Category Archives: Consulting & Planning

Gas Station Loans and Convenience Store Loans

We love to fund gas station loans and convenience store loans for our clients. 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 construction for qualified borrowers. In fact, one of the first loans that the GRP Capital team closed after the COVID-19 pandemic began was a gas station development loan.

How we can help fund your Gas Station or C-Store:

• Understanding the 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.

• Finding Motivated Lenders: We, like our clients, are carefully monitoring the ups and downs of our economy. Our lenders are doing the same. Gas station and convenience store owners have routinely demonstrated how essential their businesses are throughout the past two years of change. These businesses were able to pivot and be adaptable. In addition, customers appreciate the one-stop shopping at these shops, avoiding lines and larger crowds.

• 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

• Fuel Supply Agreements: Fuel supply agreements set up an established “cut” for the supplier. This protects both the supplier and the gas station owner. No matter what the price of the fuel is, the owner will still make money. This built-in stability makes a gas station loan attractive for many lenders. We have been able to assist our clients in obtaining favorable fuel supply agreements, which will positively impact their profitability for a long time.

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.

Tip for smooth closing: partner with professionals

Everybody wants a smooth closing, including our GRP Capital team! GRP Capital recently closed a loan for a purchase of an 86 unit franchised hotel on the west coast of Florida. GRP Capital Managing Director Krishan Patel as well as GRP Capital President Rick Patel worked closely with our client. They also worked with his team of highly competent and trusted professionals. As a result, we closed quickly and without too many hiccups.  

Smooth Closing: How we can partner with your professionals: 

• Accurate and Appropriate Financials : While many small business owners prepare their own financials, lenders prefer professionally prepared financials. For this loan, we worked carefully with our client’s CPA. Together we analyzed the financials of the hotel being purchased. We also pre-underwrote the financials of various businesses owned by our client. We wanted to show the lender the true potential revenue value of the hotel. In addition, we demonstrated the ability of our borrower to make payments on a new loan.

•  Saving Our Clients Time: The lender requested many documents. Being able to work directly with the CPA allowed our client to run his businesses. Furthermore, he trusted us and his CPA to work on his behalf. As a result, he didn’t have to be involved in every email or conversation.

•  Excellent Attorneys Make for Excellent Closings:  We notice that having a trusted attorney at closing makes a difference. They look out for our clients’ interest and are able to amend documents quickly. If necessary, they can run title and even escrow funds. We recommend that all of our clients engage an attorney. Clients are often spending a lot of money when seeking financing. Paying for an attorney is an investment towards a smooth closing and protects client’s interests.

Rick Patel upon closing this loan stated, “We know this client well and have worked with his professional team, too. They are very responsive to our phone calls and e-mails not just from me, but from Keren Alpert, our loan processor, too. As a result, our client trusts that we are doing the work in the background, so he can run his business.“

Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research  the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer or refinancing a current loan, we can assist you.

What about your EIDL Loan?

If you have an EIDL loan (Economic Injury Disaster Loans offered by the Small Business Association), what do you need to know about future loan transactions?

  • What about buying a new business?
  • What about refinancing a current business?
  • What about selling my business?

Many of our clients have an EIDL loan. We encouraged our clients to obtain these during the most restrictive part of the COVID pandemic. These low interest loans gave needed relief to some of the hardest hit industries, including hospitality.

Selling a Business with an EIDL Loan:

• EIDL Loans Mostly Have to Be Paid off poor to sale: Any lender who is funding the purchase of a business with real estate will require that buyers own the property “free and clear”. This means that there cannot be any liens (claims from lenders) on the property or the business. So, sellers must pay off previous EIDL loans prior to or at closing.

• Perhaps One Exception:  Sellers may have multiple businesses or properties. Some sellers, especially larger corporate sellers, may have an EIDL for the parent company but not the smaller component business being sold. If the EIDL is for the parent business, the new lender may find a way to make an exception.

Paying off an EIDL at or before closing:  Be aware that the SBA does not accept payoff via wire. At closing the title or escrow company will have to make out a physical check for the balance of the EIDL. The borrower can find the balance on their SBA portal. The SBA website also has clear instructions for paying off the loan via mail.

I Have an EIDL and I want to Refinance

• Size matters!  If your EIDL loan is small, then the lender may agree to pay it off. They will roll the remainder of the EIDL into the total loan value. If the loan is larger, there are a few possibilities.

• Paying off an EIDL: You may be holding on to the proceeds of the loan (and therefore have cash on hand). But new lenders will not consider the proceeds of the EIDL as an asset without also considering your EIDL loan as a liability. Therefore, a large EIDL may negatively impact your debt to income ratio. The lender may consider that you have too much debt and require you to pay off or pay down the loan.

• Subordinating an EIDL: Often lenders will agree to subordinate an EIDL. This means that they will request permission from the SBA to delay receiving payments for the EIDL until the mortgage has been paid off. Borrowers have to officially request subordination and the SBA has to grant it. This process is not automatic. In addition, requesting subordination can take some time. We have found that subordination happens most easily when we work with our network of SBA preferred lending partners.

I Have Other Businesses with EIDL loans and I’m Getting a New Loan:

The lender will underwrite your entire file and look at your affiliate businesses. If your other businesses are cash flowing and covering your debts, there are no issues with other EIDL loans. We are happy to help you do a self-evaluation of your cash position for all of your businesses. This will help you if you need to make your portfolio stronger prior to looking for financing.

If you are considering a loan for purchase or refinance 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 you time and money, so you can focus on running your business.

EIDL Loans: What to know if you are buying, selling or refinancing

EIDL Loans (Economic Injury Disaster Loans offered by the Small Business Association) have helped many small business owners during the COVID pandemic. These low interest loans gave needed relief to some of the hardest hit industries, including hospitality.

Many business owners have EIDL Loans on the books. What do you need to know? What do you need to do? An EIDL has an impact on selling, buying and refinancing.

I’m Buying or Selling a Business with an EIDL Loan:

• All liens have to be released: Any lender who is funding the purchase of a business with real estate will require that buyers own the property “free and clear”. This means that there cannot be any liens (claims from lenders) on the property or the business. So, sellers must pay off previous EIDL loans be paid off prior to or at closing. Also, previous PPP (Paycheck Protection Program loans) will need to be have been forgiven.

• Perhaps One Exception:  Sellers may have multiple businesses or properties. If the EIDL is for the parent business, the new lender may find a way to make an exception.

Paying off an EIDL:  Be aware that the SBA does not accept payoff via wire. At closing the title or escrow company will have to make out a check for the balance of the EIDL. The borrower can find the balance on their SBA portal. The SBA website also has instructions for paying off the loan via mail.

I Have an EIDL and I want to Refinance

• Size matters!  If your EIDL loan is small, then the lender may agree to pay it off. They will roll the remainder of the EIDL into the total loan value. If the loan is larger, there are a few possibilities.

• Paying off an EIDL: You may be holding on to the proceeds of the loan (and therefore have cash on hand). However, a large EIDL may negatively impact your debt to income ratio. The lender may consider that you have too much debt and require you to pay off or pay down the loan.

• Subordinating an EIDL: Often lenders will agree to subordinate an EIDL. This means that they will request permission from the SBA to delay receiving payments for the EIDL until the mortgage has been paid off. Borrowers have to officially request subordination and the SBA has to grant it. This process is not automatic. In addition, requesting subordination can take some time. We have found that subordination happens most easily when we work with our network of SBA preferred lending partners.

I Have Other Businesses with EIDL loans:

The lender will underwrite your entire file and look at your affiliate businesses. If your businesses are cash flowing and covering your debts, there are no issues with other EIDL loans.

If you are considering a loan for purchase or refinance 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 you time and money, so you can focus on running your business.

Finding Loans for Self Storage

Self storage continues to be a good business with strong profits and room for growth. As a result, many lenders are eager to fund purchase, refinances and construction loans in the self storage industry.

Why are Self Storage Loans Great Opportunities?

• Steady Demand: Did you know that 10.6% of households currently rent storage units, according to Spare Foot? These renters need this product because of housing transitions, moving into places that lack sufficient storage. In addition, renters run the age gamut, from college graduates to those moving into senior living situations.

• Recession Proof: Storage demand has remained consistent. People need storage  when housing prices go up and when housing prices go down,

• Strong Return on Investment: Self storage properties have posted high ROI, higher than other real estate classes.

• Attractive to Lenders: Lenders like storage businesses for their profit potential, their lower maintenance costs and the ease in which owners can release units when renters have quite paying.

GRP Capital has a large network of lenders, many of whom have demonstrated interest in loans for the storage industry. We can help match our best lenders to your specific needs.

If you are interested in any form of self storage loans, now is the time to act. GRP Capital Business Associate Shail Madhav is ready to discuss your plans and funding needs right now, so you can take advantage of current low rates and lender interest. All consultations are free and GRP Capital never charges fees to borrowers. 

Read more about other aspects of finding funding in today’s climate here:

Becoming a Better Borrower

What Businesses do Lenders Like Now?

Deferred Maintenance: Planning and Setting Up a Capital Fund

Deferred maintenance: projects to keep up your commercial property that still have not been completed. It’s time to recommit to making your property look excellent and perform in peak condition.

Do you have deferred maintenance projects? What’s the best path forwards?

How to Make a Plan for Deferred Maintenance:

• First of all, understand your motivation: A property that is in good working order, that looks good cosmetically and operates appropriately reflects well on you as a business owner. This is important if you are ever looking to refinance or sell. In addition, guests and customers notice when their environment is looking tired. This affects word of mouth reputation about your business and can even show up in online reviews.

• Deferred maintenance may be allowing small problems to get worse: If you have experienced, for instance, small water damage and were just waiting for the right time to tackle these repairs, stop delaying. Appraisers and customers can easily spot water damage and it is an obvious sign of neglect. Further, water damage can cause serious issues beyond cosmetic ones.

• Consider Other Upgrades: Change out plumbing and fixtures, upgrade furniture and replace soft packages (linens, bedding, curtains) as well as larger, more extensive renovations.

• Create a detailed plan: First ask yourself if money were no object, what you would do to improve your property. Then figure out which of these items you can afford and which items retain or add the most value. Next, determine how long each project would last.

• Prioritize and Act: Create a calendar with all scheduled future maintenance, keeping notes on the budget and the timeline to complete each component. You know your property best. Work around its high and low seasons to determine the best timeline. Line up your contractors and workers and get to work!

Secure Good Advice: 

• Consult your franchise service director, if applicable.  Your franchise representative (if you have one) will help you prioritize and will understand what other business owners like you face. Ask for a site visit.  Specifically ask which projects have the greatest return on capital.

• Confer with your network. Arrange for a trusted owner of a business like yours for their advice.

• Contact GRP Capital.  We are happy to look at your financial statements and discuss what your business needs are. We can help you determine some of the best options to go forward.

Building Funds for CapEx and Utilizing them:

If you were in the position to have a Capital Expenditures (CapEx) fund prior to the pandemic, it’s time to start spending that fund. While you may have been focusing only on debt service and minimizing operating expenses from 2020 until now, you can now change gears.

If you have never set aside monies for CapEx, start now. We recommend designating 4% of your budget for CapEx. Further, we recommend setting aside money in a segregated fund, so that you can build up this nest egg and use it. These funds will be included in your balance sheet as an asset until you spend it.

If you are considering a loan for purchase or refinance and would like to discuss your plans for project maintenance or developing a CapEx budget and timeline, feel free to contact our team.  

Property Maintenance: Maintaining Your Brand

Property maintenance is important for a number of reasons. If you have been deferring maintenance to focus on operations, to keep costs down during the recent economic uncertainty, act now! It’s time to recommit to making your property look excellent and perform in peak condition.

What’s so Important About Property Maintenance:

• Maintaining Your Property is Maintaining Your Brand: A property that is in good working order, that looks good cosmetically and operates appropriately reflects well on you as a business owner. This is important if you are ever looking to refinance or sell. In addition, guests and customers notice when their environment is looking tired. This affects word of mouth reputation about your business and can even show up in online reviews.

• Deferred maintenance may be allowing small problems to get worse: If you have experienced small water damage and were just waiting for the right time to tackle these repairs, stop delaying. Appraisers and customers can easily spot water damage and it is an obvious sign of neglect. Further, water damage can cause serious issues beyond cosmetic ones.

Other maintenance issues to consider include changing out plumbing and fixtures, upgrading furniture and soft packages (linens, bedding, curtains) as well as larger, more extensive renovations.

How Should You Choose Which Deferred Maintenance to Do First?

• Consult your franchise service director, if applicable Request a site visit. Seek the knowledge and mentorship that these organizations provide. Ask for help in prioritizing projects, determining what improves your property the most and increases your appraised value. Specifically ask which projects have the greatest return on capital.

• Create a detailed plan: First ask yourself if money were no object, what you would do to improve your property. Then figure out which of these items you can afford and which items retain or add the most value. Next, determine how long each project would last.

• Prioritize and Act: Create a calendar with all scheduled future maintenance, keeping notes on the budget and the timeline to complete each component. You know your property best. Work around its high and low seasons to determine the best timeline. Line up your contractors and workers and get to work!

Building Funds for CapEx and Utilizing them:

If you were in the position to have a Capital Expenditures (CapEx) fund prior to the pandemic, it’s time to start spending that fund. While you may have been focusing only on debt service and minimizing operating expenses, you can now change gears.

If you have never set aside monies for CapEx, start now. We recommend designating 4% of your budget for CapEx. Further, we recommend setting aside money in a segregated fund, so that you can build up this nest egg and use it. These funds will be included in your balance sheet as an asset until you spend it.

If you are considering a loan for purchase or refinance and would like to discuss your plans for project maintenance or developing a CapEx budget and timeline, feel free to contact our team.  

Getting Ready to Borrow? Do These Now!

Are you getting ready to borrow money? With continuing low interest rates, now is an ideal time to start or grow an existing business.

We at GRP Capital guide our clients from the germ of a business idea to receipt of funds.

Many clients come to us with good business plans and even sufficient equity and/or debt coverage. But many clients neglect what we call due diligence. Due diligence is really understanding and researching the elements necessary to close the loan. Due diligence also means engaging professionals who will advise and serve your interests.

How You Can Be Ready To Borrow:

• Hire your own attorney:  An attorney, hired by you, can examine your purchase agreements, loan documents, and the title commitment letter and policies. A qualified attorney will protect you and your business interests and can even negotiate on your behalf. Borrowers are not always required to hire an attorney; however, we do not advise trying to save money by NOT hiring an attorney.

• Ask about previous environmental reports:  Typically, when a bank loans money, they will arrange for various site visits and reports. If you are looking at buying a business or if you are refinancing, the lender will require previous environmental reports and will also engage an appraisal. If the property never had an environmental report (maybe the private lender didn’t require it), you need to be sure that nothing adverse will be revealed. Always ask owners to see their ESA (environmental site assessments). This will ensure that you know about any issues with the property. Of particular concern are nearby gas stations and automobile repair shops.

• Look into title work and previous surveys: Not every property has a recent survey on file. Nowadays, most lenders are requiring updated surveys. Engaging a surveyor and obtaining the survey can take 4 weeks. Shortening the time frame comes with a surcharge. So if you are refinancing and don’t have a survey on hand, you will probably need to engage one. If you’re purchasing a business which includes real estate, as soon as you receive a letter of intent from the lender, you should consider engaging a survey, if necessary.

• Meet with your accountant and get your documents in order: Let your accountant know that you are in the market for a loan. He or she will need to make sure you have up-to-date financials, which include Profit & Loss statements and Balance Sheets. Your accountant should have filed your tax returns or extensions. In addition, you will have to identify all of the components of your business debt.

Be Ready for Site Visits:

• Put Your Best Foot Forward: If bank personnel or appraisers are coming to look at your business, understand your business plan and be able to explain how you will be profitable. GRP provides coaching to clients to help them understand the most important messages to relay to site visitors.

• Clean House: If you are looking to refinance an existing business, the property should be in decent shape with minimal deferred maintenance, if possible. If you are planning to renovate with the proceeds of the loan, you should be able to detail what will be improved and how much it will cost.

• Have a Plan for Obvious Problems: If the property is in need of obvious repairs (water damage, parking lot issues, etc.), be honest about those, be sure that you can explain the timeline and the financing of these planned improvements.

Be Ready to Borrow!

•  Clients who haven’t done their due diligence can experience frustration during the loan process. Not having a survey, an ESA or your own attorney can delay or even derail a loan closing.

• We will help guide you in the loan process. But we hope these ideas will help you before you even call us. When you have done your due diligence, you really are ready to borrow!

One of our chief responsibilities is advocating for borrowers. Even in the recent economic uncertain times, we have continued to advocate for our clients, and successfully closed loans.

Our Great Opportunities series discusses various aspects of the changing economic climate. There are still opportunities to secure funding for specific business plans. Read more about other aspects of finding funding in today’s climate here:

Becoming a Better Borrower

What Businesses do Lenders Like Now?

Choosing the Right Loan

Are you choosing the right loan right now?  If you are ready to secure funding for your business, you know there are many types of loans in the marketplace. What’s the best method for choosing the right loan, the one that most closely matches your business needs?

Choosing the Right Loan for You:

• What is the Purpose of Your Loan? Are you purchasing a new business or property? Refinancing? Constructing a new property? Buying out a partner? Renovating or converting a property? You can utilize different loans for different purposes; they are not interchangeable.

• How long do you want to need to pay back this loan?  How long do you intend to keep this property? How long will you need funding for? The longer the loan, the smaller your monthly payments. However, you will also have debt on your books for longer, which can affect future borrowing. Sometimes, there is a business opportunity that requires immediate action, which would necessitate using a loan that can close quickly.

• How much cash on hand do you have to fund this project? With the exception of refinances, most loans require an equity injection. Figure out exactly how much you are willing and able to contribute, along with your partners.

Types of Loans:

• Conventional Loans:  Conventional loans are traditional mortgages. These loans are secured by a first lien position on the real estate or business. This means that the collateral of the real estate and business “guarantee” the loan, along with any necessary personal guarantees of the borrower. Banks, credit unions and other financial institutions offer a variety of conventional loans.

•  SBA (Small Business Administration) loans: SBA loans can be used for a variety of financing needs associated with being a small business owner, including purchasing a business, refinancing an existing mortgage and expanding and renovating existing businesses. Their rates tend to be competitive. GRP Capital partners with a number of preferred lender partners (PLP) of the SBA in order to streamline the process of closing these loans.

• Bridge Loans: Bridge loans serve as a short-term solution when borrowers needs immediate funds. Bridge loans allow a borrower to make quick and strategic business decisions, without having to worry about securing long term financing and waiting for those loans to close.  This solution allows a client time to then secure permanent funding down the road. GRP Capital can help secure quick turnaround bridge loans. We also have access to our GRP Capital Debt Fund. We are proud of our reputation of being reliable, flexible and fair in utilizing this debt fund.

• USDA Business and Industry Guaranteed Loans (USDA B&I): These specialized loans are designed for projects in agricultural and rural settings. These loans support local employment and economic health in rural communities.

If you are considering a loan for purchase or refinance and would like to discuss choosing the right loan for you, feel free to contact our team.  

Wallet for personal financial statement blog

How to Fill out a Personal Financial Statement (PFS)

Lenders typically request that borrowers fill out a personal financial statement (PFS) when applying for a loan. This personal financial statement can vary somewhat, although the SBA uses Form 413. A PFS shows the bank a borrower’s cash position, how much liquidity they have to take on a new loan and their ability to pay back future loans. It’s important to understand the typical questions on a PFS, so you can fill them out accurately. Below are components of a PFS that are most confusing to our clients.

The Asset Portion of the PFS:

• What is Cash on Hand? Cash on hand is money that you have in checking and savings accounts and in cash on your person that is immediately available to you (liquid). Be prepared to furnish bank statements to support your cash availability. This is different from stocks and bonds, IRA’s or even Bitcoin.

• What do I need to know about my life insurance policies? You only need to declare life insurance policies if you have a whole life policy with a cash surrender value. So if you have a term life policy, you cannot consider it as a current asset, as it has no cash value.

• Real Estate and Automobiles as Assets:  Estimate the value of the automobiles you have and any real estate you own. This real estate includes your residences (primary and vacation homes). In addition, you will need to calculate the value of any commercial real estate you own. If you are a partner in a business that owns real estate, you can only claim the value of the real estate equal to the percentage of the business you own.

Declaring Liabilities on a PFS:

• Notes Payable and Installment Accounts:  Gather all of your personal loan and credit card statements to fill out the liabilities section of the PFS. You’ll need to know what your payments and balances are.

• Car Loans and Mortgage Loans: Your automobiles and real estate are assets, but if you owe money on them, they are also liabilities. Complete your PFS by stating what the payments and balances are, the interest rate, and in the case of mortgages, who the lender is and when the mortgage will be paid off. If your commercial real estate is for a business in which you are a partner, you only need to declare the percentage of the mortgage equal to your ownership percentage.

• Loans Against Life Insurance: Again, this is only applicable if you have a whole life policy (not a term policy) and you have taken out a loan against the cash value of the policy. Otherwise, this should be left blank.

• Unpaid Taxes: Most lenders would prefer that you pay off overdue taxes. But you can show a small amount on your PFS and work through that process prior to closing.

Net Worth:

Net worth is an equation. If you add up all your assets, and subtract all your liabilities, that is your net worth. It does not include your salary or your earning potential, just your declarable assets and liabilities.

We work closely with our clients to make sure the PFS is accurate. If you are considering a loan for purchase or refinance and would like to discuss your plans, feel free to contact our team. We will get to know you and your business objectives. Then we will recommend the best loans for you to consider. Initial consultations are free.