The Proven Formula For Financing Your Business

A few years ago, we had a client seeking a total of $13,500,000, which equaled about 65% of the appraised value based on an “as completed value”. The funds would be used to acquire a 40,480sf commercial building in Northern California. The purchase price was $9,500,000. The “as converted” MAI appraised value was $20,600,000. There was approximately $1,000,000 in costs and fees to close and fund the transaction with another $2,000,000 needed to build out the interior spaces as planned.

The “as complete” plan called for the conversion of the Property from general office into 40 Medical Office Condominiums about 4 months after the renovation work was completed. Each unit would then be approximately 1,000sf. Zoning, parking and planning department requirements for conversion were met.

The Property was already 75% leased to 2 tenants. NOI was about $1,200,000. We were told that both of the tenants signed a letter of intent to purchase 10 of the Condo units (for a total of 10,000sf) upon approval of the conversion to medical office condos for $6,000,000.

After we helped the developer revise his loan package, we got them an experienced real estate investment firm to provide the cash equity required. Upon completion of their review, our favorite bank at the time offered the developers a total loan amount of $8.7 million with an 18-month term for the acquisition and construction expenses at 9% interest rate that would convert to a 7.5% permanent loan with a 7-year term and 20 year amortization.

Our client executed the LOI and the other internal bank loan documents then was able to close and get funded in 5 weeks.

It’s like we say all the time, if you put the right information in front of the right lender, you will get the cash you need.

If you need help, ask us for it. Visit us tomorrow for another free commercial loan secret and be sure to subscribe to our RSS feed.

You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-421-7370! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com

.44 Caliber Commercial Loan Request — How to Tie it Together

Earlier today we were composing an LOI for one of our lending partners — a private equity group when two business partners walked in our offices. By the look on their faces you would have thought someone just shot their dog. We’ve seen the look before so we knew what was coming. They’d been turned down by four lenders. They asked us if we could get them financed and if so how soon they could get funds.

We have a lender that likes the potential of the type of project they have but looking through their loan request it only took us about 20-minutes to see what the problem had been. They still had several loose ends that need to be tied down before funding could be successfully completed.

This scenario is not uncommon. We all want the funds made available to us effective “yesterday”, don’t we? Sadly, that’s rarely possible regardless to how much or how little money you want. Sure, this borrower was only looking for a little over a half million dollars, but he hadn’t really thought things through.

Whether you are raising capital through institutional sources or a private placement, it can be a daunting task. Not only can it take an unsettling amount of time for management but, even for the most experienced, it can significantly increase your anxiety levels while running a business. While it is important to identify your best sources for financing, it is also critically important to focus on tying together all of the necessary components in the transaction.

Why? Because, when properly structured and executed, a good financing deal can lead to accelerated growth as well as increased profitability. However, when it is ill conceived or over-priced, the results can be disastrous.

Conditions change within the financial markets on a consistent basis. To access the funds you need, ask yourself, have I done everything possible to make sure the necessary revenue to service the debt will always be available over the term of the loan? Is there anything else you can do to ensure the loan proceeds provide the returns you want like contracting in advance for your raw material or feedstock? Did you get signed purchase contracts and service agreements from your customers? Have you got your insurance coverage ready to go as soon as the loan or investment is available?

Every day, we talk with developers and borrowers that claim they can’t get these things until they get financed. Yet, we see other developers and borrowers do it every day. And when you consider, it is VERY rare that one can get financed for more than a few thousand dollars without them in today’s lending environment, isn’t it worth the effort?

When venturing into such a dynamic arena with so much to gain, it is only good business sense to rely upon funding professionals with the experience and skill that can get you across the finish line.
If you need help, ask for it. Visit us tomorrow for another free commercial loan secret and be sure to subscribe to our RSS feed.

You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-370-4871! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com