If you are a real estate developer with personal guarantees, there may be better ways to secure financing while protecting your personal assets. It is common that banks require developers to personally guarantee loans in order to provide financing. This demonstrates the commitment of the developer to the project, provides the bank with leverage in negotiating a workout of there is a default and limits the possibility the developer will walk away from the project. It is not common for developers with multiple developments to often have multiple personal guarantees. When considering estate and succession planning, it can be difficult to assess the risk of these personal guarantees.
Small business owners, some minor relief may be in sight in the form of government loans. On July 23, 2010, the Small Business Lending Fund Act cleared a key senate vote to end debate and move forward. The bill includes business tax break and enhancements to the Small Business Administration (SBA) loan programs. The House has already passed a version of the bill. The Fund would invest in small banks (less than $10 billion in assets) by purchasing preferred stock. The stock would charge interest rates ranging from 1% to 7% depending on how much Continue reading »
“Over the next four years, around $1.4 trillion in Commercial Real Estate (CRE) loans will reach maturity. In nearly half of those loans, the buyer owes more than the property is worth.” - Rob Hildt, lending group director at community Banking Ventures in Irvine California as quoted in a recent article in the July edition of Urban Land. What does this mean for an already stagnant market with very few deals going on despite many Funds raising capital to come in and swoop up all of the distressed real estate in the down CRE market? According to Evan Morgan, author of the article, “Supply and Demand” in the July addition of Urban land, there are several things that need to happen for the market to come to equilibrium with current economic conditions.