Tag Archives: cash out

Collateral and a Central Florida Refinance

Collateral is an important part of many business loans. Your collateral “secures” your loan. It is the tangible “thing” that the bank knows has value.

Our Central Florida client was ready to refinance. Their business has been successful, with over a decade of stabilized income. The new loan was structured to free up capital for other business projects.

However, our client’s property, a waterfront hotel, consisted of multiple parcels. The hotel did not operate on every parcel, but they leased out other parcels, including a nearby boat dock. Even more significantly, their revenues included these lease payments.

Many lenders insist on including every single parcel in their loan, especially when those parcels are a revenue source. But including every single parcel in this collateral was not ideal. First of all, it would be complicated. Additional parcels mean additional title and survey work. And each parcel has to be appraised.

GRP Capital was able to work with our lender. We demonstrated that the hotel parcel alone had high value, enough to collateralize the loan. Working with our lender and building on the trust we had developed with them was crucial. It kept the loan as simple as possible and preserved our client’s collateral, too.

Collateral Basics:

• Your collateral will be appraised. An appraiser will determine the value of your collateral. This value has to meet or exceed the value of the loan.

• Collateral Shortfalls  Sometimes collateral values come up short. This happens. When it does, there are a few options. If this is an acquisition, the buyer may be able to renegotiate a discount on the sale price. Alternatively, borrowers can offer other assets as temporary collateral, while the loan is being paid down. Finally, some clients take out a small life insurance policy to obtain extra collateral.

• Consult experts before signing a PSA:  A PSA (Purchase Sale Agreement) makes assumptions about collateral. In addition, a PSA often requires “hard money”, a non-refundable amount. Therefore, if you can, contact GRP Capital prior to signing a PSA. We can save you money, especially if we believe the price is not going to be appraised to fully collateralize.

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.

Refinance for cash out

Cash Out with a Refinance

Our client needed to pull cash out to upgrade their hospitality property but could not refinance due to the structure of their debt.

The amount they needed for their cash out was smaller than our typical loans. However, this was a repeat client who had approached us, seeking our counsel. Our management team looked carefully at all of their businesses and discovered a possibility. They owned an office building which was eligible for refinancing. There was even sufficient equity to pull out cash during the refinance.

Our client was pleased to close the loan and begin their upgrade.

GRP Capital is celebrating its tenth anniversary in 2024. This longevity has allowed to us to deepen our list of repeat customers. This benefits everybody.

Repeat Client Benefits:

• We know you! Our repeat clients are already “in the system”. We have their pertinent information, we understand the structures of their businesses, we even know who their team of professionals are. The “getting to know you” phase is already taken care of. We know what aspects of this process are easiest for you and your team and which present challenges at times. We are prepared for potential bumps in the road. Particularly with refinances and those with cash out components, this is critical.

• You Know Us!  Repeat clients know the “GRP Capital way”. You know how we match you with a lender, how we internally underwrite your file and how we process loans. There are no surprises as you already know how we communicate and the roles we have from business associates to credit analysis, from management to loan processing.

• We know your people:  If we have closed loans for you in the past, we may already have dealt with your attorney or your accountant. We already have emails for your insurance agent, your title agent and your franchise representative. Knowing how all of these professionals handle their business allows for seamless operations.

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.