We are back posting daily with our insights and thoughts on Commercial Finance. We have decided to post regularly directly on our site Lightning Commercial Funding or Loanforbiz.com.
Please book mark our Commercial Finance Daily Blog.
See You There!
Harlan A. Friedman
President & Broker
Saturday, May 9, 2009
Thursday, December 18, 2008
Daily Observation - Last Blog for 2009
I want to be the first to wish you all a very Happy, Healthy & Prosperous New Years.
I wish everyone a very joyous Holiday Season, and I will return on the 7th of January, with a fresh new look to the blog. The blog will be moving to our own website at Loanforbiz.com, we will continue to post for the next 30 days at both locations, but as of February 1, the blog will be on our site.
I am very excited about this change. The new name is the Daily Commercial Loan Blog.
To those loyal readers of the 150 posts that I wrote this year I say thank you for your attention each and every day as I share my personal viewpoints. You might not agree with everything that I wrote but I know you found it entertaining at the least and hopefully educational at the most.
Remember to subscribe to the 10 FREE Special Reports.
Harlan
I wish everyone a very joyous Holiday Season, and I will return on the 7th of January, with a fresh new look to the blog. The blog will be moving to our own website at Loanforbiz.com, we will continue to post for the next 30 days at both locations, but as of February 1, the blog will be on our site.
I am very excited about this change. The new name is the Daily Commercial Loan Blog.
To those loyal readers of the 150 posts that I wrote this year I say thank you for your attention each and every day as I share my personal viewpoints. You might not agree with everything that I wrote but I know you found it entertaining at the least and hopefully educational at the most.
Remember to subscribe to the 10 FREE Special Reports.
Harlan
Wednesday, December 17, 2008
Daily Observation - Pleading Ignorance
I hope the title grabbed you, Why would a professional, experienced broker plead ignorance when it comes to pricing a deal. The reason is very simple WE HAVE NO IDEA OF WHAT CAN AND CANNOT BE FUNDED TODAY!
Now I know you think that I have gone off the deep end when I make such a categorical statement, but the truth is we don't. And anyone who tells you they do, unless its their own money don't believe. Now am I saying that the use of a broker is now worthtless because you, Harlan cannot get deals close. NO I'm not saying that at all.
What I am saying is that when talking to your clients share this information with them so their expectations are realistic. Let me give you a perfect example.
We had a call with a potential client that received a "LOI" from a bank, and they wanted me to explain it to them. Granted this was not our LOI, actually it wasn't anyone LOI it was a financing spreadsheet which the "client" treated as an LOI. Well after reviewing this great "LOI", I called the bank that issued it a week before. Guess What?
None of the programs that they were so aggressive about were offered by the bank anymore. The 20 Year fixed which this Bank was well known for is now a 5 and 10 year balloon.
Another example we were talking with another potential client today and they were telling us that they had been negotiating with a bank on a piece of commercial real estate, the bank led them to believe they were VERY interested in the deal, strung them along for about four months, then you guessed it they had no interest in the deal anymore.
So hopefully these two examples will tell you why I consistently tell my clients I have no idea if I can get the deal done today for you or not. BUT, and here's the important but: if I believe in the deal I am going to do everything within my control to fund the deal.
For more on getting deals closed, sign up for your 10 FREE Special Reports on Getting Your Loan Closed! Also visit our website at loanforbiz.com for even more information on loans and financing methods available in these turbulent times.
Now I know you think that I have gone off the deep end when I make such a categorical statement, but the truth is we don't. And anyone who tells you they do, unless its their own money don't believe. Now am I saying that the use of a broker is now worthtless because you, Harlan cannot get deals close. NO I'm not saying that at all.
What I am saying is that when talking to your clients share this information with them so their expectations are realistic. Let me give you a perfect example.
We had a call with a potential client that received a "LOI" from a bank, and they wanted me to explain it to them. Granted this was not our LOI, actually it wasn't anyone LOI it was a financing spreadsheet which the "client" treated as an LOI. Well after reviewing this great "LOI", I called the bank that issued it a week before. Guess What?
None of the programs that they were so aggressive about were offered by the bank anymore. The 20 Year fixed which this Bank was well known for is now a 5 and 10 year balloon.
Another example we were talking with another potential client today and they were telling us that they had been negotiating with a bank on a piece of commercial real estate, the bank led them to believe they were VERY interested in the deal, strung them along for about four months, then you guessed it they had no interest in the deal anymore.
So hopefully these two examples will tell you why I consistently tell my clients I have no idea if I can get the deal done today for you or not. BUT, and here's the important but: if I believe in the deal I am going to do everything within my control to fund the deal.
For more on getting deals closed, sign up for your 10 FREE Special Reports on Getting Your Loan Closed! Also visit our website at loanforbiz.com for even more information on loans and financing methods available in these turbulent times.
Tuesday, December 16, 2008
Daily Observation - Negotiation Tactics
As nothing is happening in the world of SBA Finance, and the FED bored us today with a rate cut almost to zero, I thought I would borrow some advice on real estate negotiation from George Ross, Trump's Attorney and head real estate attorney for the Trump Organization. George Ross wrote a fabulous book named Trump Strategies for Real Estate: Billionaire Lessons for the Small Investor.
Whether you like "The Donald" or not, these words are truly words of wisdom.
Whether you’re involved in real estate or another entrepreneurial endeavor, you’re always working towards a major objectives. Sure, things don’t always run as smoothly as we would want them to, and sometimes you’make concessions (or “sweeten the deal”) in order to make it work.
But what do you do when you find that you compromised so much that your big picture objectives are no longer in sight? The ultimate goal of any deal is to feel satisfied and better off than before you started working on it. But what do you do if you don’t see that realistic possibility anymore?
Don’t waste your time – it’s more valuable than money. If you don’t see the benefits of the deal anymore, have the willpower to walk away from it.
So how do you know when to walk away? Here are some questions to ask yourself when you notice things change drastically:
Does the deal still make sense to you? Before you even start a new deal or venture, figure out what you want to achieve. This will help you stay focused throughout the process, so when things take a turn for the worst be able to acknowledge the reality of the situation and act accordingly. You’ll be a lot better off admitting a once strong deal has become weak it is better to walk away than see it all the way through.
Do your alternatives look a lot more attractive? To do business from a position of strength, you have to have the ability to look at various potential deals or paths you can take. If you keep the old saying “there are plenty of fish in the sea” in mind, then you’ll ensure that you won’t kill yourself trying to catch one of those fish.
Has the atmosphere changed from cooperative to hostile? People engage in business with people they trust and have a rapport with. Do your best to distinguish between the deal-makers you trust and the deal breakers that drive you crazy.
If your answer is yes to all of the above, then it might time be to stop making concessions and start pursuing another venture. After all, you don’t want to sweeten a deal to the point that it gives you a financial cavity.
I hope you enjoyed tonight's slight deviation. Remember for your next commercial investment visit us at loanforbiz.com, the home of Lightning Commercial Funding. Also don't forget to sign up for your 10 FREE Reports to GET Your Next Loan Closed.
Whether you like "The Donald" or not, these words are truly words of wisdom.
Whether you’re involved in real estate or another entrepreneurial endeavor, you’re always working towards a major objectives. Sure, things don’t always run as smoothly as we would want them to, and sometimes you’make concessions (or “sweeten the deal”) in order to make it work.
But what do you do when you find that you compromised so much that your big picture objectives are no longer in sight? The ultimate goal of any deal is to feel satisfied and better off than before you started working on it. But what do you do if you don’t see that realistic possibility anymore?
Don’t waste your time – it’s more valuable than money. If you don’t see the benefits of the deal anymore, have the willpower to walk away from it.
So how do you know when to walk away? Here are some questions to ask yourself when you notice things change drastically:
Does the deal still make sense to you? Before you even start a new deal or venture, figure out what you want to achieve. This will help you stay focused throughout the process, so when things take a turn for the worst be able to acknowledge the reality of the situation and act accordingly. You’ll be a lot better off admitting a once strong deal has become weak it is better to walk away than see it all the way through.
Do your alternatives look a lot more attractive? To do business from a position of strength, you have to have the ability to look at various potential deals or paths you can take. If you keep the old saying “there are plenty of fish in the sea” in mind, then you’ll ensure that you won’t kill yourself trying to catch one of those fish.
Has the atmosphere changed from cooperative to hostile? People engage in business with people they trust and have a rapport with. Do your best to distinguish between the deal-makers you trust and the deal breakers that drive you crazy.
If your answer is yes to all of the above, then it might time be to stop making concessions and start pursuing another venture. After all, you don’t want to sweeten a deal to the point that it gives you a financial cavity.
I hope you enjoyed tonight's slight deviation. Remember for your next commercial investment visit us at loanforbiz.com, the home of Lightning Commercial Funding. Also don't forget to sign up for your 10 FREE Reports to GET Your Next Loan Closed.
Monday, December 15, 2008
Daily Observations - Financing Franchises
Tonight I want to address the area of franchise financing. There are certain lenders that all they do are franchise financing, and we work very closely with them. But here's the rub; according to business brokers we work with as well as Franchisors, franchises are just not selling in this economy.
The reason they may not be moving is two fold; one the financing aspect is getting more difficult. Second the borrowers do not have the money to qualify to purchase the franchises as a lot of them have been purchased with cash or money from other investments. To quote one friend of mine he has not sold a franchise in over six months because of the two above reasons.
So why would I spend a blog post on the financing of them. The reason is that they are still do-able under the right circumstances. Below are those circumstances.
Franchise Financing
• Loans selectively available from $250,000 to $5,000,000 throughout the U.S.
• Acquisition of existing franchise businesses are available with additional collateral requirements, unless the franchise is heavily equipment based.
• Start-up requests must be fully secured or show substantial outside income sufficient to cover debt service
• Up to $300,000 with minimum real estate collateral (must have 10 yr. remaining lease plus option)
• Up to $4,000,000 with real estate
• Start-ups must be fully secured by real estate
• Financing may be available for start-up, expansion, refinancing &/or acquisition
Borrower Profile
• Direct (and recent) management experience within the industry is required as follows: A minimum of 5 years GM or ownership experience required for restaurants A minimum of 3 years management or ownership required for all other industries Experience must be recent
• Guaranty required of: operating company (if real estate holding company is used), relevant affiliates, all individuals with 20% or more ownership and other individuals with less than 20% ownership considered key~ with respect to management experience or financial strength
• Borrowers/owners must have clean/acceptable personal credit histories
Please visit loanforbiz.com the website for Lightning Commercial Funding for more on franchising and other financing methods. Also please sign up for your 10 FREE Special Reports to help you get your next commercial or business loan closed.
The reason they may not be moving is two fold; one the financing aspect is getting more difficult. Second the borrowers do not have the money to qualify to purchase the franchises as a lot of them have been purchased with cash or money from other investments. To quote one friend of mine he has not sold a franchise in over six months because of the two above reasons.
So why would I spend a blog post on the financing of them. The reason is that they are still do-able under the right circumstances. Below are those circumstances.
Franchise Financing
• Loans selectively available from $250,000 to $5,000,000 throughout the U.S.
• Acquisition of existing franchise businesses are available with additional collateral requirements, unless the franchise is heavily equipment based.
• Start-up requests must be fully secured or show substantial outside income sufficient to cover debt service
• Up to $300,000 with minimum real estate collateral (must have 10 yr. remaining lease plus option)
• Up to $4,000,000 with real estate
• Start-ups must be fully secured by real estate
• Financing may be available for start-up, expansion, refinancing &/or acquisition
Borrower Profile
• Direct (and recent) management experience within the industry is required as follows: A minimum of 5 years GM or ownership experience required for restaurants A minimum of 3 years management or ownership required for all other industries Experience must be recent
• Guaranty required of: operating company (if real estate holding company is used), relevant affiliates, all individuals with 20% or more ownership and other individuals with less than 20% ownership considered key~ with respect to management experience or financial strength
• Borrowers/owners must have clean/acceptable personal credit histories
Please visit loanforbiz.com the website for Lightning Commercial Funding for more on franchising and other financing methods. Also please sign up for your 10 FREE Special Reports to help you get your next commercial or business loan closed.
Sunday, December 14, 2008
Daily Observation - Small Business Defined
As we continue to wait for the new SBA rules and regulations to be enacted. As we also wait to see what if any of the economic stimulus plan will be adopted. As we wait to find out how the economic stimulus plan will affect future SBA funding and as we wait to see if the Secondary Market will return I wanted to address what qualifies as a Small Business under the SBA guideline.
SBA defines a small business as one that is independently owned and operated and not dominant in its field. A small business must also meet the employment or sales standards developed by the Small Business Administration and based on the North American Industry Classification System (NAICS).
In general, the following criteria are used by SBA to determine if a concern qualifies as a small business and is eligible for SBA loan assistance:
• Wholesale - not more than 100 employees;
• Retail or Service - Average (3 year) annual sales or receipts of not more than $6.0 million to $29.0 million, depending on business type;
• Manufacturing - Generally not more than 500 employees, but in some cases up to 1,500 employees;
• Construction - Average (3 year) annual sales or receipts of not more than $12.0 million to $28.5 million, depending on the specific business type.
Even though the SBA-qualifying standards are more flexible than other types of loans, lenders will generally ask for certain information before deciding to use an SBA loan program. Visit our website loanforbiz to see what additional documentation is needed and to see if your business qualifies as an SBA Eligible business. Remember Non-Profits do not qualify for any SBA Financing.
Remember to get your FREE 10 Special Reports on Getting Your Loan Closed.
SBA defines a small business as one that is independently owned and operated and not dominant in its field. A small business must also meet the employment or sales standards developed by the Small Business Administration and based on the North American Industry Classification System (NAICS).
In general, the following criteria are used by SBA to determine if a concern qualifies as a small business and is eligible for SBA loan assistance:
• Wholesale - not more than 100 employees;
• Retail or Service - Average (3 year) annual sales or receipts of not more than $6.0 million to $29.0 million, depending on business type;
• Manufacturing - Generally not more than 500 employees, but in some cases up to 1,500 employees;
• Construction - Average (3 year) annual sales or receipts of not more than $12.0 million to $28.5 million, depending on the specific business type.
Even though the SBA-qualifying standards are more flexible than other types of loans, lenders will generally ask for certain information before deciding to use an SBA loan program. Visit our website loanforbiz to see what additional documentation is needed and to see if your business qualifies as an SBA Eligible business. Remember Non-Profits do not qualify for any SBA Financing.
Remember to get your FREE 10 Special Reports on Getting Your Loan Closed.
Thursday, December 11, 2008
Daily Observation - SBA Guarantee Fee
This fee is the exact same everywhere you go in the United States. It is a fee that is set by the Small Business Administration for assisting in the funding of a Business Opportunity 7A or a real estate 504 loan.
I chose that word assisting instead of funding because the SBA does not fund loans, the bank funds the loan, the SBA guarantees a portion of the loan for the benefit of the funding bank. That portion is knows as the SBA guarantee amount of the loan, which is 75% of the loan amount. For example your client buys a business and gets a loan for$750,000. 75% of $750,000 will be what the guarantee fee is computed on or$562,500.00.
The guarantee fee will be 3% of $562,500 or $16.875.00, based on the information below.
FEES ASSOCIATED WITH SBA LOANS
To offset the costs of the SBA's loan programs to the taxpayer, the Agency charges lenders a guaranty fee and a servicing fee for each loan approved and disbursed. The amount of the fees are based on the guaranty portion of the loans. The lender may charge the upfront guaranty fee to the borrower after the lender has paid the fee to SBA and has made the first disbursement of the loan.
The lender's annual service fee to SBA cannot be charged to the borrower. For loans approved on or after December 8, 2004, the following fee structure applies:
For loans of $150,000 or less, a 2 percent guaranty fee will be charged. Lenders are again permitted to retain 25 percent of the up-front guarantee fee on loans with a gross amount of $150,000 or less. For loans more than $150,000 but up to and including $700,000, a 3 percent guaranty fee will be charged.
There is a high probability that due to the economic situation we find ourselves in that the SBA Guarantee Fee may be removed completely for two years. This is one of the proposals currently being considered, but for now these fees remain in place.
Sign up for your 10 FREE Special Reports to GET Your Next Commercial & Business Loan Closed. Visit Lightning Commercial Funding to hear an excerpt of a radio interview that we just completed on qualifying for commercial and business loans.
I chose that word assisting instead of funding because the SBA does not fund loans, the bank funds the loan, the SBA guarantees a portion of the loan for the benefit of the funding bank. That portion is knows as the SBA guarantee amount of the loan, which is 75% of the loan amount. For example your client buys a business and gets a loan for$750,000. 75% of $750,000 will be what the guarantee fee is computed on or$562,500.00.
The guarantee fee will be 3% of $562,500 or $16.875.00, based on the information below.
FEES ASSOCIATED WITH SBA LOANS
To offset the costs of the SBA's loan programs to the taxpayer, the Agency charges lenders a guaranty fee and a servicing fee for each loan approved and disbursed. The amount of the fees are based on the guaranty portion of the loans. The lender may charge the upfront guaranty fee to the borrower after the lender has paid the fee to SBA and has made the first disbursement of the loan.
The lender's annual service fee to SBA cannot be charged to the borrower. For loans approved on or after December 8, 2004, the following fee structure applies:
For loans of $150,000 or less, a 2 percent guaranty fee will be charged. Lenders are again permitted to retain 25 percent of the up-front guarantee fee on loans with a gross amount of $150,000 or less. For loans more than $150,000 but up to and including $700,000, a 3 percent guaranty fee will be charged.
There is a high probability that due to the economic situation we find ourselves in that the SBA Guarantee Fee may be removed completely for two years. This is one of the proposals currently being considered, but for now these fees remain in place.
Sign up for your 10 FREE Special Reports to GET Your Next Commercial & Business Loan Closed. Visit Lightning Commercial Funding to hear an excerpt of a radio interview that we just completed on qualifying for commercial and business loans.
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