All Types of Deals are Closing Nationwide!
Regularly, we like to highlight recent closings to give you a feel for the types of loans that are closing now. In general, we are seeing a huge demand for commercial and business only loans, especially start up franchise opportunities. It appears that not all the people who lost their jobs are going back to work. Instead, many are launching off and starting their own businesses by franchising or purchasing existing businesses. In fact, franchising is probably the safest avenue for starting a business because it provides you with proven systems that work. Below, are just a few of our recent loan closings.
Type: SBA. This was a 34-year-old successful restaurant/bar whose founder was retiring and wanted to sell it to his long-time managers. A business-only transaction, no real estate, we rolled in $200,000 of working capital. The borrowers put down 10% or $260,000 and got $200,000 BACK! So a net of only $60,000 to buy the restaurant they have been running for 30 years. It’s just a beautiful story and I see these deals all the time. Next week we are closing a bar/restaurant for $3.4 Million in GA, the same thing...the long-time manager is buying it from the founder. These legacy-type deals are just encouraging to see…people being rewarded for their service…it’s great. Most banks can not do business only transactions with no collateral over $500,000 but we can do it to the full $5 Million SBA loan limit. When you are looking to buy a business…we are the place to go!
Type: Alt-A. Banks still do not like cash-out refinances, especially above a 50% LTV. They really
don’t like them when the cash out is being used for other investments. We have alternative lenders that will allow cash out up to 75% with no strings on the money. In this case, the borrower was cashing out his office/warehouse to put into another venture. We closed this alternative loan with a 6.9% Interest rate and a 30-year fixed loan! With residential mortgage rates heading into the 6’s, this rate was a home run for the borrower and a 30-year fixed rate to boot! We have a full suite of alternative loans for those deals that are good but just outside of what banks are comfortable with. As more and more banks tighten, these types of deals will increase.
Type: SBA. We close start-up franchise loans all the time, however, this one was special because it is a new franchise with less than 20 locations open. Lenders shy away from young franchises, but we have brought many young franchises to success. Our start-up loans can sometimes go to only 10% down (but it must be a very strong deal) but 20% down is the norm. In this case, the cost to build out the space, the franchise fees, equipment, training, marketing, and working capital of $50,000 came to roughly $400,000 and the borrower put down 20%. Interest is factored in so that the borrower does not have a payment until the doors open. These loans are great, and this market has stayed very busy!
Type: SBA. A franchise startup of a unique healthcare type franchise where the borrower had no collateral. As discussed before, with no collateral, even an existing cash flowing business will struggle but we were able to get this start up done. In fact, we can go up to 5 million with no collateral on SBA loans. Most lenders are capped at $500,000 for business only without collateral but we can go to $5,000,000 as long as the numbers work. We are the SBA specialists…give us a call!
Type: SBA. The borrower wanted to open an America’s Swimming Pool Franchise. The loan included working capital, supplies, inventory-everything he needed to be successful. On this one, we were able to do it with just 15% down. That is good on a startup deal, given the borrower had no experience in the field. With many lenders, that can be problematic, but we can do no experience on franchises as long as the borrower has good credit, outside income, etc.
Type: PRIVATE MONEY LOAN. This was an existing client whom we had done a rehab loan for 18 months ago. He ran out of money so instead of calling us for more, he went out to try to refinance us out and pull out more money. After months of denials with many private money lenders, the loan came back to us from another broker. We liked the guy and he had improved the cash flow and the value some, so we extended him an additional $600,000. We netted 12 months of payments from the proceeds and allowed him to use the rest to finish out the rehab. Why would other lenders not do the deal you may ask? Well, for one it is Memphis, and a lot of people steer clear of Memphis, but we look more at the story and the project than the location. Secondly, it does not look good that he missed his rehab budget by over $400,000. Now rising costs do hurt, but he missed his mark by 50%-rising costs can’t explain that. It shows poor planning on his part to most lenders. But we liked him, so we extended him. Of course, the broker who brought it to us got paid, so the borrower lost money by not coming to us first, but we honor our broker relationships. He will ultimately get it done and it will be very successful, but he just needed us.
Type: PRIVATE MONEY LOAN. The borrower inherited this property, so he had no skin in the game. And he wanted to pull cash out to use for other investments and to make small cosmetic upgrades on the property. The property was located in a tertiary market with a population of 2000-people, and most of the tenants were on short term leases. Even though he had good credit, no bank would do cash out in that scenario and no private money guy will go to a tertiary market with a weak retail center. But we mitigated the risk with a very low LTV (40%) treating it as if it was vacant. The center had value, the appraisal supported it and we moved forward with the loan. In the end, we got it done. We execute!
Type: SBA. This strong borrower had a dream of building a barn type wedding facility. It was a purchase and build out of the facility. Although the borrower was strong, and the property was well located, getting a wedding event facility done during COVID-19 when restrictions and lock downs were in place was very tough. But they funded and should be fine, now that all COVID restrictions have been lifted. Even good loans can have trouble funding if they are the wrong property or business, but we have great lending sources that can look at the bigger picture. Most of our closings got denied somewhere else before coming to us. This borrower got the same SBA rate that they would have gotten at any other bank, even at the original banks that denied them. With no difference in rate, but a big difference in execution, why would someone not choose us? It is the smart decision!
Type: Alt-A. The borrower had 2 short sales, a foreclosure, and an IRS tax lien. Not a very financeable borrower - but we got bank financing for him! A 4.5% interest rate fixed for 5 years with a 30-year amortization. HOW? Well, the property appraised at $1.4 million so they were under 50% LTV. The bank required a banking relationship plus 12 months payments in an account with them and auto debits of the mortgage payment. The tax lien needed to be paid prior to closing of course but for that type of borrower to get fixed rates in the 4’s is tremendous!
Type: SBA. A retiring chiropractor was selling his business to a young chiropractor. The purchase was $850,000 for the office, $350,000 for the practice and we rolled in $50,000 of working capital. We did the loan at 90% SBA, but the lender allowed the seller to carry a 5% second so the borrower only came with 5% down. When you consider he was going to get $50,000 back in working capital, the net outlay on this transaction was less than $15,000 for a $1.2 million deal! WOW! All our SBA loans are done with no points, and you get the same rates as the banks so why would you go anywhere else?
P.S. Unlike the big brokerage shops, WE DO NOT CHARGE TO PUT A PACKAGE TOGETHER AND TAKE IT TO LENDING SOURCES -- and we can usually give terms within 48 to 72 hours. If you or someone you know is having trouble getting financing, give us a call! Over 80% of our closings are for clients that got denied somewhere first. Whether it is a start-up, a quick cash out private money loan or SBA loan that has been denied, we can get it done. Actually, most of our SBA closings are for borrowers who got denied by some other SBA lender. One call is all it takes, and it costs NOTHING to run a deal by us!
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7901 4th Street N.
Suite 300
Phone: (786) 416-3802
*Disclaimer: Rates, terms, loan products, loan programs, scenarios, returns and descriptions of any of the aforementioned on this site are not guaranteed and subject to changes with updates of rates, terms, loan products/programs, as well as changes in the financial markets. This is not a commitment to lend. Nationwide originations in the majority of the US and Canada.
