How We Work:
Commercial Funding works in many ways. This is how White Knight Commercial Funding does it:
First: Know that your information is handled with your privacy in mind.
Second: Is it "Do-Able"?
It's your choice; give us a call, or email us. Brokers please click the "Broker" link above. There is no cost to you and you don't have to provide us with any information that you would like to keep confidential, to find out if a loan can be made or not. This sets us apart from some sources who will take an application fee or "due diligence" money prior to finding an actual investor.
With the exception of loans we place with banks, or against your own assets, such as loans against securities, bank guarantees, self-directed IRA loans, etc., in general, our funding sources are not institutions that profit from a depository relationship. Their primary reason for existence is profit; money they expect to make from lending you the money. For this reason, their money usually costs more than money does from a bank. There will be points and fees associated with these types of loans. White Knight expects to make one to three points (percent), a cooperating broker, if needed, will expect to make one to two points, and the end investor will expect to make zero to five points.
The bare minimum you will pay is at least one point. In plain English, on a hundred thousand dollar loan, that is $1,000. So our advice to you is, check with a variety of banks first. This is a good exercise anyway. You will know why they are not lending you money, and they will likely have already asked for the same information we will need. Only now, you are ready to proceed, and you will know why we exist!
Success Fee Agreement:
If we agree that a loan has merit (our measuring tool is this; would we lend you the money if we had it?) we will present you with a Fee Agreement that spells out what kind of financing you want us to find, and the fee you agree to pay us if we are successful, and any other particulars.
If it is the kind of financing that requires it, we will expend considerable time and energy producing a professional Executive Summary, a 5 to 25 page document complete with color photos, maps, collateral information, borrower information, etc.
We then submit your loan requests to the individual investor, funding group or institutional investor that we feel is the best fit for you. Usually, within a reasonable period of time, they will notify us that they have no interest in the request, or that they are willing to explore things a little further, perhaps even issue a "Letter of Interest", or "LOI" or a "LP", a Loan Proposal.
If they want additional information, they will ask for it at this time. This usually consists of a recent personal financial statement, last two or three year's tax returns, and supporting documents such as executed offers to purchase, rent rolls etc.
Loan Offering Analysis and Acceptance:
A LOI is an informal offering that spells out the general terms of what the investor is willing to do for you, and under what conditions. It will spell out points and fees, interest rates, and loan terms.
If the parameters of the verbal or written offering are acceptable to you, the formal process begins, where much sound analysis and documentation is needed and required. It is at that point that we will ask for a small comittment fee, which depends on the loan amount, and the complexity of the deal. That fee is between .01 to 1 percent of our expected success fee. For example if we charged 1 point on a 500,000 loan, our success fee would be $5,000. So we'd ask for $500. This is your signal to us that you are serious about going through with things, sort of like a down payment on a car. We do this because we have already expended much time and effort in good faith on end, and now that you have accepted the terms, we don't want to lose out completely if you change your mind for what ever reason.
The next step is to formally engage the end investor. At this point in time you will know who the investor is, they will have already sent a formal loan offering on their letterhead and/or a detailed "Term Sheet" that spells out what they need in order to close the loan. They will have reviewed the deal, and in the case of bigger loans, may sometimes make plans to visit your facilities. In most cases, appraisals will have to be ordered or re-issued so they are less than three months old. Your investor will not foot the bill for these items. It is at this point that you will wire the funder or a 3rd party escrow office a retainer to defray the cost of the appraisals, legal, titlework, etc.
We will then diligently work with your Accounting Department or Independent CPA, to meet the items on the Investor's term sheet. Be ready to provide profit and loss reports, balance sheets, accounts receivables, payables, inventory, and cash flow statements for your business.
If necessary, we can bring in outside consultants in Accounting, Legal, and Insurance areas. Title searches will be ordered on properties owned, and UCC searches on equipment owned, if applicable. The investor will likely order credit reports on company principals, although it is true that in alternative Financing, the importance of the credit rating is usually not as relevant as the ability to re-pay...however, the better the rating, the better your rate.
Once the underwriting department is done, the lender will be ready to issue a commitment. This is their way of saying that you have a done deal.
A super clean super straightforward loan between a private investor and a borrower can take place in as little as three days to two weeks from start to finish. The closing on typical deals with banks or institutional investors can take place in as little as 30 to 45 days from loan acceptance by the investor. More complicated deals do take longer, 60-90 days is not uncommon. SBA Loans can take 2 months, Federal Loans such as HUD loans can take 4 to 6 months. One thing is for sure, when done, you will have a loan which is custom fit for your needs!
Part of our service is designing loans with great exit strategies. We always strive for loans with no pre-payment penalties. In cases of high interest, we can assist in planning an exit strategy to a loan with more favorable terms once you have shown good performance.