Commercial Financing

At GreyPine Capital we pride ourselves in helping businesses achieve their full potential. We work with a team of lenders to help provide small and large businesses with the best commercial and real estate financing products.

Some of our business solutions are:

  • Mortgages to help you buy properties for your business, such as: purchasing commercial plazas, apartment buildings, rental units or other investment properties.
  • Mortgages for helping you buy new machinery and equipment for your business.
  • Financing for acquisitions and securing adequate debt financing.
  • Revolving line of credits for your working capital needs by securing your company’s accounts receivables, inventory, equipment and real estate.
  • Private Equity financing for companies that have high growth potential or have demonstrated solid revenue growth in the past.

At GreyPine Capital, we have helped numerous businesses in securing unique financial solutions that have not only helped them grow their business but have also helped them improve their profitability and cashflow.


Commercial Loan Underwriting

In the past, commercial loans were usually underwritten as per each lender’s unique credit policies and guidelines. But today, most commercial lenders are moving towards a more streamlined approach to commercial lending. Overexposure of a certain property type in the lenders portfolio, and delinquencies of related financing in an given area, sometimes affects whether the commercial financing request gets approved or denied.


Common Analysis of Commercial Financing

Cash Flow Analysis (DSC)

The single most important aspect of a commercial financing request is the analysis of the subject property’s cash flow. The subject property must generate enough cash flow to cover all the property expenses which must include servicing of the new debt. The ratio used to calculate this cashflow is known as the Debt Service Coverage ratio.

A DSCR greater than 1 means that the property or business generates sufficient income to pay its current obligations. A DSCR less than 1 means that the business does not generate sufficient income to cover its expenses.

In general, it is calculated by:

DSCR = Net Operating Income/ Total Debt Service

Typically, most commercial lenders require a minimum DSCR of 1.20x



EBITDA stands for earnings before interest, taxes, depreciation and amortization. Most commercial lenders used EBITDA has an indicator for a company’s financial performance.

In its simplest form, EBITDA is calculated as:

EBITDA = Net Profit + Interest Expense + Taxes + Amortization + Depreciation

EBITDA is basically net income with interest, taxes, amortization and depreciation added back to it. Commercial lenders often use this figure to analyze and compare a company’s profitability with other companies in its industry. Most lenders use Moody’s Risk Rating software to generate this profitability comparison.


Types of Commercial Leases

A commercial lease is an agreement between a landlord and a business which outlines the terms and conditions of renting the landlords property. A commercial lease is specific to renters using the property for business or commercial purposes.

There are mainly two types of leases

  • Gross Leases
  • Net Leases

Gross Lease is an agreement between the landlord and the business in which the landlord pays for the building’s property taxes, insurance and maintenance.

In a Net Lease, the tenant is responsible for some of the costs of the property. Most commercial lenders base their lending decisions on Triple Net Leases.

In a Triple Net Lease agreement, the tenant pays for the rent, property taxes, insurance and maintenance.


Capitalization Rate

Capitalization Rate or CAP Rate is often used to measure the rate of return on an investment property. The CAP Rate calculation helps the investor to estimate the potential return on his or her investment.

Capitalization Rate = Net Operating Income/ Current Market Value

For Example: Mathew buys a commercial property for $2,700,000 and expects that the property should generate $250,000 per year after operating costs are deducted.

Therefore, the CAP Rate for his investment = $250,000/2,700,000 = 9.3%. Which means, Mathew is generating a 9.3% return per year for his investment of $2.7 Million.

Since there are all sorts of investment properties available in the market, sometimes it can be difficult to compare one property to another. Calculating the CAP Rate can quickly help the investor to easily compare different investment opportunities with each other.

Commercial finance is notorious for being complex. At GreyPine Capital, our vast experience in this sector will help you avoid costly mistakes, and will enable you to secure the best commercial mortgage products and financial solutions. Please call us today to book a free consultation.