State of the Lending Market

Market Condition Report


We, at Sierra Commercial Capital, are still actively funding deals however, due to the effects of the coronavirus outbreak, we’re primarily funding deals for essential businesses at this time.  Many funders we work with have hit the pause button until stay-at-home restrictions are lifted.  The markets are very fluid, changing daily/hourly since mid-March.

These are tough times, but from this will come innovation.  We are here to help and want to see your business succeed.  We are not participants in the SBA Disaster Loan programs – but we have seen businesses struggle to find lenders when their bank is not participating so we have created a link with alternative lender resources for businesses in California.

As for other funding options – below is a snapshot of a few trends we are currently seeing.


Equipment is Still being Funded

Cash is King – so hold on to your cash if you need new equipment for deliveries, manufacturing, constructions and other industries that are seeing a workload increase.  SECURED – Equipment with Transaction Sizes Range ($25,000 – $500,000), 3+ Years Time in Business, Up to 60 Month Term, Up to 75% LTV on Hard Assets for industries that are not heavily impacted by current economic conditions.

Examples of Industries that are currently NOT being funded:  Cafeterias Dental, Events, Fitness Equipment, Food Services, Furniture, Grooming, Health (Non-Essential), Hospitality, Hotel, Office (Except Phones), POS Systems, Recreation, Salons, Schools, Signage, Vending


Opportunities to Ramp up Manufacturing with Accounts Receivable Factoring

We have factoring programs that are designed to provide ongoing, monthly, positive cash flow.  This can be vital for the short-term and long-term success of a business, even businesses facing an economic downturn.   Within days, invoices and accounts receivable and turn them into immediate cash that can be used to run your business.  Our funding programs are based primarily on the creditworthiness of the companies paying the invoices.  This is a great funding source for anyone in manufacturing or distribution industries trying to ramp up production.


Commercial Real Estate

Bridge funders are mostly focusing on Multifamily and Industrial Properties at this time.  Most do not even want to look at Retail or Mixed-Use properties…although if the LTV is low enough it is still possible.  It is now common for lenders to want 6-12 times your payment sitting in the bank at time of close as reserves for any real estate loan.  20-30 year Term loans for investment properties are pretty much non-existent right now.  SBA 7a and 504 are still options for owner-occupied CRE (if you are a business still generating strong revenue).


Ground-Up Construction

A limited number of lenders are still doing construction in select markets.  Must be shovel ready.

For a construction loan, lenders are looking for experienced investors who are not highly leveraged with debt or poor credit.


Reserve Requirements are the New Normal

Many lenders are asking for at least 6-12 months of reserves to be brought to the table at close.  Expect this to continue at least through the stay at home.


Lower LTV & ARV’s

Expect LTV’s and ARV’s to be down 10%-15% from what we were accustomed to.  Most lenders are maxing out at 60%-65% for Residential and Commercial Properties


Good Credit is More Important than Ever

Commercial Lenders are concentrating on high-quality deals with strong credit.  Less than a 680 credit is very tough right now.


Residential Mortgages:  Your Job, Your Credit, and More Money Down 

Our firm only works with commercial loans, but for those looking to buy a new home or refinance your existing residential mortgage, your employment is more important than ever – even more important than strong credit.  JPMC accounted this week a minimum down payment of 20% with a FICO of 700+.  Expect other large banks to follow.


Rental Property Financing on Hold

No one is doing loans on long term (or short term) rentals.  The 30 year rental loans are done (for now) since there is no secondary market for them.


More Down & Shorter Terms on Fix and Flip Properties

We can still do these, but most lenders are requiring 20%-30% down on purchase are preferring light rehabs often with shorter terms.


Pricing is Going Up

We’re seeing an increase in minimum rate and points by at least 1% from many funding sources.


SBA 7a and 504 Loans for Businesses in a Position to Grow

Despite all the attention PPP loans are getting, we are still doing SBA 7a loans.  These loans can be used for business acquisition, business expansion, partner buyouts, purchase of owner-occupied real estate, leasehold improvements, refinancing debt, startup costs and equipment. Loan amounts up to $5 million. If your bank is bogged down with PPP loans, we work with lenders who are not participating who can move quick on regular SBA loans.  Another HUGE benefit is that you get six months of covered payments on New SBA Loans that close withing six months of the CARES Act.


Some Loans in Limbo

Most funders are still fully staffed and many are working from home during the stay at home with full access to all the tools needed to underwrite and approve loan transactions.  There are factors at the local level that at best will slow the process.  Getting things like appraisals, environmental site inspections,  notaries on documents,  courthouse filings,  title reports,  DMV title transfers for equipment are not as simple as they were a few weeks ago.


Term Loans/Lines of Credit are still possible

Most funders have hit the pause button on LOC’s.  Unsecured funding for high average balance businesses with at least 1 year in business is still possible for some businesses in the following industries:  Medical, Pharmacies, Food – Distribution &Transport, Supermarkets (not restaurants), HVAC Maintenance, Pool Maintenance, Landscaping, Firearm Sales, and Animal Supplies.


Do Churches and Not for Profits Qualify for Disaster Loans?

If your church or non profit has a 501(c)(3) certificate, then it is eligible for SBA PPP and EILC loans.  If it does not, then it does not currently qualify.  As a back-up option we have been able to secure funding for cash-out on real estate owned by a not for profit.  Keep in mind you will likely be looking at a maximum LTV of 50% and no special use real estate.


Fast Cash with MCA Loans

We don’t promote and purposely do not offer MCA loans, but if most of your revenue comes from credit card transactions and you need fast access to cash and have exhausted all other options, this is a way to get $20k-$2M in less than 48 hours.  We can put you in touch with an MCA lender but your homework first and we recommend the Department of Business Oversight warning before pursuing this option.


Every scenario is different, and the options are rapidly changing.  If you have questions, please do not hesitate to EMAIL or Call us at 916-273-6844 to learn more.

Is Your Business Customer-Centric? -

Is Your Business Customer-Centric?

Today’s customers expect you to stand behind your products and services, care about their issues, and promptly resolve their problems. They expect you to be customer-centric.

A customer-centric organization is one in which customer satisfaction is the absolute highest priority. Customer centricity is a deeply embedded business mind-set based on the principle that every aspect of your company is focused on creating an optimal customer experience.

How can you do this?

It begins with clearly articulating a philosophy of putting customers first.

Create awareness both internally and externally. Communicate the impact of customer satisfaction on the company’s performance, and make sure all stakeholders know that customer satisfaction is a core business value. Make it obvious to anyone who walks in the door that customer satisfaction is the ultimate goal.

Walk the walk and demonstrate your personal commitment to customers. At the same time, empower your employees by giving them the authority and confidence to do what’s right for customers.

Reward employees who go the extra mile for customers. Integrate customer centricity in compensation plans with incentives, bonuses, and rewards that celebrate customers’ successes.

Get the entire team involved with customers, including back-office personnel, your marketing and services associates, and key decision makers.

Of course, the process of creating a customer-centric culture in any organization starts with hiring the right employees and creating the right expectations. Developing a customer-centric culture requires time, resources, and dedication, but its long-term financial and branding benefits are well-documented, demonstrating that the rewards are well worth the efforts.

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What to Look for When Buying a Business

Potential business owners often view buying an existing business as less risky than starting a company from scratch. Turnkey businesses provide an established client base, a recognizable name, and a predictable cash-flow pattern.

But shrewd investors can further reduce their risks by evaluating the following areas before purchasing:

Franchise vs. an independent business

The brand recognition that comes with an established franchise business is a positive. However, many franchises will require investors to go through an approval process and agree to pay franchise fees, which may also include a percentage of quarterly or yearly profits. Review the franchise agreement in detail prior to investing so that you are aware of franchise stipulations regarding brand image, fees, and mandatory upgrades.

Independent business opportunities may offer more flexibility with marketing and branding. Plus, there are no upfront franchise costs to pay, and the year-end profits are yours either to reinvest in the business or to spend as you see fit. A prudent sole proprietor with a strong, well-thought-out marketing plan would be well-suited to this type of investment.

Financials and infrastructure

Business owners should be able to draw a discretionary income from their business. When examining your potential buy, look at whether the discretionary income has gone up or down over a period of years. If the owner’s income is shrinking, you will need to evaluate why: Is it poor management? Has competition increased? Are community demographics or political changes having an impact on the business? It may be possible to turn around a faltering business, but you must be prepared for the potential financial ramifications.

When you purchase a business, certain chattels may be necessary to run the company’s day-to-day operations. For example, a convenience store will require a cash machine, shelving to display products, and refrigeration units to house perishable food items.

It’s important that the seller clearly stipulates which chattels are and are not included as part of the sale of the business, and an inspection may be required to ensure that all included chattels are in good working order prior to your taking possession.


Goodwill is the amount of perceived value assigned to the business due to its community reputation and appeal within its existing customer base. A valuation of goodwill is included in the purchase price. And while a positive community outlook increases the goodwill value, a poor perception of the business in the community could have serious long-term consequences that may take more time than you have to correct. 

Existing employees

These can be a big help. Or not. Existing employees likely have the training, experience, and customer rapport required to help smooth the transition. And customers who see the same employees continuing to provide the same level of service may be more open to the change.

On the other hand, existing employees who are resistant to the ownership change may cause problems, both from a public/customer relations perspective and in challenging new processes and procedures designed to improve the operation.

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Accessibility Features Can Attract New Tenants

As the North American population continues to age, people are facing mobility challenges that have a detrimental impact on home ownership.

Shoveling the driveway and mowing the lawn get harder as an individual ages. Household maintenance requires more outside help as the physical realities of aging take hold.

Investors can expand their portfolio by investing in properties with accessible features. By removing barriers to mobility, many property owners can target and attract affluent aging individuals to their units.

Barrier-free is a design concept that minimizes or removes barriers to access for people struggling with mobility.

Investors can adapt existing structures to be more mobility-friendly, but there are limitations to retrofitting an existing building. Correcting narrow stairwells, doorways, or hallways is not always feasible in an older building; however, installation of automatic door openers can go a long way toward making a building more accessible. Consider automatic doors for every common area in the building. Elevators are often cost-prohibitive to install within an aging infrastructure. Due to these costs, the biggest areas for advancement with barrier-free design tend to be in new construction.

Stairs can be one of the biggest challenges to overcome for someone with a mobility issue.

Those few steps at the front of the building might as well be a “Do not enter” sign for someone who requires a wheelchair or a walker. Ramps can make access easier, and elevators can remove the barrier to access on upper levels of the building for individuals with mobility challenges.

Narrow hallways and doorways are often the next barrier that becomes obvious once a person with mobility issues has obtained access to the building.

Struggling through a narrow hallway with a wheelchair or walker can be dangerous and frustrating. Walkers and wheelchairs also require a larger turning radius, forcing users to back out of tight doorways and elevators. There simply isn’t enough room to turn around safely.

When you add raised thresholds to the mix, you have an increased potential for entrapment or a fall or trip. Power wheelchairs and mobility scooters may assist a person in overcoming the physical constraints of the raised barrier; however, the jarring bump often causes pain and instability, which further contribute to the fall risk. Many flat or zero-clearance threshold options that will provide both form and function are available to landlords.

Little improvements can go a long way toward enhancing a space for an individual who has mobility struggles.

Items like raised toilets, strategically placed handrails, and supports can make a home more livable. Single-lever faucets are a cost-effective and easier-to-grip option for sinks and showers. There are many other low-cost adaptations that can help landlords remove a barrier to tenancy. 

Big-ticket renovations like updating kitchen cabinetry, installing personal alarm systems, and bathroom retrofits may not make financial sense for some properties, but would be easily integrated into a new build.

Investors should closely analyze the cost benefits of these types of renovations as they develop and implement their business models.

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