Loan Term Options
Standard acquisition loans have 10 year terms
Both conventional and SBA 7(a) acquisition loans have 10 year terms. Most acquisition loans in wealth management industry lending are done as 10 year term loans with a matching 10 year amortization.
10 year term with 15 year amortization
10 year term but payments are made based on a 15 year amortization. At the end of the 10 years there is a balloon payment. The balloon payment is made in one lump sum or if everything qualifies, be refinanced into a new note. This loan lowers monthly payments over a 10 year amortization by 23.2%. More details at the bottom of this page.
5 and 7 year term options
Most conventional lenders are happy to do 5 or 7 year term loans and will typically give a small rate discount (like 25 basis points). Only a small minority of advisors opt for these shorter amortizations because of the impact to cash flow from the significantly higher monthly payments.
Commercial real estate up to 25 year term
Advisors can purchase their office building/condo with a 25 year term. If you are combining an acquisition with an office building and the real estate portion is at least 50% of the loan amount then you can also get a 25 year term. If the real estate portion is less than 50% the entire loan can extend out up to 17 years. See Commercial Real Estate portal page for more details.