Tag Archives: liquor store

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.

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.