Why We Created The NCLA Program
Let’s take a minute to look at why we created the National Construction Lending Alliance™ program.
We originally started this program because we realized that there were a lot of contractors and borrowers just like you that were really good at finding great deals but were having a challenge finding enough money to fund the deals, or they were looking to scale their business substantially and didn’t have adequate capital resources.
Because of our extensive background in the construction and rehabbing business we decided to build a program in which borrowers who are looking to fund more of their deals can team up and get their deals funded. And that’s exactly how the NCLA program got its start. This program is backed by a $25M California State Fund, as well as a $30M National real estate fund.
Our borrowers and contractors love it. It has been a huge success!
Now, we realize this model isn’t for everyone but for the ones it works for, specifically investors and investor-contractors that have more deals than money or investors that really want to scale their business, it works really well.
We’ve built strong, long lasting, working relationships with borrowers that have completely exploded their business. The real key is they realized the value in having, basically a money partner-type lender. By teaming up with our NCLA program, they now can spend all their time doing what they’re really good at and have a passion for, and that is finding and completing super good deals.
So whether you’re looking to scale your business exponentially, or you just need additional capital to fund your deals, this program may be just what you’re looking for.
We are looking for only well qualified, very experienced contractor-borrowers, or borrowers that can show they have a very solid team to complete the projects.
How The NCLA Program Works
Let’s take a look at how the National Construction Lending Alliance™ program works.
First of all, our goal with this program is to fund as much of your project as possible. Sometimes this can include the purchase price, rehab price, interest reserves, points and closing costs as long as it meets certain criteria; two in particular.
We will need to show that everyone has skin in the game. This can be done with cash, cross collateral property, or even subordinate seller carry back. Generally we will need to see approximately 10 to 15% of the total loan amount as skin in the game.
Of course, a cash down payment is the most straightforward way to cover the 10% to 15% requirement. If you, or a co-investor of yours can put that money in place, the rest of the process becomes easier.
Cross-collateral property just means that you use another non-owner occupied property that has adequate equity in it for additional collateral to make your project meet the loan to value ratio requirements. This may be a property that you own, or you may even have an associate that is willing to join you in your project that has qualified cross collateral property.
Subordinate seller carry-back just means that the seller of the property is willing to take back a note and deed of trust, or mortgage for a small portion of his equity at the time he sells his property to you. By doing this it can generally allow the property to qualify because your loan to value ratio will be lower.
And number two:
We need to be sure that the total loan to completed value ratio or ARV does not exceed generally 70% of the after-repair or as-completed-value.
Once we know that the numbers are solid here’s how the program works.
We’ve set it up so that everyone gets compensated by the project, for what they bring to the project.
Here’s our project that we need to get funded. Now as a lender participant we put money into the project. In exchange for that we get interest, generally 12% interest, which is paid by the project. If you, as the borrower participant put cash into the project you get the same rate of interest on the cash you put in as well. If you put work into the project you get paid the standard going rate for that work that any other contractor would get paid. This too is paid by the project.
Then as a property is being completed each of the contractors and anyone that works on the property gets paid for what they do. This gets paid from the project as well. We have framers, plumbers, electricians, landscapers, real estate agents, title company; basically anyone that has done work on the project; everyone gets paid by the project. Now once everything has been paid by the project the profits go into a bucket and from there the profits are shared.
By doing it this way everyone gets compensated for what they bring to the project.
NCLA Program Wrap-up Overview
With the National Construction Lending Alliance™ program we are able to fund residential and commercial new construction as well as non-owner occupied residential and commercial rehab properties.
Again, the primary way we differ from other private-money lenders and hard-money lenders is that our goal with this program is to fund as much of your project as possible.
Depending on the needs of the project or borrower we also do Gap Funding. In many of cases we will work closely alongside standard hard-money lenders to help them and their borrowers complete their project by filling the gap money requirements.
The program is set up for short term loans and generally run anywhere from 6 to 12 months. Occasionally, but rarely, depending on the project size and scope of work we may extend past 12 months.
Now that you know how the National Construction Lending Alliance™ program works, and you feel you and your project may qualify, take a few minutes to fill out the funding submission form on this page. Please be sure to enter accurate and detailed information because the more we know about your project the more likely it is we will be able to help you.