When Banks Aren’t a Good Fit, Consider Financing from a Life Company

In this tightening lending market, traditional bank loans are becoming less available and less attractive. Luckily, there are alternatives.

Life insurance companies, also known as life companies, have been a significant source of capital for commercial real estate investing for over 100 years. In order to maintain a steady flow of cash, life insurance companies use premiums from their customers along with investments in commercial real estate properties.

Without all of the regulatory standards that traditional banks have to undergo, life insurance companies offer flexibility and complementary solutions that may work better for your specific needs. Let’s explore a few of them.

Leniency with Properties

Most life insurance companies will approve your loan if you want to invest in class A, B, or C-type property, provided you meet their?standard qualifications.? This gives you the freedom to choose multi-family units, office buildings, retail spaces, and more. They also lend nationwide, in top, secondary, and tertiary markets.

Life companies do not require annual condition reports. These lenders focus on timely loan payments, ongoing building maintenance, and keeping the collateral insured.

Rates and Return

Life insurance companies will allow you to lock in rates at the time of the application. On the contrary, banks usually wait to lock in a rate at the time of closing. And with?interest rates changing ?over short periods, locking in earlier could make a massive impact. You also have the flexibility of applying for fixed loan terms of 5, 10, 15, 20, and 25 years, or even time periods in between.

By using a life insurance company, you could also achieve an LTV of up to 70% and slightly lower LTV ratios for cash-out refi’s which are available on a case-by-case basis.

Better Flexibility

In general, working with a life company for your?commercial real estate?loan will give you more flexible options. Banks often require you to set up an account with them before they can consider you for a loan. If you already have accounts with other banks, this may not be a route that you want to take. With a life company, it doesn’t matter where you bank, and you won’t need to go through the process of opening up a new account or meeting a minimum deposit just for the sake of being approved.

Without annual loan covenants, you won’t be forced to?rightsize your loan . Life companies don't require yearly net worth and liquidity tests, so you won’t need to worry about frequent loan audits that may cause additional requirements for you as the borrower. The only money that’s placed in escrow will be for taxes, not insurance.

Insurance coverages also may be more lenient. Especially in Florida, banks will often require that you opt-in for windstorm and terrorism coverage. With life companies, you might not have to enroll in these additions. Additionally, they offer flexibility on your choice of insurance deductibles so you can make the building’s financials work for your unique situation.?

Navigating this Process

All of these benefits sound great, right? It’s important to understand that to work with a life company for your commercial real estate loan; you’ll want to partner with an expert that has tons of experience in these deals.?

As the correspondent for 19 life insurance companies, you can count on my resources to offer a seamless experience with?less red tape ?and headaches. We provide a?non-recourse ?loan program in which the lender will not be able to personally go after you for the loan balance—keeping your personal assets protected. My team keeps you covered from start to finish; we order the appraisal, any other necessary reports and control the closing process. Additionally, we handle servicing locally. Through and through,?you’ll have a partner ?to walk by your side.

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If you’ve been thinking about pursuing a life company for your commercial real estate investment loan,?then let’s talk. ?I have years of experience and can help guide you to the best possible outcome.