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

Your Options Can Spell Success For Your Business

Several years ago we got a call from a very nice lady with an unusual business and type of property. She was at her wits end because she had a history of profitability, good equity and other real estate for cross-collateralization purposes but couldn’t find any lenders willing to provide the growth capital she wanted. All the lenders she contacted said that her property type was not one they financed.

What kind of property did she have? It was a multi use property that consisted of a strip mall with a bridal and tux shop, real estate office and one of the areas more popular banquet halls. We’re talking about a 9600 square foot building with a 3000 square foot dance floor, private dressing rooms, full kitchen, huge bandstand, full bar and liquor license. The problem was, there wasn’t any traditional rental income, as the borrower owned all of the businesses in the strip mall.

All this and none of the local banks she approached would give her a dime. After we looked at her appraisal and tax returns, we called the chief lending officer at our favorite bank. He agreed that she was deserving of the loan she wanted, but knew that the other members of his loan committee would have a problem with the property type. So he referred us to a private lender in her area that he bought seasoned loan packages from in the secondary market.

Once we compiled and shared the right information with this private lender, he was happy to make sure that our client got all the financing she wanted with rates and terms competitive with any bank. Further proof that even if one lender turns you down, there are others that will work with you.

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

Are You Making THIS Commercial Borrowing Mistake?

Did you ever know someone that let their ego stand in the way of their own success? A few years ago, we had a client that wanted to borrow tens of millions of dollars for the construction of a 4 star hotel. Here’s a man that spent lots of money to buy the land, get the architectural work done, engineering, MAI appraisals and environmental studies completed. He even developed a better than average business plan and a decent financial model (proforma).

What was the problem? Well, he had a good management background in manufacturing and distribution. He even bought and managed a strip mall and owned a couple of small eateries that turned a profit. But, after he transitioned away from manufacturing and distribution, he ran into some tax problems. Seven digits worth of tax problems. Sure, he regularly made his payments, but it still looked bad on his credit reports.

Yet, his tax problems were not insurmountable. He still had a project with potential and some equity in the strip mall and land where he wanted to build the hotel.

Ultimately, what caused his failure to get financing was his insistence on managing the new hotel himself, even though he had absolutely no experience in hospitality. If he had been willing to do what the banks and private lenders suggested, we would have been able to fully fund his development.

All that was needed was to “flag” the hotel with a name brand hotel chain and contract with them to manage and operate the facility. But, he was determined to save the 5% management fee and convince the world that he could do it himself. The last time we spoke with him, he still needed financing and his land remained vacant. A clear case of ego run amok.

Financing for the hospitality industry is readily available for those with good plans and cooperative dispositions. If you need help getting financing for your needs, call us and we’ll see what can be done to move your plans forward.

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

Oil & Gas Financing: What All The Experts Agree Works Best

One of the toughest categories to get funds for is financing the extraction of in-ground assets. What are in-ground assets? We’re talking about oil & gas. Also mining projects of all types. Whether it’s coal, copper, iron, gypsum or any other mineral that has to be taken out of the ground.

Why is it so hard to get funds for these extraction activities? Because the risk of failure is historically very high. Even so, if you have a plan that makes fiscal sense, when you put the right information in front of the right lender or investor, you can get the cash you need. You can get debt and/or equity financing. You can even get joint venture partners.

The information you need to provide is not so different than what’s required for financing of other types of projects. You’ll need a clear business plan and financial model so the lender or investor can see your vision. Be sure to provide a thorough description of the market, its history and upside potential.

One of the most important documents that will absolutely be necessary is a recent 3rd party reserve report that provides a clearly stated estimate of the recoverable mineral reserves available. Many times we see reserve reports prepared by individuals that are members of the development team. This will NOT work as these reports will certainly be viewed as a conflict of interest. An independent 3rd party that has no other ties to the borrower/developer must be used to develop it.

Provide detailed resumes on the management team that proves you have the experience, background and ability to successfully manage and operate such an endeavor. Prepare a detailed schedule of the permits and licenses required to begin construction and/or operation with realistic timelines needed to obtain any you don not already have.

If you are already operating and generating revenue, be sure to give them copies of your last 5 years of financial statements and balance sheets. If you’re a start-up, it will be more difficult, but still very possible to get funded.

There are far fewer lenders and investors that will fund the extraction of in-ground assets than there are for other types of projects.

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

How To Leverage Your Relationships Properly And Fund your Project or Business

Recently we’ve seen projects with good potential abandoned primarily because the developer didn’t properly leverage their relationships. In two cases, the developer relied on a 3rd party to get them an audience with a person of influence. After their initial meeting it was decided there was mutual interest to move forward. It later became obvious that the developer didn’t have realistic expectations or fully understand that there was far more required to prepare their projects for financing. Let’s face it… there is only so much that these persons of influence can do to help them.

In one case, it quickly became clear that the developer over-valued the introduction. So much so, that when it came time to finance their project, the offers to fund the project that were obtained left the developer with far less than they had hoped for. Sure the developer had done a decent job at preparing their paperwork, finding appropriate sites, feedstock and off-takers. But their commitment to the introducing party was so excessive, that the project fell apart because none of the parties involved was willing to take a lesser amount than they were led to believe they deserved.

This was a classic case of greed and unrealistic expectations.

In another case, the introduction was made. An appreciable amount of work was done to prepare the business plan and financial model. The developer found a suitable site for the project and got commitments for their feedstock. They even identified a potential lender that was interested.

What did they do wrong? They didn’t take the lenders advice before rushing back in front of the influential party. Sure, they had their meeting, but without having their project properly structured, the outcome from the meeting was, like the other group, far less than what they had hoped for. Like the other group, it was so different from what they had planned for, that the developer had to scrap the project altogether.

Would one consider these signs of inexperience and unrealistic expectations? Not hard to make that case. But, the bottom line is, an introduction is only worth so much. It’s certainly, not worth 10% or more of any project. Also, no matter who introduces you to the influential person, you still need to make a top-flight presentation and demonstrate that by working with you they are not undertaking any greater risk than normal. Preferably, less risk.

Project financing and business funding can involve complex issues and concerns. It is your responsibility as the developer or business owner to prove that you have taken all these issues into account and have taken the necessary steps to fully protect the primary participants.

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

A Little Mistake That Could Cost You a Fortune

One of the biggest mistakes developers make is trying to do too much too soon. We regularly talk with developers that have good ideas but never get past 1st base in the financing arena. Why? Because rather than focusing on completing one project, they commit too much of their limited resources trying to move 2, 3, 4 or more projects forward simultaneously.

Don’t kid yourself into thinking you’re Warren Buffet or Bill Gates. Plan your projects and move them forward to completion one at a time. Be prepared to get bad news from your local banks. If this happens, don’t give up.

There are non-traditional financing alternatives available that can fund most of your planned energy, clean energy, manufacturing and infrastructure projects when qualified.

When you properly plan and structure your project, you can access these performance-capable, lenders that offer a financing model that provides 100% financing for qualifying projects.

These lenders can provide very attractive terms for construction, mergers and acquisitions, recapitalizations and more.

You of all people know that in today’s financial market, business owners and project developers like you need creative finance models matched with performance capable capital sources with a voracious appetite for growth opportunities in your industry and class of business.

Many projects already have the qualifying components to obtain this financing. When properly structured, projects are almost guaranteed to receive 100% financing. Funds are usually available within 90 days or less of completing the required documentation.

The lender has been virtually unaffected by the recent economic downturn and is actively seeking renewable energy, manufacturing and infrastructure projects of all types to fund.

You can get assistance in properly structuring your project and/or loan request to qualify for these alternative funding sources. With stakes this high, you shouldn’t think twice about asking for help.

Ask for help if you need assistance you’re your paperwork and/or finding the best lenders for your situation. 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

Your Proven Path To Quick Cash

Sometimes, a client needs additional funds in order to complete a specific contract or purchase order from one of its customers. Often they need the funds quickly to service their client or customers immediate need. This is when Purchase Order Financing can be exactly what the doctor ordered.

As not all lenders offer the same loan structures, amounts or may not be comfortable with your industry or type of business, the right lender will save you time and wasted effort. By making sure that the correct information is put in front of the appropriate lender for your needs you can access the funds you need.

Purchase Order Financing can be a cost effective solution to a cash flow dilemma. Purchase Order Financing is a short-term funding technique used to finance the purchase or manufacture of goods that have been pre-sold to a creditworthy customer. Lenders that offer this specialized form of financing can assist in solving cash shortfalls by using the confirmed purchase orders as collateral.

How one uses the proceeds of any loan or investment is always a major subject of consideration. Most Purchase Order lenders will support your efforts in the following:

• Industrial / Manufacturing
• Government (federal / state / local)
• Intellectual Property
• Marketing / Media / Advertising
• Construction
• Agriculture (culture / harvest / processing)

You can use the cash from your advance against your Purchase Order to cover:

• Deposits
• Direct Manufacturing / Production / Construction
• Raw Materials
• Components and Sub-Assemblies
• Project-related Labor
• Overhead

You can get Purchase Order Financing on amounts from $10,000 and up. Loan terms can generally extend from 6 months to 24 months. On a case-by-case basis, longer loan terms can be provided. With the proper documentation, your loan can close and fund within 30 days or less. It’s not unusual to complete financing within 2 weeks of providing the required documentation to the right lender. So if you need cash quick, this may be your best option.

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

Accounts Receivable Financing or Factoring–How to Get Cash Fast

One of the most useful, yet misunderstood types of loans is Accounts Receivable Financing or Factoring. This is a method used by a firm to obtain cash when the available cash balance held by the firm is insufficient to meet current obligations and accommodate its other cash needs. The use of Factoring to obtain the cash needed to accommodate the firm’s immediate needs will allow the firm to maintain a smaller ongoing cash balance. By reducing the size of its cash balances, more money is made available for investment in the firm’s growth.

Often when Factoring or Accounts Receivable Financing is recommended, the business owner is less than enthusiastic as they believe that it will make them look insolvent to their customers. Nothing could be further from the truth. In most cases, before their customers grew to their current size, they probably used factoring themselves. Many times, they’re still using some form of factoring.

Many businesses have cash flow that varies. A business might have a relatively large cash flow in one period and might have a relatively small cash flow in another period. Because of this, firms find it necessary to both maintain a cash balance on hand, and to use such methods as Accounts Receivable Financing or Factoring, in order to enable them to cover their short term cash needs in those periods in which these needs exceed the cash flow.

Not all Accounts Receivable lenders or Factors are comfortable with every type of business or industry. That is why we maintain active relationships with several different Accounts Receivable Lenders or Factors. You can save you lots of time and wasted energy by quickly matching your needs with the appropriate lender.

Once the application and supporting documents is received, funds can usually be made available within 2 weeks. However, there are some lenders we have relationships with that can make funds available within 24 or 48 hours of receiving the completed application and supporting documentation.

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

Your Best Chance To Impress

Just last week, we had 2 different loan requests delayed even though the lenders liked them at first glance.  Why were they delayed?  Because the borrowers didn’t provide enough detail in their financial models or proforma’s. All too many times we get loan requests that are rejected primarily because their financial models didn’t demonstrate that the borrower really knew what their regular expenses would be and/or properly illustrate how they were going to generate revenue to service the debt and remain solvent.

Understand that lenders and their underwriters rely on the financial models or proforma’s to provide a clear picture of the firm’s ability to generate revenue and meet their obligations.

Financial models and proforma’s need to be very detailed if you want your loan request funded. Some underwriters and lenders will review the proforma before any other document you give them. Here’s why; because the financial model or proforma will tell them if you have a good handle on the day-to-day requirements to be successful with your business or project.

Want a few tips in preparing your financial model or proforma? Provide the information in an Excel spreadsheet format as it makes it much easier to follow specific line items over the months and years. Always provide projections for, at least, the same period of time that you want to repay the loan or investment. Add line items for each and every source of revenue so there’s no mystery about your ability to repay the loan or investment. Again, be very detailed about your monthly and annual expenses.

Be sure to include repayment of your loan at the same interest rate being offered. If you’re not sure what that interest rate will be, go with a higher rate. If your project or business can cash flow positively at the higher rate, then the lender will take note and will be more likely to embrace your request.

Your CPA or accountant should be able to help you. But, if you’re not sure that your financial model or proforma is up to the task, ask us and we’ll be glad to give it a FREE review for you.

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

Get Current And You’ll Find Success

The loan requests we review generally come from business owners, developers, brokers and intermediaries. Yet, many times we just have to ask, don’t they ever wonder why their loan requests get turned down? Often, they’ll get turned down by several different lenders before we ever meet.

It’s not uncommon for us to get loan requests that have dates on them that are 2 and 3 years old. So, let me ask you … would you loan your hard earned money to someone whose plans and projections are old and outdated? Of course you wouldn’t! But, these borrowers still send out the same rehashed request that’s gotten them nowhere for years. Worse yet, it seems like it never occurs to them to ask why they’re being turned down.

Many times we’ll get a business plan or executive summary and proforma that’s clearly outdated. Even though they may have a good idea, they don’t tale the time to update their documentation. Make sure your dates are current. Check recent pricing, market trends, industry news and your competitor’s success and failures then revise your documentation accordingly.

If you’re asking for tens of thousands of dollars or even millions of dollars, make sure your documentation at least looks like it’s up to date. To access that kind of investment, you need to demonstrate that you have a keen eye for detail, a thorough knowledge of your industry and are covering all the bases.

Most importantly, don’t give up! If you have a loan request that makes fiscal sense, then there are lenders and investors out there that will help if you put the right information in front of them. If you can’t find them, ask. Otherwise, you’re going to find yourself on that rejection merry go round where you don’t want to be.

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

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