Hotels, motels and inns

It’s always difficult to explain to a first time commercial borrower why banks and lenders don’t get excited about hotels, motels and inns. This past week I received a call from an individual in the Yukon who was looking to purchase a motel and restaurant that had been owned by the same owner for over 20 years. Prior to calling us he had called three (3) of the big banks only to find that two (2) of them were not interested at all and the last one said that he needed 50% as a down payment before they would even consider the application. In contacting us he was hoping that we would be able to bring some options forward that didn’t require 50% down. Continue reading “Hotels, motels and inns”

But I have a great business plan

I spent some time on the phone yesterday with an individual that has put together a transaction involving a parcel of land that he thinks would be a good spot for a mini storage. The town he lives in is currently experiencing growth and he sees an under served market – storage. He has managed to find the land, get some drawings done and has arranged for the contractors required to do the work. He has about 10% of the total cost in cash and is looking for financing for the balance. He called several banks and was not able to get a loan for many different reasons the least of which include loan size (too small) and lack of interest from a banker. Continue reading “But I have a great business plan”

Check your own credit – why?

Getting a mortgage broker, banker or mortgage specialist to check your credit score can lower it. Get any of them to check it within days of each other and watch your score drop like a rock. Most people don’t know that the more often your credit is checked the lower your score will be. This is because the scoring system assumes that you are being declined every time you get your credit checked when in reality you could simply be looking for a good deal. If your credit score falls too far then you may find yourself paying higher interest rates for your financing or you may not have any financing available to you. Continue reading “Check your own credit – why?”

Private funds to close then off to the bank

I had a chance to visit with a new client today (courtesy of the Royal Bank) who was looking to purchase a mixed use property in rural Alberta.  The property has a commercial component and a residential component.  Tenants have been found and will be in place later this month – income to service the debt in place.  The client has to close at the end of this month and came to see me knowing that he had limited options. Continue reading “Private funds to close then off to the bank”

Need less than $2M – don’t go to a bank (or a broker)

After 1,138 calls this year I can confirm that if you need less than $2,000,000 for a commercial mortgage or a business loan don’t call a bank and don’t
bother calling a broker – unless you know what you are looking for. The broker you talk to might only know a few lenders with limited options and the banker you talk to may not know how to handle your request properly if you can’t be specific about your need.  There is a very limited market of people that can help borrowers looking for less than $2,000,000. Continue reading “Need less than $2M – don’t go to a bank (or a broker)”