If you have done so already, thank you!) Our first step is to speak on the phone to discuss in detail your need for business funds. We will review your options with you and start weighing your specific situation in order to find a tailored financing solution for your specific needs. We will summarize our conversation via email and include a list of items to start gathering. Our goal is to build a solid business case for you, which we will present in the best light to our financial partners.
What kind of information/documentation will I need to provide?
In general, for larger, transactions (purchasing commercial real estate or acquiring a business), we will need:
- An Executive Summary (and/or your business plan)
- Business financials (3 years’ tax returns)
- 3 years’ personal tax returns (of all guarantors)
- Interim P&L / Balance Sheet
- Personal Financial Statements (PFS) for each guarantor
- Business Schedule of Liabilities
- Credit report with FICO score
Do I always need to provide so much documentation?
No. Some loans require minimal documentation, can be approved in minutes, and you can receive the funds within days (see our Unsecured Business Lines of Credit option).
In many cases, it will be helpful to have your (management) resume on hand. Even if you’re purchasing a business in an industry with no direct experience in that area, knowing your educational background and what translatable experience you have will only help you make your case to lenders. Look to our Forms & Applications page for the PFS with resume, which you can download and fill out, or just use as a guide.
The quicker you can gather the information requested and provide clear and logical explanations for any hiccups in your file, the quicker we will be able to properly package that information and present it to our financial partners.
Depending on the type and size of the loan, our partners will make an initial decision to move forward with a more formal process, usually requiring completing an official loan application and providing additional information.
This depends on many variables. What does your financial profile look like? How much collateral do you have? How much of a downpayment will you make? What other assets do you have to secure the loan? Once we have answers to these questions, we can begin to evaluate the type of loan product(s) do you need. What you qualify for also depends on how much money a business or a commercial property generates in revenues.
Owner-occupied properties borrowing ability will be heavily depend on the business’ cash-flow and ability to repay debt. Once we calculate the company’s historical cash-flow, we will need to add the property’s debt load. For investment properties, we have specific guidelines and tools that will help you get an idea of how much you can borrow against the subject property.
Lenders simply weigh risk through industry factors in their comfort zone, with your ability to pay back the loan (based on your personal credit history and net worth), as well as your project’s demonstrated ability to provide the funds necessary to do so.
That is a difficult question to answer as it depends on the type of loan you need, the market, and how much you will qualify for. However, here is a list of market rates* (as of Q3 2019) for a few different types of loans:
- Conventional Loan Rates: 3.046% – 5.046%
- CMBS Rates: 3.110% – 4.690%
- SBA 504 Rates: 3.400% – 3.590%
- SBA 7a Rates: 4.000% – 7.000%
- Bridge Rates: 6.046% – 12.046%
- Construction Rates: 6.046% – 10.046%
- Mezzanine Rates: 8.000%%+
|Conventional Commercial Loan Rates|
|Fixed Rate*||Floating Rate||Max LTV||Max Amortization|
|3||3.220% – 4.070%||3.046% – 4.046%||85% – Owner-Occupied / 75% – Investment||30 Years|
|5||3.220% – 4.070%||3.046% – 4.046%||85% – Owner-Occupied / 75% – Investment||30 Years|
|7||3.300% – 4.150%||3.046% – 4.546%||85% – Owner-Occupied / 75% – Investment||30 Years|
|10||3.400% – 4.250%||3.046% – 5.046%||85% – Owner-Occupied / 75% – Investment||30 Years|
|15||3.750% – 4.750%||3.046% – 5.046%||85% – Owner-Occupied / 75% – Investment||15 Years|
*The above rates are subject to change and are dependent on fluctuating market factors and your qualifications as a borrower. We try to update these rates regularly.
Our rates are as competitive as any other lender – if not better, since we have so many fantastic lending partners. Contact us today and we will look at the rates for your specific loan.
While many banks do indeed help many businesses get funding, statistically, most business loans are turned down by banks. While we partner with a number of banks – and we provide conventional loans with traditional bank lenders – we also have partners in the alternate lending world, which is where the majority of business loans happen.
Why do banks turn down most business loans? Any one of the following factors contribute to the high rate of bank turn-downs: poor credit, weak cash flow, limited collateral, lack of preparation on the business side.
On the bank side, heavy regulations, low familiarity level with niche industries and specialized businesses, businesses that are notoriously risky, such as restaurants.
What if you have a solid credit score, strong cash flow, collateral and have prepared everything you need for loan, but are still turned down? It could be no fault of your own. It may just be outside conditions that are out of your control. As stated in this Entrepreneur article:
“Outside influences are always considered prior to a loan approval or decline,” says Diane Roehrig, president of Alacom Finance. “They can include industry experience (do you have the work background to manage your own business), a business’s location, local or regional economic trends, competitors.” (The article is a few years old, but the situation has not changed.)
The fact that Pendleton Financing has so many different funding sources increases a business’s chance of obtaining funds. And since we offer both traditional and new, innovative products these can be combined in a variety of ways to meet *almost any business’s specific needs.
*Except industries such as, gambling, cannabis, pornography, strip clubs, firearms, tobacco, political campaigns, etc.
Additionally, many of our lenders are highly specialized, so they are more comfortable lending to certain industries (e.g., restaurants), which are commonly turned down by banks.
We can also work in partnership with your bank to offer you additional products.
For example, if you don’t have the cash for a down payment but have at least $50,000 in qualified retirement funds, it might make sense to take advantage of a terrific product we have where you can use those funds as a non-debt cash injection without penalty. We have a number of creative solutions that benefit our clients. Contact us for details.
Generally speaking, we will need the property’s address, (2-3 years) operating statements and year-to-date, rent rolls, current pictures, as well as a personal financial statement (PFS) for all Principals. For owner-occupied properties, you should have PFS, your last 3 years corporate and personal tax returns and current pictures of the property.
The optimum requirements for commercial real estate (CRE) are as follows: Borrower’s Net Worth (personal and business) aka Global Net Worth should be equal or higher than the loan amount requested. Borrower should have post-closing liquidity equal or superior to 6 months to service debt or 10% of the loan amount. Prior ownership experience is highly desirable. It is important to note that these should be taken only as general guidelines as these can vary from lender to lender.
Investment Property Checklist
- Property Operating Statements for Trailing Three Years and Year-to-Date.
- Property Rent Rolls
- Personal Financial Statement for All Principals and Resume.
First, Debt Service is an entity’s ability to pay off a loan. It is a metric used by lenders to determine a borrowers’ risk level.
Debt Service Coverage Ratio (DSCR) is defined as Net Operating Income (NOI) divided by total debt service. For example, suppose the NOI is $120,000 per year and total debt service is $100,000 per year. In this example, it could be shown as “1.20x”, which indicates that NOI covers debt service 1.2 times.
Lenders want to see that you can easily pay your debts while still generating enough income to cover any cash flow fluctuations. However, each lender has its own minimum required debt service coverage ratio.
In general, a good DSCR is 1.25. A higher ratio makes it easier to obtain a loan as it is more attractive (i.e., less risky) to the lender.
Residential properties (i.e., single-family dwellings with 4 units or less) usually have much lower interest rates available than commercial properties. Additionally, the term and amortization typically match on a residential loan (i.e., 30/30), whereas the term of a commercial loan is usually shorter than the amortization (i.e., 7/25), causing the borrower to have to refinance or pay off the loan (or sell the property) at or before the end of the loan term.
Commercial interest rates may be calculated a variety of ways depending on the lender’s internal cost of funds. However, the most common way a lender calculates an interest rate is by taking an index (i.e., LIBOR, treasury, swaps, FHLB, etc.) and adding a “spread” to that index, which is what the lender is making off of the loan. For instance, if the lender is pricing at LIBOR (currently at 2.046 + 2.00%), your interest rate would be 4.046%.
Practically all large corporations use Accounts Receivable financing (an Asset-Based Lending type of financing, also called Factoring). Most large corporations do it because it makes sense to obtain working capital immediately.
- Factoring or A/R financing is a cash flow tool that allows you to use your accounts receivable as an asset to ensure the growth of your business, without diluting your existing equity or incurring additional debt.
- It is an effective way to turn your accounts receivable into immediate cash, which you can use any way you wish.
How is this beneficial to my business?
- The funds can be used for almost any business expense, such as increasing inventories, capital expenditures, taking advantage of supplier discounts, hiring additional staff, and expanding facilities.
- Accounts receivable financing frees your staff from onerous billing, collection, and administration chores while eliminating costly mailing fees.
- Our specialized A/R financing experts can take over the backroom operations for your credit and collections departments.
- Funds secured through a reliable factor will enable you to ensure your business achieves the growth it needs to flourish.
WHAT ARE THE ADVANTAGES OF FACTORING OVER BORROWING?
When you borrow:
Factoring is a great option. When you can Factor, the benefits far outweigh (most if not all) loans. So, when you borrow in this example, Lenders will secure cash and collateral equal to or more than the loan amount.
- You’ll have less flexibility
- You cannot secure additional funds without renegotiating the loan
- You must meet monthly payment obligations
- You incur additional debt further leveraging your business
When you factor:
- You don’t borrow money
- There are no monthly payments
- Mailing expenses and costs associated with follow-up management on accounts are eliminated
- It costs less than a loan (usually around 2.5%)
We can also set you up with Purchase Order Financing, which is another fantastic ABL product.
Probably not. While we have almost 70 fantastic different funding sources including some private investors, we can’t do that. No lender can. Most deals require a down payment in the form of cash and/or collateral to consider a deal. (If you have retirement funds but no cash, talk to us as we have an amazing product for you.)
Remember, while lending is a relationship-based industry, we are trying to convince a lender to part with their money – this is serious business. Borrowers need to offer some form of skin in the game – if you don’t have the down payment, find investors who can offer cash and/or collateral (not to mention good credit) as your business partner.
If you do bring a partner into a deal, make sure that you have an official, legal relationship in the form of a written contract with that person. This is not just to protect you, it is to help ensure the ongoing success of your joint business venture.
We are happy to recommend highly competent legal counsel who specialize in business. Please refer to our “Trusted Professionals” page and don’t hesitate to contact us for more detailed information.
- We are accredited with the Better Business Bureau (BBB Business ID: 528331) and must adhere to their Accreditation Requirements and Code of Conduct.
- We are members of the Greater Boston Chamber of Commerce.
- We were required to pass a number of background checks with our lenders, as well as with our partners (for pulling credit, etc.).
- We need to pass yearly inspections for computer and paper file security.
- Eric Pendleton is a licensed Massachusetts Real Estate Salesperson (license #9049181).
- We will gladly sign an NDA.
- Pendleton Financing is a dba for Pendleton Consulting, LLC (a Massachusetts entity).
- Additionally, we are graduates of the Commercial Capital Training Group (CCTG) business lending training program in Albany, NY. Please feel free to contact them if you need someone to vouch for us and our business model.
Especially if you’re even considering a loan to start or grow your business (or certainly, to survive), contact us today. Involve us early on in the process, since “You don’t know what you don’t know.” We will guide you through the deal and present you with options you may not even know existed.
Check out all the Financing Options we offer on this site and let us know what questions you have. When you work with us, we become your partner and advocate. We are available days and evenings 7 days a week to listen to your needs, answer your questions, and introduce you to financial options you may not even be aware of. We look forward to hearing from you and learning about your business!