Fountainhead 7(a)

What do we do?

Our loans can range in size from $250,000 to $5,000,000. They may include business acquisitions, working capital, equipment purchases and refinances, business debt refinance, leasehold improvements and FF&E, commercial real estate purchases and refinances, and partner buyouts. A down payment contribution, typically 10-20%, comes from you, the Borrower. Loans that are for commercial real estate properties must be a minimum of 51% owner-occupied. Fountainhead offers very competitive interest rates, terms from 10-25 years and exceptional customer service allowing for quick approvals and expedient closings.

What do we do?

In general, our loans are designed for project amounts up to $12 million or so. Our loans can include acquisition of the commercial real estate, renovation of the commercial real estate, new construction, and/or heavy equipment. Our loans typically involve a first lien on the commercial property of 50% of the total project amount, and a second lien loan, secured by a 100% SBA-guaranteed debenture covering 40% of the total project cost. Finally, a down payment contribution, typically of only 10%, comes from you, the Borrower. These loans are for commercial real estate properties (and/or heavy equipment) that are a minimum of 51% owner-occupied. Fountainhead offers very competitive interest rates, 20 to 30 year amortizations, and exceptional customer service allowing for 24-hour pre-approvals and quick closings – often within 45 to 60 days.

Eligible Borrowers:

  • For-profit, non-publicly traded businesses
  • Tangible business net worth (including affiliates) not to exceed $15 million
  • Average net income of the business not to exceed $5 million over the previous two years
  • Ownership must generally be comprised of 51% U.S. citizens or Legal Permanent Residents
  • Proceeds must directly benefit the small business

7(a) Loan Structure Breakdown:

  • Project size: $250,000 to $5.000,000
  • Minimum injection: 10-20% of the total project costs (determined by personal strength and outside income)
  • Loan term: up to 25 years
  • Loan rate: adjustable based on Prime (between P+1% to P+2.75%)
  • Minimum debt service coverage: 1.20x-1.40x depending on the project
  • Fico score: 640 or better (average of guarantors)
  • Geographical area: anywhere in the US
  • Experience: management experience or aptitude

7(a) Benefits to Business Owners:

  • Longer-term financing than conventional loans (up to 25 years)
  • Fully-amortizing loans with no balloons, which removes the need to seek reapproval (or new financing) every few years
  • A smaller down payment than conventional financing, which allows you to conserve working capital
  • Proceeds to cover all of your business needs, including ground-up construction and business expansion
  • No financial covenants, other than providing annual tax returns and financial statements
  • Prepayment penalty is minimal or nonexistent
  • Loan payments cannot be accelerated as a result of an economic downturn as long as you make your payments on time

Ineligible Borrowers:

  • Non-profits entities
  • Investment companies/passive holders of real estate and/or personal property
  • Lending institutions (mortgage brokers and correspondent lenders are eligible)
  • Life insurance companies (franchised agents are eligible)
  • Businesses located in a foreign country
  • Businesses selling products or services through a pyramid plan
  • Gambling concerns
  • Businesses which restrict patronage
  • Government owned entities (excluding Native American tribes)
  • Consumer and marketing cooperatives (producer cooperatives are eligible)
  • Businesses engaged in loan packaging
  • Businesses that have previously defaulted on a Federal loan
  • Businesses engaged in political or lobbying activities
  • Businesses of a sexually purient nature
  • Businesses that do not provide a service or product (such as house-flipping)
  • Businesses (and/or principals) that have defaulted on other governmental loans

Ineligible Use of Funds:

  • Transactions that do not directly benefit a subject business (investment-only transactions)
  • “Cash out” transactions
  • Refinancing owner debt or providing funds to a person or owner
  • Buying into a business where the seller remains a part owner (business acquisitions must result in a 100% change of ownership)