Interest rates

Interest rates on commercial, industrial and construction financing can vary and are most often based on the individual merits of the transaction. There are primarily 3 criteria that are evaluated:

1) Property type, use and location
2) Borrower’s covenant and ability to repay
3) The purpose of the loan 

Generally speaking, transactions fall into 3 categories as follows:

“A” deal – This is a transaction which the property, borrowers and purpose of the loan requested all check out favourably. On smaller transactions up to $3,000,000.00, rates in line with posted bank rate can be expected. On transactions over $3,000,000.00, Canada Bond rate plus .25 basis points is a good starting point.

“B” deal – this is a transaction where perhaps only two of the three criteria check out. Generally speaking rates of about 2% over posted bank rate are not uncommon.

“C” deal – this is a transaction where the main focus is the value and security of the real estate, sometimes referred to as an equity loan. Much less attention is given to covenant or purpose of the loan. Private equity rates can run in the 8%-10% range.

 Fees

Fees are negotiated on a transaction by transaction basis but usually are not less than 1% of the loan amount.

 Qualifying Properties

 Land acquisition and site servicing
 Construction financing                 
  Mezzanine loans and equity partners
 Industrial & Commercial use buildings
 Residential apartment building
 Motel and Hotel 
 Gas stations and car wash                      
 Churches and other places of worship
 Resorts and golf courses
 Retirement home and care facilities       
 Vacation property  
 Unique ICI situations                             
 Residential homes financed to 85% of property value