Category Archives: Consulting & Planning

Multifamily Loan Product Finances 100% of your Renovation Costs

We are very excited to offer a multifamily loan product that is perfect for purchases of multifamily properties.

Many purchasers of multifamily properties have renovation and improvement plans. Their goal is to improve the property and therefore increase the rental income as a value-add investment. If you are in a similar situation, this multifamily loan may be the perfect fit.

Cover Your Full Multifamily Loan Cost of Renovations

• Loan to Value vs. Loan to Cost: Loan-to-value (LTV) compares the loan amount to the expected market value of the completed project. On the other hand, loan-to-cost (LTC) compares the financing amount of a commercial real estate project to its costs. Lenders are typically limited to a maximum LTV/LTC or a a combination of both. However, this multifamily loan product will cover up to 100% of the renovation cost. This delivers a higher overall leverage for the borrower, while at the same time maintaining the desired total leverage parameters for the lender. Structuring the loan in this innovative way benefits borrowers and lenders alike.

• Why Should I Care about LTV/LTC ?The LTV value affects your rates and your collateralization needs. Lenders look at the total value of the property to determine how much money they are willing to loan. Getting to their sweet spot means more lenders want to offer financing. When we structure this loan and pitch your financing needs to our lending partners, they respond positively. They like the LTV and are willing to come in with extra financing for worthy renovation projects. Lenders are especially keen on renovations that will enhance future profitability and stabilize the property’s value.

• Call Us Before you make a Bid:  If you can swing it, let us know at GRP Capital when you have your eye on a multifamily property. We can evaluate your financing needs. You will have a better sense of what type of financing you will be able to acquire. In this way, you can use the information prior to even making an opening bid on the property.

If you would like to discuss this multifamily loan product with us, feel free to contact our team.  We can conduct a business evaluation, reach out to our lenders, offer advice on bidding and secure financing for you. An initial business evaluation is complimentary.

Lender Dropout: Prevention and Fixes

Have you heard of lender dropout?

Lender Dropout occurs when you have been working with a specific lender and then….you’re not.

This is a devastating occurrence when it happens. You have put time in with your lender partner. Now, they are no longer interested in your project. The result is a lot of wasted time and effort and possibly some money, too, if you have earnest money or payments due to sellers on a tight schedule.

How Can GRP Capital Help if your Lender Bails?

  • GRP Capital has a large network of lenders, including those that specialize in quick closing. Your project may even be a candidate for bridge lending.
  • We can advise you in restructuring ownership, refining your financial reports and working to improve appraisals to get you a better result.
  • Sometimes, we will advise you to wait and make significant changes in your business plan or operations before seeking financing. We never want our clients to be rejected by the Small Business Administration, which can have longstanding consequences.

Can you prevent lender dropout?

• Be choosy. GRP Capital knows the lenders. We also know that not every lender is a match for you. Some lenders prefer specific geographical areas. Others like certain industries and avoid others.

• Understand nervous lenders. The last several years have thrown lots of things into the lending landscape: higher interest rates, some shaky loan institutions, ups and downs in the stock and bond market reports. Add to these supply chain issues, vagaries of demand and you have met our partners: nervous lenders. They want to lend to serious, stable borrowers. Our job is to make the case that you are dependable as managers and owners and will be able to pay back your loan.

• Talk to GRP Capital before you proffer a bid. It is very tempting to sign a provisional agreement and hand over your earnest money, especially if you think that others are interested in the same piece of commercial real estate. But you need to understand what could be tricky about your loan and what could even slow down your closing.

• Don’t make promises to close quickly. Nervous lenders mean longer closing times. Keep this in mind if you will be penalized or have to produce hard money down payments with a longer closing. .

If you are considering a loan for purchase or refinance or construction and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you.

Do I Really Need Balance Sheets?

A balance sheet, along with a Profit & Loss statement (P&L) are the two components of professional financial statements. In fact, every lender in our network will request balance sheets, without exception. Yet many of our clients have incomplete or nonexistent balance sheets for their various businesses.

What is a balance sheet? Why do lenders request balance sheets?

Balance Sheet Basics:

  • A balance sheet states the book value of all your assets (including land, property and cash on hand.) The assets also incorporate accounts receivable, which will be expected previously contracted income.
  • Ultimately, a balance sheet offers a snapshot of the health of your business. Are the assets greater than the liabilities or vice verse?

Why Do Lenders Request a Balance Sheet:

• The business being purchased or refinanced. If you are purchasing or refinancing an existing business, the lender wants to know if it is profitable. The P&L only provides a partial picture. Lenders are particularly trying to determine your DSCR or Debt Service Coverage Ratio. This means how much you are paying for financing.

• Other businesses you own. If you own or manage other businesses (usually ownership of 20% or more), lenders want more information. They will typically ask for recent tax returns and current financials. Again, they will want a balance sheet to determine your global cash flow.

• How do Business debt Schedules differ from Balance Sheets? Business debt schedules give more detailed information about long-term liabilities. This includes the history of the loan, the interest rate, the maturity date and the current balance. The balance on the Business Debt Schedule should match the balance on the Balance Sheet.

• My accountant doesn’t provide balance sheets. What should I do? Insist on balance sheets from now on. Your financial reporting simply isn’t complete with them. If you know you will be seeking financing, inform your accountant right away. Let them know you will soon be needing balance sheets. Lenders typically request full financials for any years in which tax returns have not yet been filed.

• The business I am purchasing or refinancing has an EIDL. Is that a problem? Not usually. EIDL’s should always be in good standing. Be diligent in making payments on these low interest loans. Purchasing a business with an EIDL may require paying off the EIDL, If you would like more information about dealing with current EIDL loans in future financing arrangements, click here.

If you are considering a loan for purchase or refinance or construction and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you.

Making Your Financial Reports Work for You

Do your financial reports work for you?

Tax Day is behind us and either you have filed your taxes or have filed an extension. Now is the perfect time to look more closely at your financial reports.

Ask yourself these questions:

  • Are your financial reports giving you a true picture of your businesses?
  • Are they a useful tool?
  • Do you receive these reports in a timely fashion?

Consider making these changes to improve your financial reports:

• Produce reports more often. If your CPA only creates financial reports for you taxes, then you aren’t regularly receiving financial reports. Make the change and allocate the funds right now for at least quarterly reports and insist on receiving your quarterly reports within 30 days of the end of the quarter. (You can make exceptions to accommodate for your accountant’s tax preparation schedule.) If you are looking for financing, you may need monthly reports. If this is the case, again, let your CPA know.

• Balance Sheets are a critical part of financial reporting. Financial reports have two components: profit and loss statements as well as balance sheets. Balance sheets should clearly list your assets and also your liabilities, including any EIDL (Economic Injury Disaster Loans). If you would like more information about dealing with current EIDL loans in future financing arrangements, click here.

• Create your own business debt schedule. Whenever you are looking for financing, the lenders will ask for your business debt schedule. To make sure your balance sheets are accurate, try to fill out a business debt schedule ahead of time. We can provide you with a typical form if you want to try this exercise.

• Make sure your P&L is complete and accurate. If you produce your own financial statements, then you can merge your payroll and electronic bill payments into your reporting. Then, more aspects of your business are included. If your accountant is producing your reports, now is a good time to set up a meeting to discuss your reports and making them work for you by being more complete.

If you are considering a loan for purchase or refinance or construction and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you.

signing documents like title insurance

Title Insurance: What do I Need to Know?

Have you heard the one about the friend who couldn’t close his loan, because but there was an issue with title insurance? Don’t be that friend!

All lenders require Title Insurance.

FAQs about Title Insurance:

• Who benefits from title insurance? Well, it depends. Lender’s title insurance protects the lender and owner’s title insurance works for the borrower.

• What’s the difference? Lender’s title insurance is mandatory and owner’s title insurance is often optional. We recommend always purchasing the Owner’s Title Policy. This is not a place to save money.

• What is the purpose of title insurance? Title insurance ensures that the borrower has the clear ownership of the property. Additionally, title insurance also protects the lender by ensuring their claim on the property if they are not repaid for the loan.

What could possibly go wrong with the title?

We have seen many issues that make title complicated. We call issues with title a “cloud on title”. Title agents are always looking for “clear title”. Things that cloud a title could include:

  • errors in the survey
  • boundary disputes
  • liens placed on the property (before you even purchased it)
  • old tax liabilities
  • improper settling of estates after a death or divorce
  • Previous EIDL loans

What is the process of obtaining title insurance?  Your title agent will run a preliminary title report on any property you are financing. Then, they will see if there are any claims on the property. Afterwards, the title officer then has to remove anything that would cloud title. Sometimes, there are things the seller has to do. As you can see, title issues can be complicated. Thus it is critical to hire a competent attorney to advise you when engaging in financing loans.

• How do borrowers pay for title insurance? Title insurance is based upon the value of the loan. Every year, the lender renews their title insurance and this cost is included in your loan. The price lowers each year as the loan is paid off. Borrowers only pay for Owner’s insurance once, at closing.

If you are considering a loan for purchase or refinance or construction and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you. We will help you determine your DSCR and LTV and match you to appropriate lenders for your projects.

Debt Coverage: How DSCR has Eclipsed LTV

Have you been hearing terms like debt coverage and DSCR more than ever before?

Did you already know about loan to value or LTV and are now wondering about this new alphabet soup?

Well, here is what is going on!

DSCR stands for Debt Service Coverage Ratio. It’s actually a very simple fraction. Your DSCR is your net operating income (NOI) divided by your annual debt payment. So, if your business netted $500,000 annually and you pay $400,000 yearly in mortgages and other long-term debt, your DSCR would be 1.25.

What to know about your Debt Coverage:

• What’s a good DSCR? “Good” DSCR figures can vary by industry and even location. In general, lenders are looking for a DSCR of at least 1.15. However, sometimes there are extenuating circumstances, like ongoing long-term renovation, buyouts of partners and other issues.

• Hey, I have a great LTV! We talk with our lending partners every day. Three or four years ago, the most important number in securing financing for our clients was the LTV or loan to value. This figure is a ratio that expresses the value of your property and business divided by the amount of the financing you are requesting. However, lenders are telling us now that they are not as concerned with LTV and are much more carefully eyeing DSCR!

• Why is DSCR as important or more important than LTV now?  Within the last several years, commercial real estate had been rising rapidly in all sectors from office space to hospitality to everything in between. But the changing economic climate has thrown disorder into many sectors. Lenders and appraisers have become much more conservative and are not assuming high valuations like they used to. Instead, they are looking at what is tangible and real: how much a business earns and how much it costs to pay for debt.

What happens if my DSCR is too low?  Sometimes a property’s debt service coverage ratio is below the lender’s minimum. At the same time, the client wants a loan at the upper limit of the LTV. When this happens, the lender will have to reduce the loan amount in order to maintain the minimum DSCR. This is referred to as the loan amount being debt service constrained.

• Business and Personal Cash Flow: Lenders of course evaluate your business DSCR. But they also evaluate your global cash flow. They add up the income from all of your businesses and determine your expenses, including debt payments, both business and personal.

Don’t Forget Your EIDL!

• EIDL is Debt:  If you had an EIDL (Economic Injury Disaster Loan), this shows up as debt on your balance sheet and is included in your DSCR calculations. Fortunately, the low rates on EIDL’s make the payments for them relatively affordable, but they do add to your indebtedness and affect the DSCR ratio.

• What happens to my previous EIDL’s if I’m selling, buying or refinancing? This varies depending on your debt coverage and your circumstances. To learn more about these issues, see this blog about EIDL‘s and new loan transactions.

If you are considering a loan for purchase or refinance or construction and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you. We will help you determine your DSCR and LTV and match you to appropriate lenders for your projects.

Business Evaluation: Call Us BEFORE You Bid

Why are we offering you a free business evaluation? Many clients are looking right now for the next project. Are you one of these people?

If so, we love to hear from clients who are ready to take on new challenges. These might include expanding current businesses or adding new projects to portfolios. However, we find we can be even more helpful to clients when they contact us even before bidding on a business or property.

Before You Make an Offer:

• Business Evaluation of the subject property: We can help evaluate the business. We examine the documents you have or with your permission, we can also contact the current owners. Then we begin to determine the business’ strengths and weaknesses. We provide an independent opinion on reasonable projections for expenses and revenues as well as advice on possible challenges.

• Understanding You as a Borrower: Our clients’ comfort and trust in our process is critical. In order to foster the very best relationships, we spend a lot of time getting to know our clients. We want to understand your business goals as well any concerns you might have. As a result, we will then know what your priorities are in terms of financing and finding the best loan products for you.

• Considering Hidden Costs You Might Not Have Considered:  We have the benefit of closing hundreds of loans. Therefore, we have experienced potential hiccups and can pass on that wisdom to you. We can offer information about whether a survey will be necessary, timely advice about insurance in your local marketplace or the willingness of lenders to fund your business proposal. Our experience and advice can save you time, money and frustration.

Free Prequalification:

• Getting to Know All of the Partners:  We will discuss your organizational structure and make sure it is set up in the best way to find an appropriate lender. Having this conversation before making a bid can prevent having to make changes in the ownership of businesses. It also allows for a free and honest conversation about what will be expected monetarily from each of the partners during the initial setup of the business.

• Choosing Guarantors: Not every partner should necessarily be a guarantor. We can guide you to select guarantors based upon the merits of your project.

• Review Personal Financial Statements: Again, we help all our clients to establish their own personal financial statement, which we then (as needed) share with potential lenders. This process helps us work together to determine what each client can afford and how to best show their personal assets and liabilities to greatest advantage.

If you would like to schedule your free business evaluation, contact Veeraj Patel, our Credit Analyst at 239.294.1664.

If you are considering a loan for purchase or refinance and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you.

Gas Station Loan FAQ’s

Are you in the market for a gas station loan? There are lots of things to consider if you are seeking finance. Gas stations and convenience stores continue to be solid investments, seemingly recession and inflation-proof. GRP Capital is busily working right now on placing several gas station loans, including purchases, refinances and construction.

What do I need to know right now about a gas station loan?

• Lenders are still fans of gas stations and C-stores: Lenders consider gas stations and C-stations to be essential businesses. They have proved their resilience in these somewhat volatile economic times. This gives us more options to find you good, solid lending partners.

• Include Revenue Enhancements in your Business Plan: Many of our lending partners are still very keen on gas station loans and particularly gas station upgrade loans. They want to see your plans to maintain or even increase profitability. As a result, they are willing to finance upgrades like car washes, improvements of indoor retail offerings and adding charging stations for electric vehicles.

• Take advantage of rural business financing if applicable: Did you know that the United States Department of Agriculture offers loan guarantees for small businesses in rural areas? If your store is located near a highway but outside the metro center, this might be an option for you. USDA loans offer rates that might be more affordable for certain borrowers

Why GRP Capital Can Help Gas Station Owners:

• We Do the Work So You Can Do Yours: Lots of small business owners work hard. However, we know that gas station/C-store ownership and management is particularly labor intensive. Our clients can rely on us to fill out documents, review them, obtain signatures, and set up site visits, all while working in partnership with the lender. We also have relationships with professionals like environmental engineers which can help us make the loan process go more smoothly. Ultimately, we work hard securing your funding, so you can work hard running your business.

• We Know the Gas Station Business: We have worked with a variety of clients who own gas stations and C-stores. We have expertise in funding the purchases, refinances and construction of gas stations and C-stores. We understand the nature of the business and many of its challenges, including staff retention. As a result, we can make the case for your business, showing its profitability and its potential for future profitability.

Contact Our Team For Your Financing Needs:  

If you are considering a loan for purchase, refinance or construction and would like to discuss your plans, feel free to contact our team. We have a network of lenders and can find the best match for your funding needs, saving your time and money, so you can focus on running your business.

Gas station

What About a Gas Station Loan to Upgrade?

A gas station loan may be just what your business needs to enhance revenue. Many of our lending partners are still very keen on gas station loans and particularly gas station upgrade loans. Gas stations and convenience stores continue to be solid investments, seemingly recession and inflation-proof. GRP Capital is busily working right now on placing several gas station loans, including purchases, refinances and construction.

What Upgrades should I consider with a Gas Station Loan?

• Luring Customers inside to spend more: While gas purchases are important, owners can seriously increase revenues when they encourage add-on spending from customers. Inside store sales are a key example of this add-on spending. Car washes are also considered add-on spending. Having a variety of tasty treats, do-it-yourself beverage stations and prepared foods are all enticing. It’s important to create the infrastructure to offer more variety (food stations, etc.). However, equally important is finding and maintaining sufficient workers to tend to these new areas.

• Car Washes: Car washes are a terrific gas station upgrade. They do require maintenance and increased water and supply costs. But these can be offset with enough volume. We are also seeing gas station owners offering initial car wash specials or encouraging loyalty programs.

• Charging Stations: Gas stations can still be relevant to drivers of electric vehicles through the installation of charging stations. Additionally, there is often matching governmental funding for creating charging stations. Most importantly, drivers of electric cars have to linger at the charging stations for a little while. Therefore, they have time to kill, time which can be spent shopping in your retail area.

Why GRP Capital Can Help Gas Station Owners:

• We Do the Work So You Can Do Yours: Lots of small business owners work hard. However, we know that gas station/C-store ownership and management is particularly labor intensive. Our clients can rely on us to fill out documents, review them, obtain signatures, and set up site visits, all while working in partnership with the lender. We also have relationships with professionals like environmental engineers which can help us make the loan process go more smoothly. Ultimately, we work hard securing your funding, so you can work hard running your business.

• We Know the Gas Station Business: We have worked with a variety of clients who own gas stations and C-stores. We have expertise in funding the purchases, refinances and construction of gas stations and C-stores. We understand the nature of the business and many of its challenges, including staff retention. As a result, we can make the case for your business, showing its profitability and its potential for future profitability.

Contact Our Team For Your Financing Needs:  

If you are considering a loan for purchase, refinance or construction and would like to discuss your plans, feel free to contact our team. We have a network of lenders and can find the best match for your funding needs, saving your time and money, so you can focus on running your business.

Gas Station Loans and Gas Station Upgrade Loans

Many of our lending partners are still very keen on gas station loans and particularly gas station upgrade loans. These businesses continue to be solid investments, seemingly recession and inflation-proof. We routinely check in with our lending partners to see what their appetite is. They are telling us that they remain highly interested in funding gas station purchases, refinances, and gas station upgrades.

What are Gas Station Upgrade Loans?

• Finding Paths to Increased Profits: Gas station owners have a few ways to increase revenues. Pricing their fuel to drive traffic to the store is one way. However, many fuel center owners believe that the true revenue centers are those that encourage add-on spending from customers. Inside store sales are a key example of this add-on spending.

• Car Washes: Car washes are a great gas station upgrade. They do require maintenance and increased water and supply costs. But these can be offset with enough volume. We are also seeing gas station owners offering initial car wash specials or encouraging loyalty programs.

• Charging Stations: Gas stations can still be relevant to drivers of electric vehicles through the installation of charging stations. Additionally, there is often matching governmental funding for creating charging stations. Most importantly, drivers of electric cars have to linger at the charging stations for a little while. Therefore, they have time to kill, time which can be spent shopping in your retail area.

Why GRP Capital Can Help Gas Station Owners:

• We Do the Work So You Can Do Yours: Lots of small business owners work hard. However, we know that gas station/C-store ownership and management is particularly labor intensive. Our clients can rely on us to fill out documents, review them, obtain signatures, and set up site visits, all while working in partnership with the lender. We work hard securing your funding, so you can work hard running your business.

• We Know the Gas Station Business: We have worked with a variety of clients who own gas stations and C-stores. We have expertise in funding the purchases, refinances and construction of gas stations and C-stores. We understand the nature of the business and many of its challenges, including staff retention. As a result, we can make the case for your business, showing its profitability and its potential for future profitability.

Contact Our Team For Your Financing Needs:  

If you are considering a loan for purchase, refinance or construction and would like to discuss your plans, feel free to contact our team. We have a network of lenders and can find the best match for your funding needs, saving your time and money, so you can focus on running your business.