Restaurant owners have limited options for commercial mortgages, relative to other businesses and building types. One of the most common options is the SBA loans. Although not perfect, they can be a viable option. For one, they are still reliable and are still closing. Two, they do offer some of the lowest fixed rates available and the highest level of financing for restaurant loans.Interest rates for restaurant loans are currently in the mid 6%’s to mid 7%’s depending on the particulars of the transaction. Combine that with 85% financing on purchases AND 85% financing on refinances and it is easy to see why the SBA has had such a huge impact on American Small Businesses.Compare that to traditional bank financing, rates are about the same, but you would have to come out of pocket 30-40% of the purchase price. Refinance financing is more limited and harder to close and loan to values are normally capped at 50-60% as well. Again with the SBA programs you can go up to 85% loan to value on refinances on restaurant loans.The SBA programs have received a lot of criticism over the years, some of it warranted, some of it not. One of the biggest complaints is the time frame and bureaucratic process. A key to avoiding the long delays is to work only with PLP lenders. If you do not your loan will have to be underwritten and approved twice, once by the funding bank and secondly by the SBA. If you work with a PLP lender the loan will only have to be underwritten once, and you will avoid at least one month of delays. It is common to close SBA loans in 60 days which is right in line with all commercial loans.Another major criticism is that the fees are excessive. The SBA 7a loan normally has a 2.75% front end “SBA Guarantee Fee” and the 504 has a 2.5% fee for its half of the loan. However it is important to realize that not all lenders and the way they structure deals are the same. For example we work with a bank that will absorb/pays for this fee for the borrower. So the borrower gets all of the benefits of a long term fixed rate loan with zero fees.In terms of fixed rates it depends on how the loan is structured. With the SBA 504 you can easily get 7 to 10 year fixed rates, with 25 year amortization schedules. With the SBA 7a most are floating, however it can be offered as a 3, 5 and though rare, 10 year fixed rates. We are currently working with two banks that offer the 7a as a 5 year fixed loan for restaurants. Again, as a comparison most bank financing will not exceed 3 -5 years, and the amortization schedules rarely exceed 20 years with loan to value restrictions at 50 060%.The SBA programs can provide a lot of flexibility compared to conventional bank financing. Again, keep in mind that not all lenders/banks that use the SBA guarantee are the same. So, if you have been turned down by a bank that offers SBA loans, it does not mean that you are ineligible for SBA financing, it may just mean that the actual funding bank, didn’t like your deal. The SBA is not the lender, they are guaranteeing the loan for the funding bank in case of borrower default. At the end of the day the bank is still on the hook for the loan and banks appetite for deals and guidelines vary widely. And the way that banks structure the loans vary as well. Again, for example 99% of banks offer the 7a as a floating rate, we however have access to a 5 year fixed, 7a program.
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A Guide To Commercial Real Estate Loans
Commercial real estate (CRE) is that branch of real estate that is used solely for business purposes and monetary gain. This includes retail outlets, office buildings, business parks, hotels, and residential complexes. Financing these business ventures typically comes from commercial real estate loans. These loans are secured by liens on commercial, rather than residential, property.Differences between residential and commercial loans:Individuals vs. entitiesJust as with residential loans, banks and individual lenders are actively involved in handing out loans for commercial purposes. While residential credits are most often given to individuals, commercial advances are given to business entities such as corporations, developers, and partnerships. These entities are often formed for the specific purpose of owning commercial real estate.Loan repayment schedulesThe debt for a residential mortgage loan is repaid in regular installments over a fixed period of time. This makes it an amortized loan.Unlike residential loans, commercial loans are paid over the course of 5 to 20 years from the day of procuring the credit. The amortization period is often longer than the term of the credit. The rates of interest the lender charges depends on the length of the loan term and the amortization period. The longer the loan repayment schedule, the higher the interest rates.Interest rates and feesCommercial loans are subject to higher rates of interest than residential credits. In addition, commercial real estate loans include fees that add to the overall cost of the loan. This includes fees levied on appraisals and credit application.Prepayment on commercial real estate loansIf investors settle the debt on their commercial loan before its maturity date, they will be required to pay prepayment penalties. These penalties are of 4 types:Prepayment penalty- This is calculated by multiplying the current outstanding balance by a specified prepayment penalty. It is the most basic of these penalties.Interest guarantee- The lender is subject to a certain amount of interest, even if the loan is paid off early.Lockout- The borrower is not allowed to pay off the loan before a certain specified period.Defeasance- This acts as a substitute for collateral. Instead of giving cash to the lender in exchange for their collateral, they give new collateral.In conclusion, residential and commercial real estate loans differ vastly from each other. When evaluating a business entities’ vie for a commercial real estate loan, lenders consider the loan’s collateral, the creditworthiness of the entity (owners), and the financial ratios.
Science of Wave Energy Conversion Systems for Sensor Buoys Furthered by Business and University
Introduction
The ocean is in constant motion and the effects of sea states are enormous. Ocean energy has a profound impact on the development of storm systems; shipping safety and shipping routes; recreational boating, surfing and swimming; and fishing and other methods of obtaining seafood. Wind-driven currents on the ocean surface extrapolate down into the ocean depths. Data from Sensor Buoys can provide critical information regarding ocean properties such as: ocean color, sea height, temperature, currents, and pollution.Power Problem
Existing power systems for remote sensor buoys and other remote ocean platforms often include solar panels and batteries. These systems would benefit form major improvement or replacement. Problems include: poor performance in cold and/or dark latitudes, insufficient power to operate the latest electronic equipment, high maintenance costs, high replacement costs, loss due to theft and vandalism, and battery disposal. Power harvesting from ambient ocean wave energy is a natural option to augment or replace any of these electrical-power-providing systems.Research Participants
Engineering companies, R&D groups, and universities are working on solving the issues of powering sensor buoys. Collaboration among these organizations is beneficial because of the great number of scientific areas that the development of self-powered sensor buoys encompass: marine geology and geophysics, biology, atmospheric and ocean chemistry and physics, marine hydrodynamics, electrical generators, advanced controls and dynamics, data communication, data acquisition, motor control and power systems. Close proximity to an ocean or a bay can provide researchers with easy access to test their power systems.Ocean Wave Energy Harvesting Systems
Ocean wave energy harvesting systems designed for sensor buoys convert wave motion into electricity to allow operation under all weather conditions. These new systems will enable enhanced functionality, higher performance and continuous operation. Such systems generate and accumulate energy that can be used to indefinitely power remote buoys equipped with sensor arrays as well as electronics for processing and communications. These power sources can be integrated with buoy systems to minimize the size of batteries, or to eliminate the need for batteries if super-capacitors are used. The goal is to store accumulated energy and form a completely self-contained, persistent, energy source platform suitable for a variety of sensor payloads.Obviously there are many challenges. The systems need to provide automatic wave energy harvesting and work with both drifting and moored buoys. The systems need to function at a low acoustic noise level and provide stealthy acoustic and visual operation plus a wide band response to the wave period. The elimination of batteries is the ultimate goal along with enhanced functionality, higher performance and continuous operationResearch Sponsors
There are numerous organizations interested in this technology. Some of the organizations that have provided funding include: the Office of Naval Research, the Space and Naval Warfare Systems Command, and the Rhode Island Science and Technology Council. Some of the projects investigated include the development of a small spar buoy, a direct drive system and a resonant drive system.Small Spar Buoy
This project was to devise a means of energy harvesting for a small diameter buoy free floating on the ocean surface. The buoy would contain an antenna on the upper portion and electronics for remote communications and sensing. The design would ensure that the buoy produce enough energy so that more than 4 milliwatts of power would be available at an instance. The required battery storage capacity would be at least 60 joules. Energy storage could include the use of a rechargeable battery. New scientific research has greatly extended both design concepts and theoretical analyses typically proposed for such systems and performed detailed numerical modeling that featured a wave-to-wire model of the power generation system in ocean sea states.Direct Drive System
A Direct Drive System has been developed that employs small electric generators that are directly driven via a surface buoy’s wave-induced heave motion. This system provides power from the differential motion between the buoy float and a submerged resistant plate. This configuration provides reliable operation without the need for additional gearing and has the ability to harness electrical power in the 1 to 10 Watt range in small sea states (WMO Sea State 1: Calm). The buoy response in the Direct Drive System is designed to match a wide range of expected ocean wave spectra based on the deployment location. Direct Drive of the system with wave motion results in broad band response with high efficiency. Other benefits of this system include low acoustic noise and stealthy operation.Resonant Drive System
A Resonant Drive System has been developed that employs small electric generators that are resonantly driven via a surface buoy’s wave-induced heave motion. This system amplifies the generator’s armature motion at the peak period of the sea state (WMO Sea State 1: Calm). The buoy response in the Resonant Drive System is designed to match the expected ocean wave spectrum based on the deployment location. The benefits of the resonant system include enhanced functionality, higher performance and continuous operation. The buoy is completely sealed with no external moving parts.Scale Model Testing
Scale model testing of the Direct Drive and Resonant Drive Systems has been performed in a wave tank as well as at the mouth of Rhode Island’s Narragansett Bay. This small buoy sensor system generates and accumulates energy that can be used to indefinitely power remote buoys equipped with sensor arrays as well as electronics for processing and communications. This power source can be used to minimize the size of batteries or to eliminate the need for batteries if supercapacitors are used. The buoy system design is customized and scalable (1-250 W) and can be suited to moored or drifting applications.Furthering the Science
This technology has many government and commercial applications including:
• Recharging stations for unmanned underwater vehicles
• Replacement or augmentation for solar power
• Elimination of batteries
• Sonar listening stations
• Weather monitoring buoys
• Wave monitoring buoys
• Tsunami warning stations
• Port monitoring buoys.The goal of these scientific endeavors is to develop wave energy converters that can operate in all environmental conditions and augment or replace any of the currently used battery/solar power systems with efficient, low-cost, ambient ocean wave energy systems.