Until now, we’ve gone over the types of financing that small businesses need and how to use those products to overcome challenges in the marketplace. However, it might not always be easy to see how these solutions play out in a real-world scenario.
So, today we present three case studies that show how our broker partners helped their clients reach their specific goals. For each unique business, there’s a unique solution, which is one of the reasons working with a broker is so valuable. Online cookie-cutter loan applications don’t allow customization the way working one-on-one with a live expert does. Getting to know you is one way brokers can match you with overlooked lenders and loans that aren’t widely advertised.
The stories below come to us from our broker partners, who helped these three businesses realize their financial goals. We hope they’ll give you some inspiration for your own company and help you learn more about how a broker can be an essential part of your business future.
Improved Capacity and Flexibility
A small construction company in Colorado was looking to bid on a large civic contract. The project would help them expand their business and build a reputation with the city, giving them access to more jobs down the line. However, they knew they wouldn’t see payment from the job until project benchmarks were met and their purchase orders wound their way through the city’s complex payment process.
The construction company had to pay for labor, purchase materials, and have the project delivered, all with the capital they had on hand. Without improving cash flow, however, they wouldn’t be able to meet those needs. If they wanted to bid on the city’s project, they’d have to get access to more working capital. They met with their broker, who helped them improve their capacity and flexibility with a working capital loan. Working capital loans allowed the company to spend what they needed on supplies, payroll, and materials without restrictions on how they used the loan.
Enhanced Marketplace Presence
A New Hampshire business owner was interested in buying the building their company had been leasing for the past several years. They knew they could make upgrades to the property that would improve the company’s visibility and owning the property would save them capital. The property owner agreed to sell, but the company hit a snag when it was turned down for an SBA loan.
They reached out to our broker, who helped them bypass the SBA and get financed elsewhere. Through our private lending partnerships, the company’s broker was able to help them close on the building. The lender financed based on the ARV, or After Repair Value, of the building, giving them more than the purchase price of the property. After buying the property, the business owner used the remainder of the loan to make improvements to the property that had an immediate impact on their presence in the marketplace.
Reduced Financing Fees
A metro area dentist found himself trapped in a cycle of refinancing. Every five years, he refinanced his commercial mortgage into a new loan. While refinancing can be a useful tool to lower monthly costs, there are fees involved. It can be like closing on the property for the first time, over and over again. Some lenders even charge a penalty for refinancing their loans. That’s why most business owners opt for long-term commercial real estate loans if they plan to hold the property for many years. Interest rates also fluctuate from year to year, meaning refinancing isn’t always to your advantage if rates have gone up.
Fortunately, the dentist connected with our brokerage partner, who was able to move him into a 20-year fixed-rate loan, breaking the cycle. He locked in his interest rate so he won’t need to be concerned about his rate going up in five years. If he’d continued the five-year cycle, he would have faced tens of thousands of dollars in origination, appraisal, guarantee, credit check, and application fees over the same period as the fixed-rate loan. Now, he can relax and accelerate equity growth for decades to come.
How do brokers work to make these deals for their customers? We understand the challenges you’re facing and find the right financial solution to reduce the pain and get you into a better financial picture. If you haven’t contacted a broker yet, don’t wait until something goes wrong. The more proactive you can be, the faster you can improve credit, boost your flexibility, enhance your presence, and build equity in your business assets. We’re looking forward to adding your chapter to our success stories.