Article by Vicente Sarabia
Banks receive their funds from depositors like you and me and therefore have a mandate not to take undue risks with the funds they lend. However, there are other options that are available.
The Small Business Administration will guarantee small loans principaly for acquisitions, renovation, or improvement of an existing business on transactions up to approximately ,000,000 (this amount will vary depending on industry and employee size). This type of financing is suitable for deals where the buyer has good to excellent credit and the company to be acquired has good historical cash flows to show ability to cover debt service on the new loan.
Additionally, it is possible to find financing in the form of NON-bank lenders located throughout the country that obtain their funds from the sale of notes and bonds on the global market and through private investors. This enables them to take on more risk and provide financing for tougher transactions that do not necessarily qualify for traditional bank financing.
Typical financing options available through such investors include financing for New projects in the developmental stage, Commercial projects as well as anything from Real Estate Investment and Development, Exploratory and Implementation of Energy Products, the funding of Motion Pictures, Business Acquisitions, Joint Venture Partnerships, Art, Commodities, Equipment Financing, and beyond.
These types of projects are normally funding through the following types of loans: Revolving Credit Lines Purchase Order Financing Motion Picture Financing Acquisition Financing Inventory Loans Secured Bridge Financing Construction Loans Real Estate Financing Mezzanine Financing International Real Estate DIP and Exit Financing Cash Flow Loans Loan Guarantees Conventional Factoring Asset Based Loans Letter of Credit Financing Funding for Health Care Providers
The People and Groups providing this type of finances on higher-risk projects include: Private Investors ? Standard Asset based Lending Companies ? Smaller National Companies ? Wealthy Individuals ? Cash Flow (also known as Mezzanine or Sub-Debt) Lenders ? Construction Lenders for both Domestic and International Projects ? Aircraft and Ship Lenders ? Golf Course Lenders ? Motion Picture Investors ? Regional Asset based Lenders ? Hard Money Bridge Lenders ? Health Care Lenders ? Providers of Import-Export Financing as well as Letter of Credit Financing ? Purchase Order Financing Companies ? Specialty Lenders in Real Estate, Equipment, Accounts Receivable and Inventory ? etc…
The underlying similarity of all these sources is that they will fund transactions that traditional lenders such as banks will not fund. These types of investors will most often provide loans that range from as little as ,000 up to and exceeding 0,000,000, subject to collateral and cash flow considerations.
Of course, as with any financial transaction, fees will apply. Typically, there will be a retainer fee, although one is not always required. The retainer fee normally varies by project and is credited against the closing fee which will typically be between 1 and 5 points. A small transaction of 0,000 would generally warrant a 5-point fee while a large transaction of 0,000,000 would typically call for a 1-point fee. Each transaction is slightly different and therefore would be dealt with accordingly.
In order to obtain these types of financing it’s best to go through a professional who is good standing with several of these types of lenders. Beware of brokers who charge a fee up-front for advice or consultation.
The Visa Group specializes in commercial project funding (domestic and international). We pair borrowers’ unique goals with non-bank lenders and financing options that work for you. Please call 1.469.422.5176, email us with details about your project, or visit our website at http://www.visagroupfinance.com. We do not charge any upfront fees. vicentesarabia@visagroupfinance.com