Tag Archives: 7a

Options For a Maturing Note

If you have a maturing note, you have the following options:

  • Pay off the remainder of the loan
  • Extend the loan
  • Renew the loan
  • Secure new financing

Choosing the Best Option for your Maturing Note:

• Paying off a maturing note: If you have had a conventional or even SBA mortgage which has been paying down your debt over a long number of years, making your final payment might not be too cumbersome. Do you have a bridge loan or a construction loan? If this is the case, full payoff may not be feasible. Be aware that you will no longer have tax credits for mortgage interest, which will change your taxable income.

• Extending the Loan: This option allows you to get some extra time before making that final payment. Extension is most common when facing balloon payments. Your lender must agree to an extension; in fact, this is not automatically granted. There will likely be some additional interest charges should you choose this option.

• Loan Renewal:  Have you had a good relationship with your lender? Were your payments on time for the most part (with perhaps some pauses during COVID 19 lockdowns)? Your lender MAY be amenable to creating a new loan. This will allow you to continue to pay down debt, reducing your taxable income, while staying with a familiar lending partner. Unfortunately, there are certain industries that are coming up against lender hesitancy to renew loans, including hospitality loans.

Securing a New Loan:  If you cannot go back to your current lender, you must secure new financing. Because of higher interest rates, this is the time to seek advice and figure out the best options.

GRP Capital can be of assistance. We will examine restructuring and reach out to lenders to determine what financing options are likely to be approved. Our team will consider if you should refinance existing debt, retire part of it or even restructure it. In addition, we can help evaluate your financing and cash flow needs. You will have a better sense of what type of financing options exist and choose the best one for your business.

If you would like to discuss your maturing note or any other business issues, feel free to contact our team.  An initial business evaluation is complimentary.

Is It Time to Refinance Your SBA 7a Loan?

Do you have a Small Business Administration SBA 7a loan that is at least three years old?

Have you been meeting your business plan goals and objectives?

Now is a good time to examine what the options are for refinancing your SBA 7a loan.

Timing an SBA 7a Refinance

• Three years: SBA 7a loans have prepayment penalties for the first three years. Therefore, we advise most borrowers to wait until the three years have elapsed before seeking refinances. There are a few select cases, however, where the prepayment penalties are worth it.

• Do you have evidence of meeting profit targets? If you are looking to refinance a loan, lenders need evidence that your business is largely on target. We find that lenders are willing to overlook the market disruptions of COVID, especially during mandatory lockdowns. Other than that, your financial statements should demonstrate sustained profitability. In addition to financial statements, lenders and appraisers typically require evidence from third parties. These can include STR reports or sales tax bills based upon revenue receipts.

• Debt Coverage:  The most important factor in finding affordable, reasonable loans is your current debt coverage. Lenders are not impressed just with the value of your property. In this somewhat volatile economic milieu, demonstrating the ability to pay back loans and having capital reserves is key.

Debt Refinance Possibilities and Other Structures:  We can help you determine the best next steps. It might be to refinance existing debt, retire part of it or even restructure it. We can help evaluate your financing and cash flow needs. You will have a better sense of what type of financing options exist and choose the best one for your business.

If you would like to discuss your SBA 7a loan or any other business plans, 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.