03No programme, no ceiling
Conventional owner-user mortgage
A straight commercial mortgage on the building your business occupies, held by a bank, a credit union or an insurance company. Fewer moving parts than an SBA structure, more equity, and no programme rules to satisfy.
The capital stack
- Owner equity30%
- First mortgage70%
Terms
What this programme actually looks like
- Typical leverage
- 65% to 75% of the lower of price or appraised value
- Amortisation
- 20 to 25 years
- Term
- 5, 7 or 10 years, then a balloon — the mismatch is normal and must be planned for
- Coverage
- Underwritten on business cash flow, commonly at 1.20× to 1.35× on a stressed rate
- Prepayment
- Step-down or yield maintenance; it is negotiable and it is worth negotiating
- Realistic timeline
- 30 to 55 days
Illustrative only. Bollard is a fictional business built as a website demonstration — the figures below are worked examples, not an offer, a quote or a rate sheet.
Fit
When it is right, and when it is not
A lender that only publishes the first list is selling. Both lists below are the same length in real life.
The right instrument when
- You have the equity and you would rather not carry SBA fees or reporting.
- The project is larger than the SBA ceilings allow.
- Speed matters more than leverage.
- The building is generic enough that a lender will treat it as real collateral rather than a special-purpose box.
The wrong instrument when
- Every spare dollar is working inside the business. Twenty-five to thirty-five percent down is a lot of dead capital.
- You want a twenty-five year fixed rate. Conventional commercial paper reprices at the balloon, and that risk sits with you.
Underwriting
What gets looked at, in what order
- 01
Debt service coverage
The single number that decides the size of the loan for most lenders, usually tested at a rate above the note rate.
- 02
The balloon, named early
A ten-year term on a twenty-five year schedule leaves roughly three-quarters of the balance outstanding at maturity. Knowing that figure at closing is the point of the amortisation calculator.
- 03
Guarantees
Expect a full recourse guarantee at this size. Burn-off provisions exist and are worth asking for in writing.
Worked example
Worked example — 11,000 sq ft medical suite
- Purchase price
- $1,850,000
- Loan at 70% LTV
- $1,295,000
- Owner equity
- $555,000
- Amortisation
- 25 years
- Term
- 7 years, then a balloon
- Balance at maturity
- roughly 84% of the original loan
A worked example at illustrative terms. The balloon share depends on the rate — the amortisation calculator shows yours.
Questions
What people ask about this programme
Why would I choose this over a 504?
Speed, size, and the absence of programme conditions. If the equity is not painful, a conventional loan closes faster and reports less.
What is a debt yield and why does the lender keep saying it?
Net operating income divided by the loan amount. It sizes a loan without reference to a rate or an appraisal, which is why lenders reach for it when either of those looks generous.
Next bay
Tell us about the building
A twenty-minute conversation is usually enough to know whether a deal works, which programme fits, and what your equity actually supports.
Or call the desk
(816) 555-0142Monday to Friday, 8am – 6pm Central
A demonstration number in the range reserved for fiction. It does not ring anywhere.