Boy, busy time in this business. Since I started this, its been three weeks and three more loans in the door. But I promised I would write about what kinds of deals we have been able to do and I will start with a simple one.
Banks absolutely hate to do loans for taverns. Our client found out the hard way even though he had great income and great credit. He was half owner of a country tavern in NE Wisconsin, and he needed to cash out the property, which was owned free and clear, so that he could pay off his partner and get sole ownership.
With a little advance planning, which meant being able to prove the tavern had a good income - (therefore every penny made went in to a bank account before it went anywhere else) - for a period of six months, we were able to secure a local investor to do the loan, which was structured as a two year, interest only, no-prepayment penalty instrument. It took about three weeks to close and here's how it broke down:
Loan amount: $113,000
Collateral value $170,000
Loan to Value ratio: 66.47%
Benefit to Investor: 1st lien position on the land & building asset.
2 points ($2,260.00) at close.
Interest earned (2yrs) $27,120.00
$2,260 closing fees+ $27,120.00 = ROI $29,380, an effective annual percentage rate of 13%.
Closing costs, including 2% plus a packaging fee for White Knight, came to under $8,500, and that included the cost of appraisals, titlework, recording fees, etc.
Our client was happy he could buy out his partner, the investor was really happy with the investment, (just saw him the other day and with the beating he just took on the stock market, he says he wishes he would have done more!) and we were happy to help both "get er done!" Both individuals involved are willing to give us a recommendation, so if you want to check us, out contact me and I will give you their contact information.
Wednesday, October 22, 2008
Thursday, September 25, 2008
Hello World
This is just a short post to introduce White Knight Commercial Funding to the world.
We are a small company located in North East Wisconsin, and pretty much intend to stay that way, growing instead by creating a network of partner brokers, lenders, investors, and businesses all centered on one thing: finding capital for businesses who can't get it from a bank.
We get inquiries daily; borrowers, brokers, and investors want to know how our deals work. it is my hope that by sharing actual loan scenarios and their resulting loan offerings that we can all learn what is possible, and what is par for the course, in the alternative financing world. We will disclose how we do things, what we charge, what investors charge. We will answer your questions to the best of our ability.
What we do is described in many ways. Some call it "hard money", we prefer "asset based lending", and it can take many forms. In many ways, it is not all that different from getting a loan from a bank. Investors expect to protect their investment by taking a lien on the collateral, they expect to be assured that you can pay them back, and they expect to make money.
One thing is for sure, this kind of financing has been around as long as businesses have, and as long as banks have been around, not financing them. It is experiencing a tremendous growth spurt right now, because, as we all know, banks right now, are in almost a complete paralysis. But businesses still need money, in many cases now more than ever, because the banks are not extending the working capital lines they used to. Even well established businesses are suffering from severe cash flow problems.
The numbers are staggering - In the last 90 days we have received over 250M in loan requests. We are certainly not anywhere near funding all the requests, but for a small, home based business in Wisconsin, it is an amazing thing to see unfold. There are good operators and bad operators out there. In our short lifespan we have already heard many horror stories about brokers who promise results, take retainers, and then never produce a loan. If you are a borrower, I will work on some tips on how to protect yourself, and I will share what I know in coming posts. Thank you for visiting.
We are a small company located in North East Wisconsin, and pretty much intend to stay that way, growing instead by creating a network of partner brokers, lenders, investors, and businesses all centered on one thing: finding capital for businesses who can't get it from a bank.
We get inquiries daily; borrowers, brokers, and investors want to know how our deals work. it is my hope that by sharing actual loan scenarios and their resulting loan offerings that we can all learn what is possible, and what is par for the course, in the alternative financing world. We will disclose how we do things, what we charge, what investors charge. We will answer your questions to the best of our ability.
What we do is described in many ways. Some call it "hard money", we prefer "asset based lending", and it can take many forms. In many ways, it is not all that different from getting a loan from a bank. Investors expect to protect their investment by taking a lien on the collateral, they expect to be assured that you can pay them back, and they expect to make money.
One thing is for sure, this kind of financing has been around as long as businesses have, and as long as banks have been around, not financing them. It is experiencing a tremendous growth spurt right now, because, as we all know, banks right now, are in almost a complete paralysis. But businesses still need money, in many cases now more than ever, because the banks are not extending the working capital lines they used to. Even well established businesses are suffering from severe cash flow problems.
The numbers are staggering - In the last 90 days we have received over 250M in loan requests. We are certainly not anywhere near funding all the requests, but for a small, home based business in Wisconsin, it is an amazing thing to see unfold. There are good operators and bad operators out there. In our short lifespan we have already heard many horror stories about brokers who promise results, take retainers, and then never produce a loan. If you are a borrower, I will work on some tips on how to protect yourself, and I will share what I know in coming posts. Thank you for visiting.
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