Frequently Asked Questions

Our commercial finance advisors are ready to answer your questions and provide you with the best lending option for needs. We've listed a few common questions below.

How is Sierra Commercial Capital different from other Loan Borkers?

Sierra Commercial Capital is a licensed broker in the State of California.  Our founders are former bankers with a combined 50+ years in the banking industry.  

What do I need to apply?

A Capitalization Rate, better know as the “Cap Rate”, is a real estate valuation method used to compare real estate investments.  The ratio is the Net Operating Income (rent) produced divided by either the original capital cost or the current market value of the property.

How are you different from a Bank?

What size loans can Sierra Commercial Capital handle?

We can handle all commercial loan sizes from $5,000 for small merchant cash advances to well over $20M for Commercial Real Estate financing facilities.

What type of Business and Industries does Sierra Commercial Capital work with?

We work with every and all types of industries. Small, medium and large businesses work with Sierra Capital to handle their financing needs.

Who are Sierra Capital's lenders?

We have a relationship with over 100 lenders.  Our lenders include small banks, community banks, private lenders, insurance companies,  credit unions.  We seek out lenders who have a niche or specialty related to all types of alternative financing.

What States do you lend in?

Although we have lenders who work in all 50 States of the US, our focus is on businesses and investors who are based in California, Oregon, and Washington.  

Do you offer Start-Up Financing?

For start-up's we only offer SBA 7(a) financing, equipment financing, and loans against existing 401K's (commonly-used to fund franchise businesses).

How long does it take to receive funding?

The funding timeline largely depends on the type of loan, how fast documentation can be returned, and if there is a need for an appraisal or environmental review for real estate.  For SBA and traditional financing, the time frame is typically between 30-90 days. For alternative financing about 5-10 days. Merchant cash advances take 1-2 days.

What are your fees?

 

We never charge you anything out-of-pocket. For most SBA loans we get paid a success fee from the lenders. In some situations relating to traditional real estate financing where the lender does not offer a referral fee, we charge between 1-2% of the final facility amount, and it would only be due at funding.  Smaller term loans, credit lines, equipment, and MCA's can vary.  

What credit score do I need to qualify for funding?

Most bank and SBA financing will require a credit score over 650. For other forms of alternative financing, credit score requirements can range from 500-650. Any time the lender risk is higher, the higher the borrowing rates.

Do you run a credit report on the owner of the business?

We recommend checking your personal credit scores before applying using a service like Kredit Karma.  We don't send your loan to 10 lenders to see what sticks - and having an accurate score helps us zero in on the type of credit you would qualify for.  Some lenders will want a soft credit pull prior to issuing a commitment letter.  Most will run a hard pull in the underwriting process sometime prior to funding.  

How much do Commercial Appraisals cost?

Typically a commercial appraisal in California will cost anywhere from$2,000 to $5,000 dollars.  This fee can vary depending on the scope of work, property type, location, and timing. For complex and/or special use properties, the fee can go as high as $10,000+

If your only experience purchasing real estate is with residential property, this can be a bit of a sticker shock.  There usually three components that go into a commercial appraisal: 

  • The Cost Approach
  • The Sales Comparison Approach
  • Income Capitalization Approach 

How do you distinguish between a business and a hobby?

From IRS.gov ...

In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. A hobby activity is done mainly for recreation or pleasure. No one factor alone is decisive. You must generally consider these factors in determining whether an activity is a business engaged in making a profit:

  • Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

You may find more information on this topic in section 1.183-2 (b) of the Federal Tax Regulations.

We can not make business loans on a hobby.