FAQ: loan terms and pricing

Loans of $5M–$50M, held on our balance sheet. You can test a request against our criteria.

Pricing is SOFR + 600–900 bps, or a fixed-rate equivalent, with an origination fee of 1–2%. Where a loan sits in that range depends on the collateral, the leverage, the complexity and the term. See pricing, fees and OID.

SOFR is the Secured Overnight Financing Rate, the common US floating base rate. A spread of 600 bps adds 6.00% to it. Illustrative arithmetic: if SOFR were 4.00%, a loan at SOFR + 600 bps would carry 10.00% interest, and the rate would move as SOFR moves. Many loans also set a floor on SOFR.

Yes. Our pricing is SOFR + 600–900 bps or a fixed-rate equivalent. A fixed rate removes rate risk for the borrower; it is set at closing to reflect the floating-rate terms it replaces.

Terms of 12–36 months, with extension options. Our loans are designed to carry an asset or business to its next step: a sale, a refinance, a stabilization or a realization.

An extension option lets the borrower extend maturity if stated conditions are met at the time, typically no default and performance tests such as a minimum debt yield or coverage ratio, often with an extension fee. The conditions are set in the term sheet. See amortization, call protection and PIK.

An origination fee compensates the lender for arranging and committing the loan. Ours is 1–2% and is typically paid at closing, often netted from loan proceeds. Exit fees, where they apply, are set in the term sheet for each loan.

Original issue discount is a loan funded at less than its face amount. Illustrative arithmetic: a $20M loan funded at 98 delivers $19.6M; the borrower repays $20M, so the lender earns the $0.4M difference over the life of the loan. See pricing, fees and OID.

It depends on the loan. Bridge and construction loans are often interest-only, with principal repaid at maturity from a sale or refinance. Term loans and asset-based facilities may amortize or sweep excess cash. Amortization is set loan by loan to match the borrower’s cash flow.

Usually yes, subject to the call protection in the loan documents. Common forms are a prepayment premium that steps down over time or a minimum amount of interest. The terms are agreed in the term sheet; see amortization, call protection and PIK.

Yes, where it matches the borrower’s real cash flow. We don’t lend to a rigid box: interest reserves, earn-outs or payment-in-kind components can be shaped to a borrower’s cash flow, inside a senior secured structure. An interest reserve can carry an asset through lease-up; PIK lets part of the interest accrue to principal.

Covenants match the loan type. Real estate loans often test debt yield, DSCR or LTV and control construction draws. Asset-based loans center on the borrowing base, reporting and cash management. NAV loans test loan-to-value and portfolio concentration. See covenants explained.

It depends on the structure. Many real estate loans are nonrecourse except for carve-out (bad-boy) guaranties, with completion or carry guaranties on construction and renovation. Corporate loans often have guarantees from parent and subsidiary companies rather than individuals. See collateral, security and guarantees.

As is market practice, the borrower typically pays third-party costs such as appraisals, environmental reports, field exams, title and the lender’s legal fees. A term sheet usually states which costs apply and how a deposit is handled.

A term sheet summarizes proposed terms and is usually non-binding except for provisions such as confidentiality, expenses and exclusivity. The binding obligation comes with the signed loan documents. Our term sheets are approved by our investment committee before we propose them, and we will not issue a term sheet we do not intend to honor. See loan terms and documentation.