Overview
Liberty SBF was established in 2011 and is headquartered in Philadelphia, PA, with satellite offices in Detroit, and Los Angeles. This relative upstart is a multi-pronged commercial real estate lender which prides itself on being able to address the needs and challenges that face small businesses in what is considered a challenging credit environment. Despite their relative newness to the non-bank lending industry, they are able to provide several different types of commercial loans for small businesses which they feel can meet most needs. Those loans types include traditional SBA loans (in particular 504 loans), as well as conventional term loans and bridge loans. Regardless of the small business’ credit need, simple or complex, they have the staff and wherewithal to handle most types of transactions, including debt refinancing, partner buyouts and quick-close acquisitions.
For property acquisitions, as a small balance commercial lender, Liberty SBF is able to provide low-cost financing, at a fixed interest rate, for borrowers nationwide. They can assist with acquisition financing or refinancing of owner-occupied properties intended for self-storage, office, medical, industrial, hotels, multi-use or special use properties. Generally, the commercial real estate loans must be for a minimum of $1,000,000 and a maximum of $15,000,000; the Loan-to-Value or LTV rate is 90%. Liberty SBF has a syndicate of approved banks, SBA loan intermediaries and other non-bank lenders with which it partners in order to originate SBA 504 loans.
- Can provide financing for up to 90% of the property value for the SBA 504 loan
- Offers small balance commercial financing of owner-occupied properties often not well served by the traditional commercial real estate lending market
- Interest rates and fees, though variable and dependent upon the situation, are relatively transparent on the company website
- Funding, especially for SBA loans, may take longer than 30 days (in some cases up to 90 days)
- The Debt Service Coverage Ratio (or DSCR) must be a minimum of 1.20
- Property to be financed must be owner-occupied (51% or more)
Liberty SBF offers three types of loans to small businesses; namely, conventional term loans, SBA (504) loans and bridge financing. They specialize in the niche market of small balance commercial real estate loans which have traditionally been under-served. Small balance commercial loans are essentially acquisition loans in an amount too low to even be considered by the more traditional commercial bank lenders. The underwriting criteria for these types of loans tends to be less stringent than large balance loans, thus the approval rate is often better.
Services Offered & Types of Funding
Conventional Term Loans
| Types of Loans | Details |
|---|---|
| Loan Purpose: | Acquisition and/or refinance of properties that are owner-occupied (at 51% minimum) for multi- and special-use purposes as well as the hospitality industry. |
| Restrictions: | Properties must be located within a Metropolitan Statistical Area (orMSA) within the United States and its territories which show strong economic signs and meet specific fundamentals for the property type |
| Amount of Loan: | From $750,000 to $7.5 million |
| Loan Terms: | Up to 10 years |
| Amortization: | Up to 30 years |
| Recourse: | Full recourse |
Bridge Loan
| Types of Loans | Details |
|---|---|
| Loan Purpose: | Acquisition and/or refinance of properties that are owner-occupied (at 51% minimum) for multi- and special-use purposes as well as the hospitality industry. |
| Restrictions: | Properties must be located within a Metropolitan Statistical Area (or MSA) within the United States and its territories which show strong economic signs and meet specific fundamentals for the property type. |
| Amount of Loan: | From $1 million up to $14 million |
| Loan Terms: | Up to 25 years |
| Amortization: | Up to 25 years |
| Recourse: | Full recourse |
| LTV Rate: | Up to 90% of the appraised value |
SBA Loan
| Types of Loans | Details | |
|---|---|---|
| Loan Purpose: | Bridge financing for debt refinancing and/or restructure, DPO financing,quick-close acquisitions, or partner buyouts. | |
| Property types: | Manufactured housing, multi-family housing, office, hotel, or retail properties | |
| Eligible Locations: | Up to 12 months of interest only payments | |
| Amount of Loan: | From $1 million (maximum is unknown) | |
| Loan Terms: | Up to 12 months of interest only payments | |
| Recourse: | Non-recourse | |
| LTV Rate: |
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Rates and Fees
Liberty SBF loan rates are comparable to other lenders which also provide conventional and SBA 504 loans. Where they will differ is in the “packaging fees” they charge. From the Liberty SBF website, the following fees may be assessed on the conventional and SBA 504 loans:
- Processing Fee : $1,500
- Deposit for Expenses : $15,000
- Prepayment Penalty : Assessed if loan is repaid within the first five years (amount unknown)
- The bridge loan does not have any disclosed fees per se but Liberty SBF does set the rate for a bridge loan at LIBOR + 6.99%.
Borrower Qualifications
Liberty SBF Bank says that they finance their loans directly from their balance sheet, thus their philosophy regarding credit is based on strict underwriting standards. However, they also recognize that each borrower is unique and are willing to work with a small business owner to explore creative solutions.
In general, Liberty SBF requires that the borrower have had a minimum of two years profitable operations in their small business venture. A credit score of at least 620 is also required of the owner or principal of the company. The “sponsor,” as Liberty SBF calls the company principal, is also expected to be a creditworthy individual who has “sufficient liquidity and net worth” though that is not well defined. Last but not least, for SBA 504 loans, the company’s financial statements should provide evidence that they have sufficient resources to retire the debt, with the Debt Service Coverage Ratio set at a minimum of 1.20x (and 1.30x for conventional loans).
As regards collateral, Liberty SBF will require a clean title to the property being acquired or refinanced; no other collateral will be required. It is not clear if a Guaranty will be required of the company’s principals.
Application Process
There is very little information regarding the application process on the Liberty SBF website; prospective borrowers are encouraged to contact a lending officer to assist with the process. To that end, they can be contacted directly via their website by completing and submitting the online form. One can also reach them via email or by phone, and they have a social media presence on Linkedin as well as Facebook.
Help & Support
Liberty SBF services and acts as asset manager for all of the loans that it originates and which are held in their portfolio. There is very little information on the Liberty SBF website as to the their support and help in the process of obtaining a small business loan from them.
User Reviews
There is little “noise” about this non-traditional lender online outside of a single reputable source which reviewed their services (and praised them as an exceptional lender in the 504 space) and Liberty SBF’s own website.
Final Thoughts
Liberty SBF caters to a market that has been traditionally under-served by large traditional commercial banks and lenders. They work with a niche market comprised primarily of small business owners who want to acquire, refinance or obtain a bridge loan for commercial property which, due to their small amount (i.e. less than $15 million) essentially flies under the radar of the large traditional lenders.
While the website itself may be lacking, it’s refreshing to see that they are upfront about their offerings in terms of loan amounts, rates, length of term, fees, etc. Obviously, every client will have a different outcome, largely based on the company’s and principal’s creditworthiness, but to give Liberty SBF credit where it’s due, they seem willing to make an effort to provide creative financing as and where needed.
This is clearly a company that doesn’t believe in the “hard sell” as is evidenced by their website. A simple contact form and page is what it takes to begin the process. That is not necessarily a bad thing, however, especially if one has been aggressively chased by others in the lending space when it is only information being sought.
There is nothing online about Liberty SBF which sparks any kind of suspicion or doubt to this reviewer. If your credit needs have been largely ignored by the big lenders because your loan request isn’t worth their consideration, Liberty SBF would be well worth a call.
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