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    14 Replies Latest reply on Nov 1, 2007 5:04 PM by garagewoman

    Lending to purchase property

    garagewoman Newbie
      My husband & I own a small auto repair business. We have been in business for 2 years and have taken on a good bit of debt in our personal names to keep the business going during the first 2 years. We are getting to a point where that is no longer an issue. We have been looking to purchase our own garage and have put a contract on one. The banks are saying we have too much revolving debt but my credit scores are around 711 and my husband is in the high 690's. We are caught in a catch 22 because the banks tell us to purchase property so we can repay ourselves the money we've invested but they aren't willing to lend us the money to purchase a property. We have the 20% down that is requested and our payments on a loan would be $600 less a month when what we are paying on a lease. I'm very very upset about this because I've always taken care of business and have never had a negative item in my credit history!!! Does anyone have any suggestions?
        • Re: Lending to purchase property
          DomainDiva Ranger
          It sounds like your debt-to-equity ratio is out of balance. Credit scores of 690 & 711 don't qualify on the 'good' scale. Good starts at 720.

          You need to revisit your personal revolving debt. Revolving debt carries with it a high interest rate. This is where the problem is since making only minumum payments means decades of repayment even if you don't use the cards again.

          The bank is giving you a catch22 situation because they do not want to lend money while there is so much personal outstanding debt. You may want to rethink where you are financially right now and loose the personal debt and then make new business plans.
          • Re: Lending to purchase property
            LUCKIEST Guide
            I am a SCORE Counselor and we counsel many people with the same cash problems.
            Being upset does not help. Lets try some positive suggestions.
            Do you have an accountant?? You deal with more than one bank. Have you talked to another??
            Have you or the Accountant prepared a CASH FLOW projecting the next year or two??
            You have the cash for the down payment. Maybe the owner of the property will hold the notes on the
            property instead of going to the bank. It is unfair, but banks also have problems now.
            There are two sources of money that might help "sandriconsultants@gmail.com" and "gatheringofangels.com"
            BE CAREFUL, Good luck, LUCKIEST
            1 of 1 people found this helpful
              • Re: Lending to purchase property
                Triumh_IG Newbie
                Hi,

                I am the President to TRIUMPH Investement Group and would love to share with you are various products in commercial lending both here in the US and Worldwide. We have programs that are specifically for start up business's, high DTI, high LTV's, etc. Feel free to contact me with any questions: TRIUMPH_IG@sbcglobal.net I have no upfront fees so anything I can do to help you or any of your clients, please, contact me.
              • Re: Lending to purchase property
                Lighthouse24 Ranger

                I can understand your frustration! I don't mean to pry, but could you provide a ballpark idea of how much you're trying to borrow to purchase the garage, how much your revolving debt is, what business structure you are using (sole proprietor, partnership, corporation), and the time frame you have to close the deal? I think that info would allow the community to offer a suggestion you can actually use (if one exists).
                1 of 1 people found this helpful
                • Re: Lending to purchase property
                  Lighthouse24 Ranger

                  PS - My last post was typed/submitted before the posts above it (from DomainDiva and Luckiest) appeared. I was not implying that those were suggestions you couldn't or shouldn't use!
                  • Re: Lending to purchase property
                    4buspecialist Newbie
                    Good Afternoon,
                    • First of all I wanted to congratulate you and your husband for making a great decision by getting your own business! That is always the first step towards a better future. I can certainly understand your frustration and will help as much as I can to make you folks feel at ease! I would like to know what banks have you gone to so far? Were there any steps taken to talk to the underwriters? Reply back so I can gain a better understanding. Thank you.*
                      • Re: Lending to purchase property
                        garagewoman Newbie
                        Good Afternoon,

                        I've heard from 1 bank so far and I'm currently working with 2 investment bankers in our area. As far as going to underwriters, that I'm not sure of. I know the 1 bank that we spoke to had met with an executive committee but that was all. I know it is hard to get funding now especially because of the problems with the sub prime mortgages but in 8 months this year, we have passed what we did the entire 1st year in business and are increasing every day.

                          • Re: Lending to purchase property
                            Triumh_IG Newbie
                            Hello,

                            I have an Investment Group myself and I would like to comment that you are very correct when it comes to the Residential Lending Slump. But...I deal with International and National lending I haven't seen many adjustments to our programs. We have an awesome program for clients such as the lady with the garage and they are out there. Commercial lending is still striving and I would love to be of future assistance if you like.
                        • Re: Lending to purchase property
                          Triumh_IG Newbie
                          Hello garagewoman,

                          My name is Nancy and I am the President to TRIUMPH Investment Group. My expertise is in Commercial Lending so I was excited to see a question like that. We have many products that aren't available to your bank next door. For example, I have a great product that will successfully rescue you from your situation. I would love to talk to you over the phone to discuss this further with no obligation. I truely enjoy helping people, such as yourself, succeed. Feel free to email me with your contact info and I will gladly contact you. email to: TRIUMPH_IG@sbcglobal.net for any questions you might have on Commercial Lending. I know I have the product for you :)
                          • Re: Lending to purchase property
                            Lighthouse24 Ranger

                            Diva was accurate in saying that someone generally needs a 720 or higher if they're trying to borrow without income and asset documentation. From your question, I assumed that you were providing that documentation, in which case a score above 680 should open some doors for you (and already has, it appears).

                            I'm not qualified to suggest a specific solution for your situation, but I know there is one because I have bought property under similar circumstances. While I had to initially accept some less favorable terms and interest rates to get the ball rolling, a good accountant helped me use that cash to my best advantage (he was not your stereotypical tax guy, but rather someone who got jazzed on the whole idea of managing business assets and credit, and who understood my relatively high tolerance for risk).

                            In one case, we formed separate new companies to own the building, own the unattached fixtures and equipment, and operate the facility. We then had four legal entities seeking and managing smaller amounts of debt, some of which could be secured by tangible assets and future credit card receipts -- plus each could do business with the others in ways that provided tax advantages in the short term, as well as additional funds to pay off the original higher interest loan. (I could really empathize with your post, because in that case, my own bank would not loan me $64K to buy an $81K building, but a few months later, the new corporations we set up had a total of $130K in unsecured credit available! Go figure.)

                            As you can already see, there are sources available for the money you need. My suggestion is to also seek the advice of an accountant on how to best use that money to achieve your business and personal financial goals. Best of luck to you both!
                              • Re: Lending to purchase property
                                garagewoman Newbie
                                Thanks for the support. I'm feeling more upbeat than when I first put my post out there. I worked in commerical lending for a local bank and also installment too! So I do understand credit scores but I can tell you that the way lending is done now is different in the 90's. Before you were looked as a people not just a series of #s and that is not necessary the case today which is really sad. I've been looking at the idea of the different entities also. I just recently let my accountant to join with another accountant that is more aggressive in managing my money so hopefully that will help. Thank you to everyone for your great ideas!!!!