Is that light I see?

... Or a train?

I've been emailing and calling almost everyday in regards to financing the 5-unit complex I'm still looking at. My dilemma is this ... The property falls into "commerical" lending due to it being 5 units or higher. Commerical lending is fickle (I'm finding out) as they have separate requirements for a lot of things. To make matters worse, the 5 unit is so cheap that commerical lenders don't even want to deal with the pain of carrying the note (which I can understand).

After asking around, someone on REIClub.com suggested going to this site to see if there is a lender whose HQ's is located in the general area. I found a couple, but only one was within shouting distance of the actual area I am looking at. So, I called them this morning and talked with a nice lady in the loan department about my situation. The good news is that they CAN help me, but would still need a bunch of paperwork from me in order to secure financing. I asked about business lending and she started on about how the company needed two years of history, blah blah blah. I told her I would be creating the entity now, and that I wished to still get a PG (personal guarantee), but the entity would actually own the property. I'm still not sure if she understood what I was saying after repeating it several times. :(

I gave her the list price of the property and she asked if I'd be putting $$$ down, etc. I told her I could put 10-30% down, but would rather not if at all possible. She said due to the circumstances, they would probably make me put some down (doh! I keep forgetting this is COMMERCIAL property). She then said that due to the loan's low amount, they wouldn't have anything over 10 years (IOW, no 15- or 30-yr rates). These were the rates she quoted me:

* 3/1 ARM @9.75% with 1% annual increases after the 3rd year.

* 5/1 ARM @10.25%

* 10-yr fixed @11.25%

Needless to say I was a bit bummed. I was figuring 9% tops for such a loan and with a term of 15 years. Does this sound plausible to anyone out there that does commercial investing? Again, the loan will be for LESS THAN $50,000, so maybe the higher rates are justifiable to protect their interests.

Edit: I called another one of those banks to probe for better services. The guy I spoke with was pleasant to talk to. I explained my situation to him, and he said there shouldn't be a problem at all getting me a loan. I told him I would probably create a business entity to hold title to that and other properties, but understood that I would still need to PG for the loan. He said it's done all the time and shouldn't be a problem in my case at all. The only drawback I had is that they usually only do these types of loans for VERY short term: THREE years (ARM or fixed). Gulp! I guess there's probably no way around this snag. I asked him what the next step would be, and he said to send him as much financial information on the property as possible, along with my personal financial information. I guess the wheels are in motion now!