Fequently Asked Questions
- Who is RBA Capital?
RBA Capital is a Lender Finance company with industry experienced management providing credit facilities to real estate based finance companies on a national basis, assisting smaller specialty finance companies achieve their long term business objectives. With the backing of Royal Bank America, part of the Royal Bancshares of Pennsylvania, Inc. family (NASDAQ:RBPAA), RBA Capital has the capacity and expertise to provide liquidity to all types of lenders.
- How do RBA Capital’s credit facilities
work?
RBA Capital provides a revolving credit facility to your company secured by an assignment of the underlying loans that you have made to your customers. You originate, underwrite and fund these loans with your borrower. We will subsequently rediscount (refinance) back to you whatever the agreed upon advance rate that we have approved for your company’s credit facility.
- How big are the credit facilities that RBA Capital provides?
Our credit facilities start at $2 million and go up from there. We can structure them with an “accordion feature” that allows you to increase the commitment when your portfolio increases to a certain amount. This helps you to avoid unused line fees or paying to maintain funds that you are not using.
- What size loans can be placed on the facility?
Typically we like to keep the loans that go on our facility to no more than 10% of the maximum amount of the overall credit facility. If we extend a $5,000,000 credit facility to a lender, then we like to limit each loan put on the facility to no more than $500,000. Exceptions are possible and are handled on a case-by-case basis.
- Will RBA Capital have to review every deal?
No; RBAC would finance your loan portfolio after validating your underwriting practices, financials and servicing abilities; therefore, once established we can fund on your loans with minimal review. We will work with you to outline mutually agreed upon asset eligibility requirements for loans and the loan portfolio (property type, loan amount, LTV, geography). Once that we have built this "box" that should accommodate most all of your business, you may originate loans comfortably knowing that if they fit within that box they should likely go onto your RBAC credit facility without issue. You then forward the collateral to RBAC along with our Borrowing Base Certificate. If complete and valid we will quickly rediscount each loan at our agreed upon percentage advance rate wiring the funds to you typically within 24 to 48 hours - often the same day. For construction draws you would similarly send us the documentation along with our Borrowing Base Certificate and we will likewise advance funding upon those draws. When an opportunity presents itself that does not fit within the "box", but is a good deal, email us the information and we will give you a quick decision as to allowing the loan onto the facility as an exception. Otherwise, you may choose to make the loan keeping it on your company's balance sheet."
- What are your underwriting guidelines?
We are looking for clients that have a track record in the lending industry with an ability to originate, underwrite and service and collect the loans they are making. Clients will typically need to provide the “haircut’ equity funds for the credit facility which would approximate 20-30% of the amount of the credit facility. For example, to have the ability to fund a $3 million portfolio would require in the neighborhood of $750,000 in equity, sub debt or investor capital.
- Does this equity have to come form the principals or can it come from outside investors?
The equity can come from private third party investors or from private mortgage funds.
- How long does it take to close with RBA Capital?
From signed Term Sheet to closing can take from 4 weeks to 6 weeks.
- What are the costs?
The cost of initiating a facility involves the underwriting and closing costs associated with the deal. RBAC seeks to limit these costs at all times and performs up front underwriting to limit the time in the field thereby reducing the cost to the borrower. The costs associated with the Facility itself once up and running are minimal and are mainly passing through costs associated with managing the facility. The typical structure does include a commitment fee and potentially other fees depending on the risk associated with each deal.
- Does RBA Capital table fund the loans that I originate?
While RBAC has the ability to perform this function, we mainly rediscount loans that you have already funded. By that we mean that you as the lender fund the loan with your customer and then overnight the note and mortgage to our custodian who will advise us of the amount upon their receipt. We then rediscount that note to you by funding whatever the agreed upon advance rate we have set up for your facility.
- Who uses this type of facility?
Firms that use RBAC’s facilities are generally lending firms that are currently using private money to fund their transactions and are looking to gain leverage from our facilities as well as find an established and consistent funding source. These companies benefit from the facility by no longer having to call on private investors to fund each transaction. Some firms will be ones looking to transition from a “Brokers” to a “Lender” role or consolidate various banking sources with one large industry lender.
- How do I get money out of the facility to pay operating expenses and other costs
necessary to run my business?
On a pre-determined basis, all available funds in the Lockbox / Blocked Account will be swept and transferred to a bank account at RBA Capital. This account will be used to pay down the facility. This pay down on the facility creates excess availability which is made available to the borrower on a regular basis.
For additional information please contact at 610-293-8008.
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