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Thursday, October 16, 2008

Daily Observations - Biz Ops... A Thing of the Past?

"Biz Ops" as they are affectionately called by us professionals are business opportunities. Loans for acquiring a business where there is no real estate involved in the transaction my be a thing of the past, or at least on hold for quite a while.

Once again today another major lender which happened to specialize in "biz ops" informed me that they are no longer in the business of lending to anyone unless the deal has real estate as its primary component. Some may lend on the "biz ops" if they have real estate as part of the sale others are not lending on the "biz op" portion at all.

There are still a few boutique local lenders that will entertain "biz ops" but the list every day is getting smaller and smaller. I was presented today with an interesting statistic, 1/3 of all the SBA Lenders throughout the USA have stopped lending their capital. The reason, NO secondary market; no one to purchase the loans and pay the bank a premium for those loans.

Since there is no secondary market all loans have to be held by the funding bank as a portfolio loan. Therefore the lender wants bricks and mortar as security not "pie in the sky" ie goodwill, etc.

For more on commercial loans that we are still closing visit loanforbiz.

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