Tag Archives: refinance

The Government Shutdown and Your Loans

The government is currently “shutdown”. How does this affect your current and future loans?

Current loans and the government shutdown:

  • If you have current loans with government agencies like the Small Business Administration, the SBA is still servicing these loans.
  • You can continue to make payments and can even make some changes (like in ownership). But you cannot modify any loan amounts at this time.
  • Please be sure that you continue to keep your EIDL loan current, even during the shutdown, as this affects your ability to seek future financing. You can use this link to confirm your EIDL status: Check here

Trying to Get a New Loan during the Government Shutdown?

  • If you are in the middle of an SBA loan application and your lender pulled the PLP number, your loan should not be delayed. The PLP number is an SBA-specific loan number and provides pre-approval status.
  • If you don’t yet have this pre-approval, your loan will be paused.
  • However, your lender will continue to underwrite your loan. You should continue to submit all requested documents so you are making progress.
  • But the SBA will not underwrite or approve new loans during the government shutdown.
  • If you are seeking financing because of a maturing note, we urge you to contact your current lender. Explain that you may need an extension because of the shutdown, which is beyond your control.
  • If you do obtain an extension, be realistic and patient. Even when the government shutdown ends, approvals will not begin immediately. There will be a backlog of work. Allow for a longer approval process.

GRP President Rick Patel and Managing Director Krishan Patel both have worked through government shutdowns before. They know that they can be frustrating, but with patience and planning, loans cans still close, even if slightly delayed. GRP Capital can help you as you negotiate with current lenders, satisfy sellers and guide you through the process.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.
City business district

Explaining the SBA 504 Debenture Process

What Does it Mean and How does it Work?

A debenture is really a fancy word for a special kind of bond. It is an “instrument” created by a lender to raise capital. Lenders create a debenture and are in first position to be repaid. This debenture is bought and sold on financial markets.

Debentures are an integral part of the Small Business Administration (SBA) 504 loan program.

Here’s how the SBA 504 program with Debenture works:

  • There are three entities that fund the loan: a senior lender, a Certified Development Company (CDC) and the borrowers themselves.
  • The Senior lender provides typically 50% of the funding through the first mortgage. Their loan is in the form of a bridge loan, because it bridges the gap while the full funding is underway.
  • The CDC provides a second mortgage loan for a large chunk of the loan (around 40%). This portion of the loan is guaranteed by the SBA.
  • CDC’s are not traditional lenders. They do not have depositors or customers in the same way. So, they raise funds through creating the debenture and selling it to investors. This debenture is 100% guaranteed by the SBA, and is considered a very safe investment.
  • The borrower provides a modest equity contribution (typically 10-20% of the loan)

Advantages of an SBA 504 program with a Debenture Component

  • Lower down payment/equity injection
  • Competitive fixed-rate financing for the life of the loan
  • Long repayment periods (up to 25 years)
  • Affordable payments as a result of the loan repayment periods, which impacts cash flow immediately

Timeline of an SBA 504 loan from start to Finish:

  • First, you have to select both a senior lender and a CDC. This is where GRP Capital’s expertise is the most critical. We have the experience and the vast lender network to help find both a lender who is willing to be in the senior position as well as an appropriate CDC.
  • The senior lender and CDC coordinate so they agree on the loan structure and details.
  • Once the senior lender and the CDC indicate their willingness to find your project, then dual underwriting commences. Borrowers work closely with our processing team to provide information and documents to both the lender and the CDC simultaneously.
  • Both the senior lender and CDC officially approve the loan through their loan committee sturctures.
  • The senior lender sets a closing date! The senior lender takes lead in creating documents, and agrees to a a place and time for closing. A title company, escrow and attorneys are also working on your behalf.
  • The first loan closes: borrowers take possession of their new property, and funding for other costs begins (like construction and renovation).
  • The borrowers begin making payments on the first loan.
  • Now the creation of the debenture occurs. The debenture sale occurs around 30-60 days after the first closing. That’s why a bridge loan is necessary.
  • After the CDC receives their funds from the sale of the debenture, they pay off the bridge loan in full. They then create their own closing documents and a second closing takes place.
  • The permanent 504 loan is fully financed.
  • The borrowers now make payments on the final permanent loan.

Why Should I Consider an SBA 504 loan?

  • Your project is more attractive with an SBA guarantee, especially for senior lenders.
  • The long terms and low rates are important to your business plans and projections.
  • You are purchasing a building or a business OR
  • You are refinancing and/or consolidating qualified debt OR
  • You are renovating or involved in construction OR
  • You are purchasing long-term machinery and equipment with a useful remaining life of a minimum of 10 years.
  • You do not need financing for working capital, as that is not an eligible 504 component.

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets GRP Capital apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.
Loan calculation

Check Your EIDL Status: Your Future Loans May Depend on It!

What is your EIDL Status?

During the onset of the COVID pandemic, many business owners took advantage of low cost loans offered by the Small Business Administration (SBA), called Economic Injury Disaster Loans or EIDL. These were long term loans at a very low interest rate, intended to keep businesses operating.

If you have an EIDL on the books, it is critical that you are making the regular monthly payments. Even more critical is that every person who is even a partial owner in a business with an EIDL must confirm that their loan is current. You can use this link to confirm your EIDL status: Check here

GRP President Rick Patel and Managing Director Krishan Patel both have worked closely with clients whose EIDL status was not current.

Rick mentions, “There is almost nothing that is more detrimental to future loan eligibility than having an EIDL that is not current.”

Krishan states that responsible business people “must be proactive and check on any EIDL that has their name attached” before seeking out future financing.

What to Know and Do about your EIDL Status

  • Make sure you keep a current list of every business that you own (fully or partially) in which you received an EIDL.
  • The SBA portal can be utilized to check on the status of each EIDL loan. However, if there have been multiple partners or owners of a business that sought out a loan, you need to determine who set up the portal and the login information (user ID and password).
  • Within the SBA portal, you can see if the loan is current or not.
  • If your EIDL status is not current and shows either a default or even worse a charged off status, you must address this right away.
  • You cannot obtain future SBA loans (including 7(a) and 504) if your EIDL status is anything but current.
  • Please allow sufficient time to repair your EIDL status. First, find out the amount needed to get your loan current. Then continually communicate with the SBA to ensure that the portal status changes.
  • The SBA portal allows you to download EIDL documents, which might be requested by lenders, particularly the loan agreement.

Best business practice tip: Maintain Business Debt Schedules

  • Maintain a business debt schedule for every business you own (even if you are even a partial owner).
  • Each business debt schedule should list every loan for this business, the monthly payment, the date of the loan and when it will mature, the interest rate, the original loan amount and the current balance.
  • For real estate mortgages, also include the original cost to purchase the property and the current market value (your best estimate).

Whether you’re purchasing, refinancing, or building from the ground up, our extensive network of lenders ensures you’ll find funding that aligns with your goals and cash flow needs.

Here’s what sets us apart:

  • We save you time by researching and identifying the best funding options for your project.
  • Our expertise spans various loan products—including non-recourse loans, SBA loans, bridge loans, and conventional financing—so you can navigate even the most complex transactions confidently.
  • Beyond lending, we provide strategic guidance on operational decisions that drive long-term business success.

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.

Lighthouse for beach hotel but it's SA

Beach Resort Multi-Family Refinance

Senior Associate Ryan Dumas is pleased to announce the refinance of a multi-family loan at a popular beach resort town.

Our clients, who owned a very rare property on a vacation destination island, had specific asks for their multi-family refinance.

First, the loan needed to be affordable with better rates than their current note.

Second, they were looking to pull some cash out, which narrowed the interest of multi-family lenders.

Third, we needed to find financing with a lender that was somewhat flexible. Many multi-family lenders have hard and fast rules: insisting on 12 month leases or even 90 days at 90% occupancy. This lender understood the special nature of this property. They particularly understood the very high demand for housing in a resort community.

Ryan Dumas stated, “I’m thrilled that we closed this loan for our clients. Rates were all over the map before we closed this loan. Sourcing a non-agency loan was the key to this loan’s success. Our clients were able to connect with an understanding lender. The result: a higher loan with greater cashout.”

Looking for Multi-Family Financing?

• Get your paperwork ready. Lenders will request rent rolls, copies of leases and financials. Keep your files up to date and in good format (where the numbers from the various reports are congruent with each other.)

• Discuss options with our team: Many lenders want to finance multi-family projects. As a result, there are different types of loans that might be applicable for your project. We can explain the benefits of non-Agency loans, Fannie and Freddie backed loans, conventional loans, SBA Loans (for smaller properties) and even USDA loans for projects outside of metro areas.

• Keep up your occupancy: If you are seeking a refinance, lenders wants to see a healthy occupancy rate. If you are purchasing an underperforming property, the lenders need a strong, clear business plan to rehab and turn around the 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. 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.

outside of apartment complex

Indiana Multi-Family Refinance

Senior Associate Ryan Dumas is pleased to announce the refinance of a multi-family loan in Indiana.

Our clients, experienced multi-family owners, needed to refinance an existing loan. They were looking for stable financing at competitive prices.

Ryan worked hard with the clients, who were extremely motivated. Fortunately, the clients had also engaged a fantastic on-site manager. She worked closely with the GRP Capital team to provide up to the minute financials and rent rolls, so the loan could close as quickly as possible.

Our clients were extremely pleased with the process. As busy entreprenuers, they particularly liked how GRP Capital breaks down the lender checklists into bite-size to-do lists. The client told our loan processor, “Thank you so much for this email with a simple list”, remarking that other lists from previous lenders can be overwhelming at times. The team also shepherded the clients through the Environmental Site Assessment (which was not done for the original acquisition loan) as well as a necessary survey. As an added bonus, the clients were vacationing near our office during their scheduled closing date, so they were able to pop right in and sign their documents while we notarized. We loved meeting them and their adorable children.

Ryan Dumas stated, “I’m thrilled that we closed this loan for our clients. They are wonderful businesspeople. I’m particularly impressed with how they turned around this property. They own a lovely multi-family product with a very good reputation in a location that needed this type of housing. Our team worked very hard with them, and we hope to help them find more properties in the future.”

Looking for Multi-Family Financing?

• Get your paperwork ready. Lenders will request rent rolls, copies of leases and financials. Keep your files up to date and in good format (where the numbers from the various reports are congruent with each other.)

• Discuss options with our team: Many lenders want to finance multi-family projects. As a result, there are different types of loans that might be applicable for your project. We can explain the benefits of Fannie and Freddie backed loans, conventional loans, SBA Loans (for smaller properties) and even USDA loans for projects outside of metro areas.

• Keep up your occupancy: If you are seeking a refinance, lenders wants to see a healthy occupancy rate. If you are purchasing an underperforming property, the lenders need a strong, clear business plan to rehab and turn around the 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. 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.

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.

Do I Really Need a Survey?

What is a survey and do I even need one?

Whether you are buying or refinancing a current business that includes commercial real estate, you really do need a current survey. In fact, most lenders and title officers require a survey.

What Does a Survey Do and Why is it so important?

• Boundaries: The basic purpose of a survey is to show a detailed drawing of your entire property with all of its buildings and improvements. The survey will clearly delineate where your property begins and ends. The survey will be on record and show that you have clear legal ownership of everything within these boundaries.

• Encroachments: An encroachment indicates a place where ownership of a property crosses a boundary line. So maybe there is a shared septic tank with the neighbor and part of that infrastructure is on your property. The survey would show that encroachment and the title company would “insure around that”.

• Easement:  An easement is a section of your property that is carved out for somebody else’s access and use, typically a utility company. So if you have buried cables or an alleyway, sometimes there are easements here. You own the full property, but the easement designates a place that a third party has access to and sometimes even control over. Again, these would be clearly labelled on a survey and title insurance insures around this.

How much time does it take and how much does a survey cost?

• Don’t leave me hanging; what does it cost and how long will it take? Surveyors are professionals. They have to determine the scope of the survey, do research about the boundaries of your property, search city or county records for previous surveys, go to the site, draw the survey and obtain approval from the title officer and the lender of their final survey. Therefore, a survey typically takes at least four weeks and sometimes much longer in different marketplaces and different seasons. The costs can vary but are typically under $10,000, depending on the complications of the building and prior documentation.

• ALTA surveys: There are different types of surveying tools. However, we recommend that borrowers purchase an ALTA (American Land Title Association) survey. These surveys conform to the industry standards and even have a standard document (Table A) which lenders, title officers and surveyors use to communicate about what information they require.

• Are there any ways to save money and time?  The best way to save money and time is to make sure that a relatively current survey has already been done. So if you are refinancing and you never got a survey when you bought your property, arrange for a survey right now! If you are buying a property, ask the seller if there is a current or even an old survey. We often are able to contact the previous surveyor and obtain an updated, re-certified survey, which will save lots of time and money.

If you would like to discuss surveys, title issues, closing, refinancing and purchasing 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 doing your due diligence and secure financing for you. An initial business evaluation is complimentary.