Patrick Graham

What is Force Majeure and How Does it Work?

When an unexpected event interrupts business as usual, it is common to question whether or not that event will excuse parties from performing their contractual obligations. Many legal contracts, including real estate leases, attempt to address this issue with a “Force Majeure” clause, which outlines how these unexpected events are handled. Given the sudden impact …

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Understanding a Lender’s Credit Policy Requirements

When trying to finance a real estate project, it’s common for a borrower to approach multiple lenders for a loan. Unfortunately, it’s equally as common for those same lenders to provide inconsistent responses. One lender may look at a deal and want nothing to do with it while another may look at the same deal …

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The Capital Stack Explained

Depending on the complexity of a real estate project, financing can come from many different sources. Collectively, the sources are often referred to as the “capital stack” where “stack” is an appropriate metaphor because each source comes with its own collateral, return expectations, and repayment priority. While there are many shades and variations of each, …

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Understanding Personal Guarantee Structures

Unless you run a large company with an established track record of repaying loans, a bank will likely ask for a personal guarantee before approving a commercial real estate loan.  What is a personal guarantee?  In this article we’ll thoroughly explain personal guarantees by covering the following: Definition of a personal guarantee When personal guarantees …

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30/360 vs Actual/360 vs Actual/365: Loan Accrual Calculations Explained

In a former life, I helped banks install loan servicing software. In every installation, there came a point where the bank would have to decide which accrual method to use for its loan portfolio.  When we got to this point, the Loan Operations manager would always turn to me and say, “what’s the difference between …

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How Term Sheets Work For Commercial Real Estate Loans

The term sheet is an important document in commercial real estate lending. It is used to outline the terms of a potential loan prior to fully underwriting the deal and issuing a commitment letter. In this article, we will take a closer look at how terms sheets work for commercial real estate loans. To provide …

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Introduction to Interest Rate Swaps

As sure as the sun rises, interest rates are going to go up and down over time.  As they change, they have a profound effect on global financial markets, investors, banks, and corporate borrowers. In the world of lending, both borrowers and debt issuers (lenders) have the ability to capitalize on interest rate movements by …

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SBA504 Loans Explained

Business owners have many options to consider when searching for the funds needed to finance a capital investment.  From traditional bank lenders to fintech startups, the options are plentiful and the purpose of this article is to highlight a lesser known, but widely used source of financing, the SBA504 loan.  To get you up to …

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What is a Bridge Loan?

As a participant in the real estate market, have you ever come across an attractive deal, but you didn’t have the liquidity needed to secure it?  Perhaps you were waiting on another sale to close in order to fund the needed equity for the new deal? The above scenario happens so often that there’s a …

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