Loan Types Comparison

Term Loan vs. Line of Credit: Choose Like a CFO Match the type of debt to the life of what you’re funding. • Short, seasonal, lumpy needs → Line of Credit (LOC) • Longer, durable investments → Term Loan When a Line of Credit wins: • Working-capital swings you’ll unwind within months: AR/inventory, timing gaps, deposits, freight. • Borrow, repay, re-borrow as cash converts. ➔ Watch for: availability formulas, renewal risk, non-use fees, springing covenants. When a Term Loan wins: • Multi-year payback with clear ROI: equipment, buildouts, acquisitions, software. • Predictable amortization; match term to useful life. ➔ Watch for: prepayment penalties, fixed covenants, DSCR upkeep. General rule for most but given every deal and situation is different: • Payback inside 12 months? LOC. • Payback over 3–7 years? Term loan. • Mixed use? Split it: LOC for the revolving piece, term for the permanent piece. Two quick examples: • $5,000,000 receivables spike for 90 days → LOC fits; balance clears as customers pay. • $3,500,000 production line adding $600,000 EBITDA/year → Term loan over 5 years aligns with the asset’s life. Pitfalls to avoid: ▪ Funding long-term assets with an LOC → a "permanent" balance that never clears. ▪ Plugging short-term gaps with a term loan → fixed payments outlast the problem. ▪ Comparing "rates" without renewal fees, balloons, or covenants. ▪ Submitting unreconciled financials—the fastest path to a slow "no." Choose the structure that matches your cash cycle—and debt starts working for you.

Over $600 billion in CMBS and Agency loans are originated annually—how do you choose the right one? Picking the right financing can make or break your investment. Here’s a quick breakdown of CMBS (Commercial Mortgage-Backed Securities) Loans vs. Agency Loans for real estate investors: ✅ CMBS Loans (Wall Street-Backed Financing ✔️ Higher leverage (up to 75% LTV) ✔️ Non-recourse, offering asset protection ✔️ Fixed-rate options with 5-10 year terms ❌ Rigid prepayment penalties (yield maintenance, defeasance) ❌ Less flexibility in loan modifications ❌ Typically for stabilized properties with strong cash flow ✅ Agency Loans (Fannie Mae & Freddie Mac Multifamily Loans) ✔️ Lower interest rates than CMBS loans ✔️ Longer amortization periods (up to 30 years) ✔️ More flexible prepayment options ❌ Strict borrower and property qualifications ❌ Mainly for multifamily properties (not mixed-use or commercial) ❌ Requires strong financials and experience in real estate Both have their place depending on your investment strategy. Which loan type do you prefer for your deals—CMBS or Agency? And why? Let’s discuss! #realestate #investment

💡 SBA 504 vs 7(a) for Business Acquisitions: Know Before You Go 💡 Everyone loves the idea of a low fixed-rate SBA 504 loan. Who wouldn’t? 40% of the project at a great rate sounds like a win. But here’s what many don’t realize: 📌 504 is primarily a real estate-only product. It doesn’t cover goodwill or business value—just real estate (and sometimes furniture, fixtures, or equipment). So if you’re buying a business that includes real estate, you may still need a separate 7(a) loan for the business portion. Now you’re looking at: ⚠️ A 25-year 504 loan (real estate) ⚠️ A 10-year 7(a) loan (business) ➡️ And a cash flow headache. Because even with that attractive fixed rate on the 504 side, the shorter term and higher payments on the 7(a) can wipe out the benefit—especially in a cash flow-sensitive deal. 💥 My recommendation in many of these cases? Go with one SBA 7(a) loan (as long as the real estate value is >50% of total project costs): ✅ 25-year term ✅ Covers both real estate and business acquisition ✅ Simpler structure ✅ Smoother process ✅ Short 3-year prepayment penalty (hello, refinance!) Skip the loan stack juggling act. Want to walk through your scenario? Let’s talk. #FreedomJourney