Why a Business Cash Advance Works!
In business cash flow is king and as a business owner sometimes you will find yourself needing money to expand your business, buy new equipment, pay for unexpected expenses, or you need cash to meet payroll. Traditionally you would go to the local bank and apply for a line of credit and after someone reviews your cash flow statements, tax returns, personal credit report and your deposit history you might get a loan but more than likely you line of credit request will be declined. As more banks are under scrutiny from bank regulators the old saying “if you can prove to your bank that you do not need the loan then you will get one” is probably closer to reality that it has ever been.
Our business cash advance converts your future Visa and MasterCard receivables into immediate cash that you can use for any business purpose. Repayments are based on a small fixed percentage of your future Visa and MasterCard receivables. Payments are automatically applied to your remaining balance until the balance is satisfied.
Unlike a business loan, our service is aligned with the success of your business: since repayments are linked to your Visa and MasterCard receivables, we don’t get paid until you get paid, thus helping you manage the cash flow of your business, especially during slower months.
Benefits of a Business Cash Advance vs. a Business Loan
- No personal guarantees
- No collateral pledge on your home or business
- No points
- No fixed payment schedule
- No coupons or checks to write
- No impact on your ability to qualify for other financing
- No business restriction on the funding
- No hassles, quick and easy application process
Benefits of Choosing Our Business Cash Advance Program
- No Collateral Liens (UCC-1) Filed at Time of Funding
- No restrictions on your ability to access additional financing.
Our goal is to help small and mid-sized business owners by providing a simple and convenient alternative to a traditional business loan. Our business cash advance program provides a real solution for business owners that are faced with the reality of disappearing sources of working capital. Traditional sources of capital, such as bank loans, home equity loans, and credit card loans are no longer an option for many business owners. Our business cash advance program provides a flexible, hassle free solution for any business owner that needs access to immediate working capital but can’t qualify for a traditional business loan at the bank.
Health of the Banking System
After falling steadily from mid-October through early February, the banking sector has been on a tear in recent weeks. As with the broader market, the sector’s rally faces a test when first-quarter earnings kick off this week, featuring reports from Bank of America and JP Morgan.”You’ll see improving health [but] the system still has some underlying issues,” says Kenneth Posner, author of Stalking the Black Swan and the former head of Morgan Stanley’s financial services research group.
With unemployment stubbornly high, more bad consumer loans are an obvious risk facing the sector. CreditSights, for one, estimates Bank of America JPMorgan and Wells Fargo may have to set aside an additional $30 billion to cover possible losses on home-equity loans, Bloomberg reports.
The biggest issue facing the banks now is interest rate risk, Posner says: “Rising interest rates would be a double whammy for banks.”
First, banks have generated huge profits in the past year thanks largely to the spread between the Fed’s zero interest rate policy and yields on “risk-free” Treasury bonds in the 3% to 4% range. Should the Fed further raise its discount rate – the rate it charges banks to borrow – that would cut into bank profits.
Second, “much of commercial real estate on the books of banks is performing today, but just barely,” Posner says. “If a rise in interest rates pushed up borrowing costs [for commercial developers] and you didn’t see a sudden jump in lease rates, that would make commercial real estate much worse.”
Ben Bernanke presumably knows this, which is why the Fed has pledged (repeatedly) to keeping rates low for an “extended period.”
While forecasting they will stay “lower longer than expected,” interest rates are a “relative game,” Posner notes. “It’s not just what’s happening here but the rest of the world will effect our interest rates.”
Case in point: the yield on the 30-year approached its highest level since October 2007 intraday Monday in reaction to the latest bailout plan for Greece, which prompted funds to flow out of the relative safety of Treasuries.
Is the Commercial Real Estate Bust Still Coming?
Resort Financing Bust
Three hours ago CNBC.com aired a story about the Whistler-Blackcombe resort that is owned by Intrawest. If the name Whister-Blackcombe sounds familiar is because they are hosting Alpine (snowboarding, ski-jumping) events for the current Olympics. What is interesting is Intrawest missed their mortgage payment of $540 million dollars in December and the current lien holder is threatening to foreclose unless an agreement is made by February 19, 2010. The CEO of Fotress, Dan Mudd recently appeared on CNBC to discuss what is happening.
Intrawest is owned by Fortress Investments which is a well-known private equity firm and hedge fund. Intrawest purchased the property in a leveraged buyout in 2006 for $2.8 Billion dollars. Intrawest felt that condo sales would increase and they could pay back the $1.7 billion that they borrowed for this deal. According to the article resort investments have been hit the hardest because of the current economy.
Small Business Financing Insider Tips!
The easiest way to get your commercial loan approved is to be prepared.
- Know your credit score. This is important. Before you apply for your next commercial mortgage have a copy of your most recent tri merge report. Your goal is to have a credit score of 650 or above with anything less than that and your loan will be difficult to approve. Judgments, Bankruptcies, Lawsuits need to be accompanied by a letter of explanation.
- For the next 60 to 90 days during your commercial loan process do not apply for credit. Inquiries will lower your credit score and can possibly prevent you from getting financed. Do not buy a new phone, co-sign on a new car, and do not window shop your deal with other lenders.
- Have the last 3 years of your personal and business tax returns available to be submitted with your loan package. Make sure that your tax returns are signed and dated and that they were actually submitted to the IRS. Lenders will order a 4506-T to verify your information.
- Have your personal financial statement ready and available and if possible have it certified by a 3rd party (Bookkeeper, CPA, etc) and it has to be no more than 60 days old when your loan package is submitted.
- Have the most dated copy of your resume available for submission and if you can sign and date it.
- Have pictures of the property available and ready to be submitted with your loan package, the more the better and if you have access to any 3rd party information provide that as well.
- If you are purchasing a property have between 20% to 25% available as a down payment and you need your funds to be seasoned and sourced so that a verification of deposit can be ordered and verified.
- If you are purchasing a property have a copy of your earnest money contract signed and dated by the escrow officer at the title company and include their information with your loan package.
- If you are using your 401(K), SEP-IRA, or any other type of account have documentation to support that the funds can and will be used.
- Be prepared to spend anywhere from $5,000 to $15,000 in 3rd party reports as required for your loan.
Once you have all of your information ready submit it to your loan officer and expect to have a credit decision within three to seven business days. Once you have an approval you can expect to close and fund your loan within 60 days if not sooner.
SBA 504 Insight!
SBA 504 Loan Program Highlights
- Buy land and build a building
- Build on leased ground with lease being longer than 20 years
- Renovate/expand building already own
- Purchase building currently occupying
- Purchase machinery & equipment with 10 years useful life
- Purchase machinery & equipment with less than 10 years useful life is not allowed
- Lasehold improvements is possible
- Working Capital is not available under this program
- Finance Inventory is not available under this program
- Finance Receivables is not available under this program
- Consolidate Debt is not available under this program
- Restructure Debt can’t be done
- Refinance Debt is limited
Typical SBA 504 Business Profiles
- Start Up Business can be financed
- Franchise’s are acceptable
- Not a franchise, management experience and sufficient cash is acceptable
- Not a franchise, no management experience, no cash is not acceptable
- For Profit Business
- Non-Profit Business can’t be financed
- Radio/TV/Newspaper/Publishing Companies
- Gambling Establishments can’t be financed
- Lending Investment Companies can’t be financed
- Academic Schools can’t be financed
- Trade/Technical/Preschools/Nursery Schools can be financed
- Investor Financing can’t be financed
Ideal Conditions For A Business Needing An SBA 504 Loan:
- In business at least 2 years
- History of increasing sales
- History of profitability
- History of re-investing profits
- Less than $3,000,000 profit, after taxes
- Less than $8,500,000 tangible net worth
- Negative Net Worth Is Possible
- Will create jobs as a result of expansion is preferred
- Will not create jobs as a result of expansion can still be financed
- Business will occupy 100% of building
- Business will buy existing building, occupy at least 51% or more
- New Construction-business wants to sublease part of the space
SBA 504 Inside Tips
- The down payment/equity injection on SBA 504′s could be as low as 10%, preserving needed cash for working capital.
- Interim financing costs including points, fees, and construction interest maybe included in SBA 504 loan.
- Appraisals, architect costs, engineering, environmental, and your construction title insurance maybe included in SBA 504 loan.
- Impact and permit fees; as well as utility hook-up fees are eligible costs in a SBA 504 loan.
- Equipment and machinery can be financed with a SBA 504 loan.
- Site improvement costs can be included in a SBA 504 loan.
- Banks can have as low as 50% Loan to Value Ratio with a SBA 504 loan.
- Contracts for Deed are eligible for new financing under a SBA 504 loan.
- Land acquired prior to application for a SBA 504 Loan can be part of the required equity injection, if the land has been acquired within the last 3 years.
- Change of ownership and purchase of a company is eligible for an SBA 504 loan.
- For profit golf courses are eligible for SBA 504 financing.
- A building on leased land can be financed by a SBA 504 loan as long as the lease is longer than the maturity date of the SBA 504 loan.
- If there is pre-existing debt already secured by Project Property, the debt may be wrapped in bank’s first mortgage as a non-project cost along as there is adequate DSC and LTV.
- Refinancing of existing debt, not to exceed 50% of the cost of the project, can be done with a SBA 504 loan if the business is expanding, acquiring land, expanding their building, or purchasing equipment.
Now is the time to take advantage of the SBA 504 program. Contact us today!
Property Definitions
Automotive
Automotive is a somewhat broad category and encompass a variety of uses that support the automotive segment. Included within this category are auto repair shops, quick-lube facilities, tire repair shops, etc. The type and size of building will vary with the use. Many buildings are designed specifically for the auto trade characterized by overhead doors, car lifts and usually a small office area.
Light Industrial
Light industrial is characterized by a small size facility where no heavy manufacturing or specialized industrial process takes place. Office space within light industrial ranges from 3% to 25% of the total area. Buildings must include sufficient plumbing and lighting to accommodate personnel. Common uses found in light industrial properties may include: cabinet making, assembly processes, home service industries, etc. Absent from these properties is any type of heavy machinery, welding operations, cranes or hazardous materials.
Mixed-Use
Mixed-use properties must contain at least one commercial unit (retail, office etc.) and at least one residential unit. If the primary use at the property is for commercial purposes, the property will fall under our mixed-use Tier II guidelines. The mixed-use property type can be classified in any tier depending on the percentage of the multi-family component and the type of commercial use.
Office
Office buildings are buildings designed for general commercial occupancy and are normally subdivided into smaller units. Office use implies a general business use that does not include retail, manufacturing or warehouse type operations.
Retail
Retail buildings are designed for retail sales and display and usually have display or decorative fronts. This retail classification encompasses a wide variety of uses including, but not limited to: markets, convenience stores, drugstores, department stores, big box retailers, barber shops, laundromats, etc.
Self Storage
Mini-warehouses are warehouses subdivided into a mixture of cubicles of generally small size, designed primarily to be rented for small self- storage or noncommercial storage and may include some office-living space.
Warehouse
Warehouse buildings are designed primarily for storage purposes. An amount of office space included is usually commensurate with the quality of the building but typically ranges from 3% to 12% of the total area. Plumbing and lighting are usually limited due to anticipated light personnel load. The design of the building usually includes a light frame with large open interior areas. Cold storage and transit warehouses (truck terminal) are included in this category.
Medical
Buildings containing space designated for medical functions such as doctors, dentistry, medical lab or medical facilities. The space is typically air-conditioned and specially finished for medical functions in terms of providing a greater number of wall subdivisions for treatment rooms and additional plumbing. Medical uses are typically parking intensive with parking requirements of five spaces per 1,000 square feet standard.
DayCare
Daytime child-care center for pre-school age children.
Restaurant
A place where meals are served to the public.
Funeral Home
A facility that contains wake reception rooms as well as embalming facilities for preparing corpses for burial. Mortuaries store the dead before burial or cremation.
Educational
Day Care Centers, Other Educational Schools, Test Prep Centers.
Tough Questions To Ask Your Commercial Client!
If you want to be the best commercial originator possible then you need to ask your client these questions before you start on your next commercial loan.
- Does the borrower have the net worth equal to or greater of what he is trying to borrow? Or are they asset rich and cash poor?
- Does the borrower have the experience to do this transaction? Did you review their resume? Are they a first time borrower? Do they have a full time job during the day and are doing this on the side?
- Does the borrower have a 650 or above credit score? Does he or she have issues with their credit (late payments, tax liens, judgments)?
- Does the borrower have at least 6 months of principal, interest, taxes, insurance (PITI) available in an IRA, SEP-IRA, 401K, etc and you can verify this information?
- Does the borrower have the last 3 years of their tax returns signed and submitted to the IRS and what is their Adjusted Gross Income. Do they constantly get refunds from the IRS? Do they write down all of their income so they never pays taxes? Does the income listed on their tax return stay constant?
- Does the borrower have current year to date profit and loss statements on the subject property? Are they signed and within 60 days?
- Does the P and L show large write offs during the year that can’t be explained and does your borrower shy away from answering?
- Does the property have a debt service coverage ratio greater than 1.20 and if not then what is wrong with the property/deal?
- Has the property been listed for sale in the last 6 months and if so why is the borrower trying to refinance their property at the same time?
- If this is a purchase transaction is the contract good for 60 days or greater?
- Does the borrower have the funds for the down payment and they are seasoned and sourced for at least 6 months or is someone using creative financing to get the deal done?
- If it’s a refinance has the borrower been current on his mortgage for the last two years? Did you order a Verification of Deposit to verify?
- If the borrower is bringing a copy of their own appraisal what happened and why do they have their own appraisal? Did another lender turn them down?
- Have you received a copy of the title report on the subject property to make sure that nothing is out of the ordinary, for example, tax liens, mechanical liens, judgments?
- If the borrower is trying to refinance his property, has he owned the property for more than 2 years as required by conventional financing guidelines?
- Have you reviewed pictures of the subject property to make sure that it is either A or B quality type of property that does not require significant maintenance?
- Has the borrower been to their local bank and turned down? If so, why?
- Is the borrower willing to pay you whatever points you want to charge to get the deal done? If so what is wrong with the deal, the borrower, or the transaction in general?
- How many people are involved in the transaction? Is their a daisy chain of brokers? Are there silent partners that no one mentioned before?
- Is the borrower, real estate agent, and everyone else involved rushing everyone to get the deal done because it’s the deal of a lifetime?
- Did the borrower, real estate agent, or anyone else in the transaction promise to bring you more business, give you a percentage of the transaction, or promised to give you money under the table when the deal funds?
If any of these questions raise a red flag or a concern, then you need to walk a way. A good deal is a good deal from the beginning all the way to the end.
Fast Deployment of Capital (Hard Money)
We are aggressively looking for loans in the $100,000 to $1,500,000 range. All loans must be for business or investment purposes and they can be for purchase, refinance, credit line, construction, renovation, project completion or a bridge loan if needed. Most loans will close in 7 business days once we receive a full package. Details on our program below:
Types of Properties.
- Land
- Multi-Family
- Single Family
- Condo
- Co-op
- Mixed Use
- Office
- Warehouse
- Retail
- Convenience Store
- Light Industrial
- Gas Station
- Special Purpose
States to lend in:
- Delaware
- Maryland
- District of Columbia
- Virginia
- North Carolina
- South Carolina
- Georgia
- Florida
Loan Parameters:
- Bridge Loan #1, one year or less, 18% and 6 to 8 points with no prepayment penalty. Max LTV 50%
- Bridge Loan #2, up to 5 years, 18% and 6 points, with first year PPP of 12% and decreasing 2% evert 2 months. Max LTV 50%
- Both loans have interest only repayment terms with principle due at maturity.
- We will allow a (Combined Loan To Value ) CLTV up to 105% if it makes sense.
To submit your loan request send a 1003, credit report, pictures of the subject property to info@wisemancapitalgroup.com. Once we receive your loan information if we feel the deal fits within our guidelines a commitment to lend will be issued within 72 hours.
Multi-Use Properties Commercial Financing
Our multi-use properties program is ready to go. We are looking for the following types of properties:
- Commercial
- Industrial Office
- Warehouse
- Mixed Retail with Office
- Mixed Use Commercial and Residential
- Light Manufacturing and Industrial
- Office
- Office Condo
- Industrial Condo
- Dental Office
- Medical Office
- Retail
Loan Types:
- Purchase
- Refinance
- Cash out Refinance
Max LTV:
- 90% Owner Occupied (SBA 504)
- 65% purchase (non-sba, up to 90% CLTV)
- 65% refinance/ 60% cash out refinance
Loan Terms:
- 25 years fully amortized
- 20 years fully amortized
Min FICO:
- 650
Loan Programs:
- 1 yr fixed
- 3 yr fixed
- 5 yr fixed
- SBA 504
- Quarterly Variable
Loan Amounts: $200,000 to $7,000,000
