One of the best avenues for small business owners to create desired brick and mortar stores or headquarters is through a rehabilitation or renovation loan. Instead of having to completely fund a project literally from the ground up through land acquisition and construction, finding a building already capable of serving your needs but requiring some repair could potentially be the best option.
When this is the case then location is already established which can be beneficial to the owner in knowing the surrounding traffic and patterns of potential customers which they could entice to enter their place of business. If not for the purpose of retail, similar construction projects also exist in business parks and office complexes which can also lead a small business owner to understand their company’s fit into the current landscape.
Once a decision has been made to seek a previously constructed opportunity which may not currently, but could potentially fill all of the desired needs for the business then funding the project is the biggest step in the process. For many small business owners this can be one of the shortfalls for bringing a project to fruition but investors should understand there are multiple options to consider when hoping to establish their presence with a home base.
One such option involves rehabilitation and renovation loans which are meant to fund projects that are often purchased at a below average market value due to the nature of their current condition but could exceed market expectations upon completion of any updates and renovations throughout a building. These improvements need to be funded as well and finding the sourcing for such a project can be a stressful process but understanding that options are available for exactly this type of situation can also help to alleviate some of the stress associated with the execution.
These investors hoping to find a tenant or buyer after completion of the necessary upgrades or improvements could benefit from finding a funding source relatable to their needs. This is where the rehabilitation/renovation loan comes into play. These renovation loans are unique as each is obviously different with varying factors associated with their needs and should be treated as such. Loans can also be completed with terms up to 24-months and in ranges up to 70-percent of the current as-is state of the property.
These varying degrees of implementation make finding the appropriate funding source an easy choice with the regulations associated with the renovation loan needs. Instead of being generalized and constrained from broad ranges and lending terms, by treating each loan application as a unique situation makes funding decisions more appropriate and relatable to the small business owner or landlord making the necessary purchase of a commercial property there are at least eight things you need to know about small business loans.
“1. Put yourself in the lender’s shoes–why should they lend you money? When applying for a loan, treat it as if you’re applying for a job. Instead of a great resume, however, you need a stellar application. That means understanding your financial situation and deciding what you can use for collateral, which might include your house. A business person who does the latter shows they believe in their business. Cash flow and credit quality are other key factors. And dress professionally; if you look like you don’t need the money, you’re more likely to get it.”
While appearance shouldn’t play into funding positions, making sure you approach each lending situation with a professional attitude and application helps to ensure you receive the funding for which you are seeking – regardless of the situation.
“2. Figure out how much money you really need. Businesses too often seek more money than they really need and, the more you seek, the more likely you will be rejected.”
With loan financing available up to $3 million you can always approach the funding with an appropriately desired level necessary to facilitate the needed renovations within a project.
“3. Learn from your mistakes. If one lender rejects you, figure out why. When you go to the next small business lender, address that deficiency.”
Just as each loan presents a unique situation, finding the necessary funding through a loan with a company who will take into consideration your individual benefits and specific requests is essential to limiting the stressors associated with each lending opportunity.
“4. Those with poor credit in a business-to-business environment that have receivables can use them as collateral. Alternative lenders, such as so-called Internet lenders, will charge higher interest rates, but generally have more relaxed standards.”
A potential benefit but making certain your lending opportunities are met is an essential function in our lending class. If the building associated with the project presents ample collateral then the lending propensity is expectant for funding.
“5. Always consider–in most cases it should be your first consideration–working with Small Business Administration-backed (SBA) lenders. Many businesses incorrectly assume they aren’t eligible. SBA loans often feature low interest rates and generous repayment terms. Also note that just because one SBA lender turns you down, not all lenders will do likewise.”
While it is true that lenders may vary in their requirements for achieving funding, finding an opportunity for fulfillment within the respective property needs to be addressed regardless of any outside influence.
“6. Know what you’re getting into. That means learning the annual percentage rate (APR) of the loan. Know what the fees will be, as well as any prepayment penalties. Be an informed shopper.”
Always an important piece of advice to consider how much exactly will be due to repay the entire loan. With lending opportunities up to 24-months these should be considered appropriate financing responsibilities to ensure a project finishing complete.
“7. As mentioned earlier, online lenders may provide funding (and quickly) if other alternatives fail, especially for those with bad credit. Aside from higher interest rates, Internet lenders are known for onerous terms and poor transparency, so be sure you really need the money–and can pay it back–if you go this route.”
For commercial real estate purposes both the lender and eventual landlord or property owner need to be comfortable with both the terms and annual percentage rate associated with any type of lending opportunity.
“8. Small banks are likely to be more helpful than bigger banks that prefer working with larger customers.”
The bottom line is associated with finding an appropriate lending opportunity for your exact situation and project basis.
If you find yourself in any of the above described and appropriated scenarios or have a potential differing need for hard money lending then come see the experts at COHI Capital Private Equity Lending who can help you determine and analyze your individual needs. After consulting, their quality experts can offer meaningful advice and help to set up a beneficial plan immediately for all involved parties. They will decide what type of loan will work best for you drawing on experience and benefits of finding successful funding needs for over a decade. A full detailed review of your situation can be completed in addition to resolution issues and monetary considerations. Request some additional information by contacting COHI today. Call 970-922-3277 or contact us for a decision. Often these are made the same day and can be addressed depending on client needs and schedule.
Stay In Touch