MIAMI—There's a popular misconception that it's more difficult to get a commercial real estate loan today than it was 10 years ago. While it's true that in the post-recession environment lenders have to adhere to stricter loan requirements, the past two years have been among the three strongest on record for commercial loan originations in the US –– proof that capital is readily available to borrowers who do their homework.

However, navigating the new regulatory environment can be difficult. The rules have changed, and so have lenders' expectations. In an exclusive interview with GlobeSt.com, Apollo Bank CEO and chairman, Eddy Arriola, breaks down what commercial and residential real estate developers need to know to successfully secure financing.

GlobeSt.com: What are the top attributes that banks look for in strong borrowers?

Arriola: Sponsors who are most likely to succeed in securing financing are those who approach lenders with a clear vision and structured plan to deliver the project with a lower loan-to-value ratio. Borrowers must also approach the banking institution with realistic expectations that will keep them from being over-leveraged and left with no viable options should there be a slowdown in the real estate market.

Banks are always on the lookout for borrowers with proven track records. Sponsors can help themselves by presenting a straightforward, well-organized business plan, one in which any questions that might raise the proverbial red flag are immediately addressed and answered. They should also provide examples of other similar developments they have successfully completed in the past.

GlobeSt.com: What are some of the most common requirements that a project must meet before receiving a construction loan?

Arriola: The traditional fundamentals need to be in place. Banks like to see some existing equity in a project.

It shows that the sponsors and equity investors also have some skin in the game. Location remains a very important factor.

GlobeSt.com: What are the top attributes that banks look for in strong borrowers?

GlobeSt.com: What are some of the most common requirements that a project must meet before receiving a construction loan?

Arriola: The traditional fundamentals need to be in place. Banks like to see some existing equity in a project.

It shows that the sponsors and equity investors also have some skin in the game. Location remains a very important factor.

Instant Insights /

Debunking a Common Commercial Real Estate Loan Myth

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