Table Funding vs Warehouse Line: Which Fits Your Lending Business?

Lender Capital compares table funding and a warehouse line this way: a line lends a private lender part of each loan, so the lender funds the rest, owns the loan and carries the risk, while with table funding a capital partner funds the whole loan at closing and owns it. The lender puts no cash in the loan and earns points and a spread.

Which fits depends on three things: how much capital you have, which loans you make, and how much risk and leverage you want to hold. This guide compares the two side by side and ends with a checklist. If you're new to the first one, start with what table funding is.

Key takeaways

• Cash per loan: a line needs your cash for the haircut on every loan; table funding needs none.
• Earnings per loan: a line usually earns more per loan, because you keep all interest above the line's cost. Table funding earns points and a spread, with no capital in the loan.
• Risk: on a line you keep the credit risk, margin calls and covenants. With table funding the capital partner owns the loan.
• Eligibility: many bank warehouse programs exclude bridge, construction, fix-and-flip and hard money loans. Table funding depends on a capital partner whose criteria fit.
• Growth: a line's capacity is capped by its size and your equity; table funding is capped by deals that fit a partner's criteria, not your balance sheet.
• Many lenders use both: a line or their own capital for loans they want to keep, table funding for the rest.

How does each one work?

A warehouse line

A warehouse line is a revolving credit facility secured by the loans it finances. You close a loan, pledge it to the line, and draw an advance equal to the loan balance minus a haircut. When the loan pays off or is sold, the payoff repays the advance and the capacity revolves. The Federal Reserve's research on mortgage warehouse lines describes the same mechanics, including mark-to-market margin calls, covenants that let the provider reprice or cancel the line, personal guarantees and 364-day terms (Federal Reserve Board, 2018). For the full picture, see the warehouse line of credit for private lenders guide and the glossary entry for a warehouse line.

Table funding

With table funding, a capital partner reviews the full file before closing and commits to fund it. At closing, the partner wires the loan amount, the borrower signs with you as lender, and the loan is assigned to the partner. Regulation X defines it as "a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds" (12 CFR 1024.2). See the glossary entry for table funding.

Table funding vs. warehouse line, side by side

	Warehouse line	Table funding
Who owns the loan after closing	You	The capital partner
Your cash in each loan	The haircut, for as long as the loan is on the line	None
Debt on your balance sheet	Yes, the line	None
What you earn	Points plus all interest above the line's cost	Points (less any placement fee) plus a spread above the partner's rate
Credit risk	Yours	The owner's
Margin calls and curtailments	Possible, if a loan is marked down, ages or goes delinquent	None: there is no line
Covenants and guarantees	Net worth, liquidity and profitability tests; usually personal guarantees	None tied to a line
Fixed costs	Interest, plus fees that can include upfront, non-usage, legal, audit and custody	Typically none until a loan funds
Eligibility	The line's criteria, sublimits and concentration limits	Each capital partner's criteria
Dwell time	Limited; loans past the limit can lose their advance	Not applicable
Speed at closing	Fast once a loan is eligible: you control the draw	Depends on the partner's review before closing
Renewal risk	Lines are often renewed yearly; terms can change	Per loan; no facility to renew

Which costs more?

It depends on what you count. A line's interest rate is usually lower than what a capital partner earns on a placed loan, and you keep the borrower's full interest above it, so per loan, a line can leave more money with you. But the line's cost is more than its rate:

• Fees. Lines can charge upfront or commitment fees, non-usage fees on the unused amount, per-file fees, legal and audit costs. One published bank program, for example, charges a per-file transaction fee on each loan funded on the line (Simmons Bank).
• The haircut. Your equity sits in every loan on the line. That capital has a cost: it can't fund the next loan.
• Idle capital from covenants. Liquidity covenants require cash you can't lend.
• Dwell time. Interest runs as long as the loan sits on the line, and private loans are often held for months.

For a full breakdown of rates, fees and all-in cost per loan, read warehouse funding costs explained.

A worked example

Hypothetical, round numbers; not any provider's terms or Lender Capital's rates. A $500,000 bridge loan at an 11% note rate with 2 points, held for 180 days.

	Warehouse line (75% advance, 9% rate, $750 + 0.25% fees)	Table funding (partner at 9.5%, 1-point placement fee)
Your cash in the loan	$125,000	$0
Borrower interest you collect (180 days)	about $27,100	(the partner owns the loan)
Line interest and fees	about $18,300	$0
Points you keep	$10,000	$5,000
Spread you keep (180 days)	n/a	about $3,700
What you keep, before your own costs	about $18,800	about $8,700
Return on your cash in the loan	about 30% a year on $125,000	no cash in the loan

Per loan, the line leaves more with you, in exchange for $125,000 of your capital, the credit risk, and the line's covenants and guarantee. With $1,000,000 of capital and this haircut, you can carry about eight loans like this at once on the line. With table funding, your capital doesn't limit how many loans you close. Run your own numbers in the warehouse line cost calculator and the lender spread calculator.

Which is riskier for the lender?

A warehouse line is a loan to you. If a borrower defaults, you still owe the line. If a pledged loan is marked down, goes delinquent or ages past the dwell limit, you may have to pay down the advance in cash, often at the worst moment. The lending company is liable for the line, and providers commonly require personal guarantees. If the line isn't renewed, you need a new home for every loan on it.

With table funding, the capital partner owns the loan from closing. Your risks are different: making sure the loan is underwritten and documented as you represented, servicing it well, and keeping the relationship strong enough that partners keep funding your loans.

Which loans fit each one?

Warehouse lines fit loans that match the provider's eligibility box. Many bank programs are built for residential mortgages sold quickly. Simmons Bank's published program, for example, lists bridge and construction loans as ineligible collateral and states that it does not finance hard money, bridge or fix-and-flip loans. Specialty lenders do finance private loans, typically with lower advance rates, tighter eligibility, sublimits and higher pricing.

Table funding fits loans that match a capital partner's criteria: loan type, leverage, location, size, borrower experience and the quality of the file. Each partner sets its own criteria.

Which helps you grow faster?

A line grows with your equity and the line's size. To finance more loans, you need more haircut capital and a larger facility, which usually means stronger financials, a longer track record and renegotiation. That is a fine path for an established lender that wants to hold loans.

Table funding decouples growth from your balance sheet. Your limit becomes how many good, well-documented loans you can originate that fit a capital partner's criteria. For lenders who are capital-constrained but deal-rich, that changes the math. See how private lenders fund more loans for every option side by side.

Can you use both?

Yes, and many lenders do. A common pattern:

• Line or own capital for the loans you want to hold and keep all of the interest on, that fit the line's eligibility.
• Table funding for loans outside the line's box, over its concentration limits, or that would tie up too much haircut capital.

Before you mix them, read your warehouse agreement. Some lines have exclusivity terms, minimum utilization or eligibility covenants that affect how you can place loans elsewhere.

Decision checklist

Choose a warehouse line if most of these are true:

• You have the net worth, liquidity and track record a provider requires, and you're comfortable with personal guarantees.
• Your loans fit the line's eligibility, size and concentration limits.
• You want to hold loans and keep all of the interest above the line's cost.
• You have equity for the haircut on every loan you plan to carry.
• You can manage margin calls, curtailments and an annual renewal.

Choose table funding if most of these are true:

• You can't get a line yet, or your line excludes the loans you make.
• Your capital is tied up and you're turning good borrowers away.
• You'd rather not put debt, covenants or guarantees on your balance sheet.
• You're happy to earn points and a spread rather than all of the interest.
• Your loan files are complete enough for a capital partner to review before closing.

If you're somewhere in between, the answer is often both. The capital stack options for hard money lenders guide shows how lenders layer them.

Frequently asked questions

Is table funding cheaper than a warehouse line?

Not per loan, usually: with a line you keep all interest above the line's cost. But table funding needs none of your capital, has no fixed facility costs, no covenants, and the capital partner owns the placed loan, so it can be the better use of your capital. Compare both on what you keep per loan and per dollar of your own capital.

Do warehouse lines finance hard money loans?

Some specialty lenders do, usually with lower advance rates and tighter terms. Many bank warehouse programs do not: one published bank program, for example, states it does not finance hard money, bridge or fix-and-flip loans.

Can a new private lender use table funding?

Yes, if a capital partner will fund its loans. Expect to be reviewed: your track record, underwriting, licensing and the quality of your loan files.

How Lender Capital fits

Lender Capital places first-lien, business-purpose real estate loans with capital partners using table funding. You apply once, then submit each bridge, fix and flip, ground-up construction or DSCR loan with the full file. We send it only to capital partners whose criteria it fits; one partner funds the whole loan at closing and it is assigned to them. You keep your points (less the placement fee), earn the spread above the partner's rate, keep the borrower and service the loan, and pay a placement fee only when a loan funds.

See table funding with Lender Capital, compare every option on the warehouse line alternative page, or apply as a lender.

Sources

• Kim, Laufer, Pence, Stanton and Wallace, Liquidity Crises in the Mortgage Market, Federal Reserve Board FEDS 2018-016
• Simmons Bank, Warehouse Lending, an example bank program's eligibility, guarantee and fee terms
• 12 CFR § 1024.2, Regulation X, definition of "table funding"