Within this context, non-traditional private finance companies like SWH Funding Corp. have come of age as we come to the close of the decade.

These "hard-money" lenders help real estate entrepreneurs and owners of operating businesses with real estate assets take advantage of prime conditions by providing high-yield commercial mortgage loans for sound, viable projects that traditional lenders have chosen to set aside. This includes financing short-term bridge loans to qualified borrowers for acquisitions, refinancings, turnaround/work-out situations, foreclosures and bankruptcies for virtually all property types.

SWH, as a private company, can exercise its prerogative to evaluate each loan on its own terms. They can provide funding based on the personal history and credibility of the borrower, coupled with the potential success of a project. In many cases, these firms assist with the "clean-up" of projects so that they can ultimately be repositioned.

SWH Funding first recognized the need for consistent, alternative funding sources for developers and owners, following the real estate industry's downturn in the late 1980s. Companies like ours quickly became resources for buyers who were unable to obtain conventional financing through banks and other institutional sources, and were at the forefront of the real estate lending industry's rebirth during the early 1990s.

 And, the vital function of non-traditional lenders has continued to grow, as is evidenced with our success in completing more than $160 million financed in the past eight years. Today, we structure, fund and close loans from $2 million to $100 million throughout the United States. These loans are originated through a nationwide network of brokers and bankers, many of these loans are complicated, problematic and require prompt funding.

CREATING VALUE DURING A PROJECT'S EARLY STAGES

 By supporting early-stage projects that do not yet fit the traditional box of conventional lenders, companies like SWH Funding can help create value to help things advance. Often, traditional lenders recommend us to potential clients, so that they can upgrade their status and re-present their deal when it has reached the "next phase."

Today, renovation projects comprise one of the hottest areas of financing for non-traditional lenders. There may be some skepticism about a project's viability, or perhaps an entire level of reconstruction must be completed to prepare for final leasing or sale. Savvy high-yield financing firms are comfortable meeting these types of challenges.

 SWH Funding has provided an acquisition loan to a developer who acquired a Manhattan warehouse industrial building. The borrower subsequently gutted the interior and was then able to secure conventional financing for a conversion to loft apartments.

 Another ambitious builder exploring a multi-family renovation deal in Hoboken, New Jersey, recently needed financial guidance for getting his project started. SWH Funding helped him structure the paperwork, financing and terms, and eventually, funded 95 percent of the initial cost.

 The builder purchased a row of old New York-style walk-up buildings and quickly began leasing them. Today, even though the renovation work is still in progress, the project is qualified for conventional financing - long before expected. SWH Funding's role was to organize its borrower and enable him to quickly reach the next stage.

FUNDING LAND ACQUISITIONS

 For decades, residential builders depended on their local savings banks to back raw land purchases. The banks financed the acquisition and, in return, benefited from writing home mortgages for the buyers of the developed property. In today's market, however, savings institutions are turning away from supporting land acquisitions.

 Residential builders who cannot self-finance are turning to non-traditional lenders. For those developers that can demonstrate industriousness and creativity, financing is readily available.

 Most importantly, the builder must have the vision to divide land and design homes that are attractive to the end-users, and in ways that are financeable. To prepare a property for financing, critical factors include proper zoning and approvals. Once the land is fully entitled, it becomes highly desirable.

In a recent deal in South Brunswick, New Jersey, SWH Funding financed the developer of an attractive assisted living project when the purchase money loan from the seller was coming due and could not be extended. The developer had already taken the property from commercial zoning to land zoned and permitted for senior housing. SWH Funding came in when the developer had created most of the value.

 The ultimate permanent lender had already given its commitment. However, the developer needed several months to get the construction loan in place which was being negotiated with a consortium of banks. The project was viable. The developer had created value to get over this immediate hurdle to stay in the game.

 SWH Funding contacted the consortium representative and told him we could provide him with our due diligence underwriting material for the project, such as our construction inspector's overview of the plans and specifications. As a result of this collaboration, the assisted living facility - which two years ago was only a dream - will begin construction in December.

READING THE STORY BEHIND A DEAL

 The loan process at SWH Funding begins when an applicant submits an executive summary of a project and a formal request for funding. We read it, perform some preliminary due diligence, talk to the applicant on the phone and determine if the deal would fit our criteria. If the proposal looks promising, SWH Funding asks the applicant to sign a commitment and pay a due diligence fee. At that point we know that he's serious and, accordingly, we start due diligence in earnest.

As SWH Funding works a project through, our top concerns include: Will the next person in line - a lender or buyer - accept this deal, this research, this preparation? Will another lender or buyer accept this kind of consultant, appraiser, architect, study, survey, title report and deed structure? Is SWH Funding putting these things in the proper form? Although each project is different, SWH Funding's 75 years of combined experience in the real estate and lending businesses provide a significant head start in assembling the experts, documents and reports that will make it all happen. And through our counsel, the borrower adds to his priority list the steps that financial prudence requires. When both parties succeed in their mission, SWH Funding adds a new loan on our books, and our borrower builds a dream.