Category Archives: Small Business

Graphic of electric vehicle charging station

New Spending Bill and Electric Vehicles

Electric Vehicles are in the news right now. The new spending bill that just passed through Congress affects the purchase of these vehicles and charging stations. In addition, the bill may have an impact on your future business decisions.

How can electric vehicle charging stations benefit you? What legislative decisions will also affect you?

Electric Vehicles (EV) and the New Spending Bill:

• Expiration of Tax Credit for EV Purchases : Currently, individuals who purchase an electric vehicle receive a $7,500 tax credit for new vehicles and a $4,000 tax credit for used vehicles. These tax credits will expire on September 30, 2025.

• Possible Effects of Expiration: EV owners are loyal and largely happy with their purchases. There is likely to be a surge of demand and purchases of EV’s up to the expiration date. There may also be interest and inquiries regarding nearby charging stations.

• Electric Vehicle Charging Stations: There was also a tax credit through the Alternative Fuel Vehicle Refueling Property Tax Credit. This tax credit, limited to $100,000, offered incentives to businesses that installed charging stations. Many business owners took advantage of this credit. This included gas station and convenience store owners, retail and commercial office space owners, multi-family housing owners and hospitality owners.

• When is the EV Charging Station tax credit expiring? This tax credit is due to expire on June 30, 2026.

• Should I Install an EV Charging Station? Our lenders are aware that business owners may be keen to take on this business upgrade with some urgency. In addition, if you are in the market to purchase or refinance commercial real estate, you may want to include a charging station installation in your business plan. While it is difficult to predict the cost-benefit of a charging station, it is certainly advantageous to install the station before the tax credit expires. t

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. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Meeting from above

SBA Launches Working Capital Loan

The Small Business Administration has just announced a brand new working capital loan program. This program will be administered as a 7a loan. Although the SBA has not announced a start date, the official launch of the loan could occur as early as third quarter 2024.

The name of the pilot program is the Working Capital Pilot Program (WCP). The goal is to provide lines of credit to small business owners. The SBA particularly wanted to create this financing option during the current extended high rate environment.

According to the SBA’s press release, “This pilot program represents a significant expansion of the SBA’s loan programs by adding a line of credit product with an innovative fee structure engineered to increase flexibility for small businesses and lenders, providing more options when structuring a line of credit to meet businesses’ specific needs.”

What we Know about the Working Capital Loan Program:

• Competitive Rates for a Line of Credit: This loan can be utilized for short-term capital injections. As a result, the loan should help increase profitability or jump start a new aspect of a business. The shorter team loans and flexible designs should be enticing to many entrepreneurs.

• Flexibility: The WCP offers greater flexibility than other SBA 7a offerings in terms of maturity date and loan terms.

• Asset Based Financing : The WCP will offer a line of credit, based upon the assets of the small business. This should enable business owners to manage cash flow and to also deal with any snags in supply chains.

• More guidelines are forthcoming: The SBA is offering one-on-one consulting to lenders to help educate their personnel first about the advantages and details of the WCP. GRP Capital expects to be able to recommend these loans after a short study period with our lending partners.

• Using Valued Lender Partners: In order to access this working capital loan, we will need to engage with experienced lenders in the SBA marketplace. These lenders are already in contact with our GRP Capital team. Together we are determining the best usage of this new financing option.

• Annual Guaranty The loan will include an upfront SBA guaranty. Borrowers can pay this guaranty annually.

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. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Interest rate

Interest Rates and Your Loans and Investments

Interest rates are a hot topic right now. But how do they impact your current and future loans? Whether you’re a seasoned investor or business owner, understanding the mechanics of interest rates is critical. Only then can you make informed decisions.

Let’s break it down.

Cost to borrow money:

  • A loan’s interest rate determines how much it costs to borrow money. The interest rate determines the additional amount you pay on top of the principal.
  • Lower rates reduce your borrowing costs. As a result, your cash flow and profitability improve.

Value and growth of investments:

  • On the flip side, interest rates dictate the returns on investments. These include bonds, treasury bills, savings accounts and certificates of deposit (CD’s). Higher interest rates can mean better yields for investors.
  • Compounded interest rates accelerate the growth of these investments over time.
  • It is critical to compare returns against inflation. If inflation outpaces interest rates, your purchasing power diminishes.

Key Factors to Know about Interest Rates:

•Not every loan is dependent on the Fed rate or the prime rate. While many loans are influenced by Federal Reserve policies, others are pegged to different benchmarks. These include the SOFR (Secured Overnight Financing Right), swap rates or even lender-specific indices.

The prime rate is often used as a baseline for commercial lines, with an additional margin based on borrower risk. (Prime +1.5 for example).

• Fixed vs. Variable Rates

  • Fixed rate loans lock in your interest rate for a part of the life of the loan. This provides stability, but can be less advantageous if market rates drop significantly.
  • Variable rates fluctuate with market conditions and are often readjusted quarterly. While they offer savings during low-rate environments, they can become costly when rates rise.

FAQS about Interest Rates:

Q: I have a fixed rate mortgage or business loan. Should I be concerned about interest rates?

A: Not necessarily. Fixed rate loans shield you from market volatility; your payments remain constant. However, if the rates drop significantly lower than your fixed rate, it might be a good idea to explore refinancing. At GRP Capital, we can help you assess whether refinancing aligns with your long-term goals and global cash flow.

Q: Are variable rate loans risky?

A: Variable rate loans can be advantageous when interest rates are low but require careful planning for potential increases in payments during high-rate periods.

  • A $1 million loan at 4% variable interest would cost $40,000 annually in interest payments. If the rate increases to 6%, that jumps to $60,000, a significant cash flow consideration.
  • Business owners who prefer predictable expenses often opt for fixed rate loans despite potentially higher costs during lower rate climates.

Q: How do higher interest rates affect my ability to secure financing?

A Higher interest rates increase borrowing costs. They may also tighten lending criteria, as lenders assess higher risks. This makes it even more important to work with experienced professionals who can identity competitive financing options tailed to your needs.

Navigating the complexities of financing in today’s fluctuating rate environment can be challenging. But that’s where we come in.

At GRP Capital:

  • We specialize in matching client with lenders who understand their unique projects.
  • Our expertise spans acquisitions, refinancing and construction financing across various industries.
  • We prioritize solutions that balance competitive terms with sufficient cash flow for long-term success.

Whether you are looking to refinance existing debt or secure funding for growth opportunities, our GRP Capital team is here to guide you every step of the way. Let’s discuss how we can help you achieve your business goals.

Working together on SBA 504 loans

SBA 504 Loans for Hospitality

Once again, Ryan Dumas has helped a client close a hotel loan, this one in an East Coast resort location.

Ryan’s client, an experienced hotel owner, was prepared to purchase a hotel. This property was not too far from a current one he already owns. Our client knows this community well and had been keeping his eye on this hotel. He believed that the hotel had the potential to be even more profitable with strategic, experienced management, which he had the time and skills to provide.

Our in-house underwriting and credit analysis team recommended an SBA 504 loan to our client. Many lenders are still skittish about hospitality loans. However, the guaranty of one of the SBA 504 loans is enticing to a greater number of lenders. Working with a certified development company as well as a senior lender, our team was able to shepherd the loan through this complex process.

Our client has taken possession of his new hotel. His strong business skills should allow him to capture even more of this resort market. He remarked, “I know you worked very hard to process my loan.” During the loan processing, we spoke to him every day. So we are going to miss him while he’s busy with his new business!

FAQs on SBA 504 Loans:

• What can an SBA 504 Loan be used for? Purchase of a business or equipment as well as renovation/construction for an existing business. At this time, SBA 504 loans cannot be used for refinancing.

• What is a Certified Development Company (CDC)? In order to apply for an SBA 504 loan, borrowers must work with both a CDC and a senior lender. The CDC has to officially submit the loan to the SBA for approval. In addition, the CDC also approves the lender. Typically the CDC and the lender each have their own underwriting processes, which happen simultaneously.

• How Complicated are SBA 504 loans? To be honest, there are a lot of moving parts. Essentially, you are applying simultaneously for two loans and closing them at the same time. Having GRP Capital to assist in the large numbers of document collections saves clients a huge amount of time and hassle. In addition, GRP Capital already has positive working relationships with many CDC’s and knows which lenders are willing to make hospitality loans.

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. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

We Did It! Fast Closing for two Midwest loans

Ryan Dumas‘ clients came to him with a challenge and a problem. How quickly could GRP Capital close not one, but two hotel loans?

It was a challenge, but our team, working together, was up to the task. In fact, we closed both loans in under 40 days. This was one of our fastest hospitality loan closings, and a source of great pride!

Our clients, experienced hotel owners, now own two new hotels. They were pleased with the results and the team approach to the various issues that come up during a closing. During one conversation, the client said, “My attorney was impressed with you. You really got quick results.”

Quick closings are not always possible. But sometimes they are absolutely required.

Reasons for a Fast Closing:

• Issues facing the seller: A property might come on the market due to a seller issue. They may have another business they want to fund with the proceeds. Sometimes, sellers just simply are ready to retire. While not every reason is truly a “crisis” requiring a quick closing, we try to expedite the process.

• Competitive Bidding. Borrowers will sometimes feel tremendous pressure to close when sellers indicate there are other buyers out there. We try to caution everybody that super fast closings are not always possible (and are becoming rarer in both hospitality and construction loans). In addition, a loan in progress will almost always close more quickly than starting over with another buyer.

• Using proceeds from a 1031: Borrowers who are planning to use the proceeds from a previous commercial real state sale save taxes by quickly using the profits on a new purchase. This transaction, called a 1031 exchange, has a time limit between the sale and the new purchase. This can legitimately necessitate a quick closing.

What Can you do to Expedite Closings?

• Have your books in order: Borrowers need to have up-to-date personal financial statements. Their taxes must be filed or on extension. And the borrowers must have their hands on good, solid information about the business they are buying. Lenders must be assured, especially for a fast closing, that borrowers can make loan payments.

• Put your CPA on speed dial. As a borrower, you will need multiple documents including up to date financials. If your CPA regularly submits monthly reports to you about other businesses you own, that’s awesome. If not, let your accountant know that you are in the loan process and may need accurate documents quickly. You may have to pay for this short-term additional work. We recommend doing so.

• Work with an attorney: Fast closings are almost impossible without good counsel. Contact your real estate attorney and include them in decisions and document creation. Use their advice as you create borrowing entities and attendant operating agreements. DIY is not great for fast closings. Solid legal advice is needed.

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. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

New Construction Loan for Liquor Store

Construction loans require special attention. They are somewhat complex and carry a modicum of risk. For these reasons, there is a smaller pool of lenders who make construction loans.

Our Georgia clients were experienced liquor store owners and operators. They had found a site in Georgia that looked promising for a new liquor store. After some delays securing local permitting, they were ready to secure financing.

Rick Patel worked closely with the clients. His advice was integral to securing general contractor approval. In addition, like most construction loans, this one also required multiple budget revisions. An accurate budget is critical, so the loan amount is sufficient for the entire construction process.

Important Aspects of Construction Loans:

• Clear, realistic business plan: Borrowers must assure lenders that they have a realistic business plan. That means they must have a strategy not only to build, but also to operate and manage a brand new business. Before even searching for a lender, spend the time to develop a coherent plan. Your plan should include a marketing analysis of the area, descriptions of competitors and why you think you can be successful. Sometimes GRP Capital will recommend that borrowers utilize a business consultant, who can produce a report that speaks the “lender language”.

• Finding an appropriate general contractor. Banks will want to vet your general contractor, just like they underwrite you as a borrower. To do this, they will want to ascertain that the GC has relevant experience and strong finances. Typically lenders will interview and request documents from the GC directly, which GRP Capital helps to facilitate.

• Careful underwriting: Lenders want to make sure borrowers have the capacity to repay the loan. In addition, an appraiser determines both the value of the land or building prior to construction (as is) and when the project is completed. The underwriting and appraisal process will often find aspects of the budget that have to be revised. As a result, construction loans often take a bit long longer to close.

• Permission to Build: Depending on your locality, there can be some bureaucracy. Obtaining permits to build as well as permission to operate the business often requires approval at the city or county level. Understand the permitting process, including the timeline.

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. Whether you are looking to refinance or purchase or engage in construction, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas Borrowers Move from Bridge Loan to Permanent Financing

Our Texas borrowers came to us last year, needing a bridge loan. We accomplished that.

Then we turned our attention to sourcing permanent, affordable financing. And now we accomplished that!

Looking back over the whole process reminds us of all of the challenges that can occur between origination and closing.

The First Goal: Secure Emergency Bridge Loan Financing.

Our clients had their eyes on an upper moderate hotel in South Texas. They had chosen their lender. But this story almost didn’t have a happy ending. Their lender dropped the loan in the middle of underwriting!

Lender dropout is a real problem and it is becoming more common in the current economic climate. And even more upsetting, the seller was adamant about the timeline: no extensions!

The buyers came to us in a bit of a crisis. They needed a loan fast!

Rick Patel and Krishan Patel worked closely with the client partnership group. First GRP Capital recommended a restructuring of the loan. As a result, traditional lenders would be more willing to finance it. But, being realistic, our team recommended a bridge loan. Bridge financing is a short term loan, designed to bridge the gap between undertaking financing and finding a permanent financing product. Bridge loans can be the perfect solution when the loan absolutely has to close, but the clients need more time to get everything right.

The Second Project: Permanent Financing

Once the bridge loan was in place, it was imperative to find permanent financing for our clients. Bridge loans are expensive. As a result, they are a stop-gap, temporary measure.

Ultimately, with some more time, we were able to secure a permanent loan for our clients. In the meantime, they even sustained some hurricane damage. This still did not stop the closing. However, it was a bit delayed while insurance companies reevaluated the situation.

The moral of the story is that hard work and patience and strong financial advice do win out in the end.

Bridge Loan Basics:

• Short-term financing that has to stay short-term. Bridge lenders are interested in short-term financing only. They want to know that clients have an exit strategy to obtain permanent financing.

• Premium comes with a price. Bridge lending has a built in cost, usually a higher interest rate. This is another inducement to find permanent financing quickly.

• Be prepared for careful underwriting: Bridge loans are a somewhat riskier product for the lender, so lenders will work to protect themselves. They will conduct their own underwriting and it will be quite similar to a conventional lender’s underwriting protocol. Bridge lenders want to ensure that your loan will be able to be funded elsewhere pretty quickly. So they will look at your loan structure, your cash positions and your debt coverage before offering even this emergency financing.

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. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

Texas Buyers Needed Bridge Loan

Our clients had their eyes on an upper moderate hotel in South Texas. They had chosen their lender.

But this story almost didn’t have a happy ending. Their lender dropped the loan in the middle of underwriting!

Lender dropout is a real problem and it is becoming more common in the current economic climate. And even more upsetting, the seller was adamant about the timeline: no extensions!

The buyers came to us in a bit of a crisis. They needed a loan fast!

Rick Patel and Krishan Patel worked closely with the client partnership group. First GRP Capital recommended a restructuring of the loan. As a result, traditional lenders would be more willing to finance it. But, being realistic, they recommended a bridge loan. Bridge financing is a short term loan, designed to bridge the gap between undertaking financing and finding a permanent financing product. Bridge loans can be the perfect solution when the loan absolutely has to close, but the clients need more time to get everything right.

With a lot of work, this story had a happy ending. Our clients are the owners of a new hotel. They have short-term financing and are working with GRP Capital now to finalize their long-term financing needs.

Bridge Loan Basics:

• Short-term financing that has to stay short-term. Bridge lenders are interested in short-term financing only. They want to know that clients have an exit strategy to obtain permanent financing.

• Premium comes with a price. Bridge lending has a built in cost, usually a higher interest rate. This is another inducement to find permanent financing quickly.

• Be prepared for careful underwriting: Bridge loans are a somewhat riskier product for the lender, so lenders will work to protect themselves. They will conduct their own underwriting and it will be quite similar to a conventional lender’s underwriting protocol. Bridge lenders want to ensure that your loan will be able to be funded elsewhere pretty quickly. So they will look at your loan structure, your cash positions and your debt coverage before offering even this emergency financing.

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. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

First Time Owner Buys Florida Hotel

Our client was ready to be a first time owner of a hotel.

He had already successfully owned and operated several fast casual restaurants. Now he was ready for the challenge and the potential opportunity of a Florida hotel.

Our client had been looking for properties in the west coast of Florida for a while. He knows that market well and it is close to where he lives. He was keeping his eye on several hotels that were rumored to be going on the market. When they became available, with our advice, he made a competitive bid which was accepted. Now, he just had to close by the seller’s timeframe.

A first time owner needs a little more attention. Rick Patel and Krishan Patel worked closely with the client, along with Keren Alpert, our loan processor. We advised him on setting up his corporation. We recommended that he bring in an experienced minor partner, at least at the beginning. We also were a resource in engaging legal counsel and insurance.

The partnership group coalesced and the loan closed. Our client told us, “Thank your team for all the help during the process”. His hotel is ready for the Florida high season.

Tips for First Time Owners:

• Stay within your budget. Just because you are ready to take on this new challenge, don’t feel pressured to spend more than you are able to. As exciting as new ownership is, affordable ownership is your goal.

• Engage your attorney and accountant. First time owners are wise to assemble a team of professionals in addition to utilizing your GRP team. Do not try to save money by serving as your own attorney or accountant. Accountants needs to be on board to provide monthly updated financial reports for any businesses you own. Lawyers can help you in negotiating with the seller (and their lawyer), as well as prepare and review documents and make any necessary changes to agreements.

• Start working on obtaining insurance right away! Obtaining insurance is not super fast for new properties, especially in certain coastal areas. Particularly if you require flood insurance, begin that process as soon as your PSA (purchase sale agreement) is signed. Sometimes you may also need life insurance either because you are a key employee, or because of a collateral shortfall. It can take weeks to obtain the life insurance policy and assignment, so begin that process right away as well.

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. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.

California Hardware Store Has New Owners

Our clients saw a hardware store for sale and were ready for a hardware store loan.

We were ready to make it work.

This was a brand new venture for our client partners. It was our job at GRP Capital to make the case for their past successes and their solid business plan.

An independent hardware store can be a competitive, challenging business. But in this smallish California town, the local hardware store was a gathering place for all things hardware and a variety of rentals. Our clients knew the area well as they already ran a successful independent hotel nearby.

Our clients worked closely with the sellers, retaining the management team and key employees. This will ensure continuity, something the lender looked at favorably. The lender was sufficiently confident in our clients’ business plans to offer an affordable loan. Ultimately, both the lender and the client were optimistic about the hardware store loan and the business’ chances for success.

Do You Want to Expand into New Business Ventures?

• Become a student in the new business. Just because you have been a customer of a business does not make you an expert. If you want to be a business owner, become an expert. Do your reading, talk with business owners, attend a local conference or even audit a class on the business at a local college.

• Managing What you Have and What You Are Starting : We If you already have a successful business in another arena, how will you maintain your current obligations? Part of your business plan needs to include maintaining your current businesses. Lenders will want to see continuity in revenue stream and solid post-closing liquidity.

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. Whether you are looking to refinance or purchase, we would love to discuss your business plans with you. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.