Thursday, January 22, 2009
Borrower Beware...
Well, if I was three days GREENER I may have fallen for a really slick scam. There are a LOT of commercial lenders out there who are not lenders at all. This particular group cultivated me and my business for months, slyly "turning down" loans, etc. Something didn't smell right and lucky me, I have friends very adept at looking up information on people. Here's you TIP of the DAY...don't send a dime to anyone that you haven't checked out with a minimum of FOUR references, plus court case background checks. Also, lucky me, I am forming great relationships with HONEST brokers and REAL lenders so the chances of getting taken are slim. (No one is more paranoid than me right now, with all the first person first hand FRAUD running rampant). There is no way I'd allow you to get involved with an outfit that doesn't pass muster. And I don't expect you to do business with me, without checking ME out. References Happily Given! Nuff said!
Friday, January 9, 2009
Well I've been vewy vewy bad about keeping up with posts. So let me do a couple quick ones... Our most recent loan request was from a publicly owned east coast company needing 5.8M to purchase another company in the south, with no money down. Normally that scenario would never fly because no investor likes to get involved with a borrower who isn't putting their money where their mouths are; but I was surprised with a loan offering just today from a hedge fund in CT. I guess the fact that the sellers were willing to take a hefty 2nd, and the company is profitable as all get-out, posting 2 and 3 million dollar net profits in the last couple of years, may have something to do with it.
Preliminary terms are: a five year balloon prices at 11%, interest only, with a 2 year prepayment penalty (3%), and three points to the investor. A hefty due diligence fee of 25K was negotiated down to 15K, and the borrower tells me today to proceed. So I tell the hedge fund its a go, and they say, send in the Executive Summary. I'll let you know how it plays out, but in these days of few companies getting funded for hardly anything, it sure is nice to have an offer. I'll let you know how it goes.
The other successful offering we got just a couple days ago were for a east coast special needs housing remodeling contractor...they needed 500K working capital to fund materials, etc. for 3 million dollars worth of contracts in hand.
We got an investor to bite on the deal, and these were his terms: 1) form a corporation (borrower was operating as a sole propriatorship), and the terms were: a 500K secured revolving credit facility priced at 12% interest only, for a term of two years, with an option to renew for an additional one (1) year term, provided the Borrower is not in default, at a cost of one percent (1.0%) of the gross amount of the loans. There was one point to the lender at close, plus a 1 point facility fee. This particular investor also requires a 10K due diligence deposit. We'll post how that one goes as well! Cheers to you for a happy and profitable New Year!
Preliminary terms are: a five year balloon prices at 11%, interest only, with a 2 year prepayment penalty (3%), and three points to the investor. A hefty due diligence fee of 25K was negotiated down to 15K, and the borrower tells me today to proceed. So I tell the hedge fund its a go, and they say, send in the Executive Summary. I'll let you know how it plays out, but in these days of few companies getting funded for hardly anything, it sure is nice to have an offer. I'll let you know how it goes.
The other successful offering we got just a couple days ago were for a east coast special needs housing remodeling contractor...they needed 500K working capital to fund materials, etc. for 3 million dollars worth of contracts in hand.
We got an investor to bite on the deal, and these were his terms: 1) form a corporation (borrower was operating as a sole propriatorship), and the terms were: a 500K secured revolving credit facility priced at 12% interest only, for a term of two years, with an option to renew for an additional one (1) year term, provided the Borrower is not in default, at a cost of one percent (1.0%) of the gross amount of the loans. There was one point to the lender at close, plus a 1 point facility fee. This particular investor also requires a 10K due diligence deposit. We'll post how that one goes as well! Cheers to you for a happy and profitable New Year!
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