South End Capital

About South End Capital

Founded in 2009, South End Capital is a nationwide, non-conforming lender providing small balance real estate and subprime SBA loans. South End Capital is committed to offering excellent service and innovative financing.

US Business News, Fit Small Business, Top Ten Reviews and Business.com have recognized South End Capital as one of the premier non-conforming lenders in the country.

Loan Programs

South End Capital offers two distinct loan programs outlined below; a small balance real estate (SBRE) loan program and a subprime SBA program. For the purpose of this review we will focus on its SBRE program.

The small balance real estate program is summarized below from its website:

We offer fast, permanent and short-term financing with a low documentation process. Stated income and full documentation loans are available for property held as an investment or occupied by your business (no personal residences). Purchase, refinance, fix and flip and unrestricted cash-out refinance programs are available nationwide except in AZ, ND, NV, OR, SD and VT. We lend on 1 to 4 unit residential, 5+ unit multifamily, mixed-use, office, retail, warehouse, industrial, mobile home parks, self-storage, auto-service, auto-dealers, daycare, restaurants, nightclubs, bars and more. Apply below, there is no upfront credit check and no upfront fees!

SBRE Program Highlights / Guidelines

  • Bank statement, stated income and full documentation loans
  • Loans from $175,000 to $5 million
  • Rates start at 5.75%
  • 1, 3, 5, 7 & 30 year fixed loan terms
  • No credit score minimum
  • Up to 80% LTV (commercial)
  • Up to 100% LTC (residential)
  • Flexible prepayment penalty options
  • Foreign national loans
  • Non-profit loans
  • Close in 2 to 4 weeks
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The Loan Process

South End Capital focuses on the use of technology in an effort to make its loan process user-friendly, fast and communicative. LendVer was able to shadow the loan process for the SBRE program. South End Capital is a direct lender for its SBRE program which was the main focus of this review and the only program shadowed.

The Application

The online application is easily found on the programs page of the South End Capital website and it will take you only a few minutes to complete. The application is short and concise and does not ask for any personally identifiable information such as a social security number or date of birth, there also is no application fee or other upfront fees required. At the end of the application you will have the option to attach any loan documentation or provide any helpful information that will assist with the review of your request. South End Capital’s application process is secure because its website and loan applications have a security certificate embedded.

After clicking “Submit” you will receive an onscreen notification and an email that your application has been received and will be reviewed promptly. Submitting your application will not affect your credit or cause an inquiry on your credit report. Next, you’ll receive an automated email that your application has been reviewed and more information is needed, underwriting questions will be included in the email which you can respond back to via a secure link. The application and communication process is very secure and even the disclaimer you agree to when applying references that South End Capital won’t communicate with anyone other than you (the borrower) during the loan process.

The Term Sheet

If your application was completed correctly and if you are eligible, you will receive a two-page term sheet (often the same day you apply). The term sheet South End Capital provides is easy to read and understand, it outlines the estimated terms of the loan (it is not a loan commitment), what you will be agreeing to, the costs associated with the loan and what to expect next. The second page of the term sheet is a credit authorization form, meaning if you decide to proceed at this point, your credit report will be pulled. However, there are still no fees you have to pay and you will not be obligated to proceed even after signing the term sheet. The term sheet explains that if you do proceed with the firm’s loan, additional underwriting documents will be required, and a subsequent letter of intent (LOI) will be issued if you pass more in-depth underwriting (at which time a $500 deposit will be required).

After you sign and accept the term sheet, you will receive an underwriting documentation request via email. Very few documents are required by South End Capital and will include familiar items such as a personal financial statement, a property rent roll (if applicable) and other basic forms.

The Letter of Intent (LOI)

The LOI is more comprehensive than the term sheet, this is a nine-page document that spells out your loan terms in detail, enables a title and appraisal report to be ordered, includes a business debt schedule, a supplemental questionnaire and a credit card authorization form to charge you a $500 deposit. You can expect the terms listed on the LOI to be the same as on the previous term sheet, and in addition to a clear title report and a satisfactory appraisal report, there will only be a few outstanding underwriting conditions listed. No tax returns are required if you apply under South End Capital’s stated income or bank statement loan programs. Also, the $500 processing fee will be refunded at closing and South End Capital will usually pay for the appraisal report upfront (a $2,000 to $3,000 cost) and you will only be responsible to reimburse the company if your loan closes.

The Closing Process

After you sign and return the LOI along with the requested underwriting conditions, you will receive an email from a member of South End Capital’s closing department. Your South End Capital closing contact will order your appraisal and title report, explain the steps ahead and be in touch with any additional questions. You will receive periodic updates while you wait two to three weeks for the appraisal report to come back. Once underwriting is completed and if no issues are uncovered, South End Capital will issue you a loan commitment (there are no additional fees due at this time). The loan commitment is a short two-page document, will outline the same terms that were on the term sheet and the LOI (assuming nothing adverse was uncovered in underwriting), will require you to confirm and agree to the terms listed and that you are prepared to close your loan.

South End Capital’s preferred title company will coordinate a closing date and time that is convenient for you. Closing documents will display South End Capital Corporation as the lender and the $500 deposit you paid when you signed your LOI will be credited back to you. The entire closing process will take less than 30 days if you provide requested documentation in a timely manner.

Pros

  • Low interest rate, low documentation loans starting at 5.75% for non-conforming borrowers.
  • High LTV (loan-to-value) loans up to 80% for commercial property and 100% LTC loans for investment residential property.
  • Various underwriting options are available including stated income, bank statement and full documentation loans.
  • South End Capital offers long-term commercial mortgages fixed for up to 30 years which are very unusual.
  • South End Capital’s loan process is easy and requires minimal documentation.
  • The company has a great industry reputation and has been in business for 10+ years.
  • Most property types are considered including special-purpose commercial real estate such as bars and restaurants which most lenders stay away from.

Cons

  • Automated and email based loan pre-approval process so not much phone interaction with real people in the beginning.
  • Rates for really low credit borrowers (500 to 600 score range), or for South End Capital’s hard money loans are in the 10% to 13% range.
  • South End Capital is a business property and investment property lender, it doesn’t make primary residence loans.

Why South End Capital is the Best

We evaluated many commercial real estate lenders and awarded South End Capital the 2019 Best Commercial Real Estate Lender due to its flexible and innovative programs, its speed of execution and its customer service. South End Capital offers unique products such as a 30-year fixed commercial real estate mortgage, unrestricted cash-out and stated income underwriting for special-purpose property like bars and restaurants.

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