RECENTLY FUNDED | $3MM SBA 504 Loan for a Commercial Real Estate Acquisition and Renovation for Luxury Retail | Stamford, CT
LOAN CASE STUDY: The owner of a profitable high end retail business was looking to acquire and renovate an existing commercial property in Stamford CT that would be 100% owner occupied. She had the opportunity to design a space which would suit her business better than the original leased property, and possibly increase sales.
THE SITUATION: A CT entrepreneur had started a high end retail business from scratch in 2017 that quickly became profitable. However, the partners were faced with losing their leased location due to an imminent building demolition.
What might have seemed like a setback became an opportunity to buy and renovate a more suitable property to house her business. A sophisticated renovation and redesign of a high traffic building would be a better fit for the high end retail business, and would likely increase sales.
She had identified a suitable building that required extensive renovations, but needed financing to achieve the company’s goals and make this large, long term investment work.
She was referred to Speritas Capital by their banker - as their bank was unable to accommodate this type of retail financing. The banker had worked with Speritas Capital before and knew that we’d take good care of their client.
Financing Challenges
The main challenge was finding a lender comfortable with a business-to-consumer brick and mortar operation. Many lenders are shying away from retail businesses.
The borrower also had multiple affiliated companies for which tax returns and financial info needed to be provided in the underwriting process. These affiliated companies had to be factored into the global cash flow calculation.
Timing: To manage the process and documentation for a 504 loan in order to meet the deadlines established in the purchase and sale agreement.
Speritas Capital’s Role - Funding Solutions
We started by reviewing financials & tax returns to determine the best loan fit.
Deal Positives:
The Borrower was profitable and had over 4 years of financials and tax returns to support the loan.
The Borrower had ‘free cash flow’ available to cover the monthly debt payments. Because payments to the owner had been booked in different expense categories, Speritas had to work with the borrower to identify those inconsistencies and create a credible free cash flow model.
Speritas Capital’s financial analysis, and our ability to find and properly document the owner payments, was key to demonstrating the company’s ability to cover the proposed debt payments.
The client would have qualified for either a SBA 7a loan and an SBA 504 loan. Though an SBA 504 loan is more complicated to execute, and often takes longer to close, the end result is lower blended payments (from the two lenders involved in a 504 loan.)
With strong business and borrower fundamentals, all the right pieces were in place for Speritas Capital to create a strong loan package to pique the interest of a 504 lender with strong Certified Development Corporation relationships.
As usual, Jeff Bardos, Speritas CEO, helped usher the deal from introduction to close.
Why an SBA 504 Loan?
Buying and renovating a building (one of the allowed uses of an SBA 504 loan) to house a business is a great use of SBA 504 because these loans have a lower blended interest rate than SBA 7a Loans. That makes for lower, more affordable monthly payments, which is especially good for a business that might have seasonal highs and lows.
Questions about SBA 504 loans? Call or text 203-247-4358, send an email, or schedule a call now with Speritas Capital CEO, Jeff Bardos.
About this SBA 504 Loan
Loan Type: SBA 504 Loan for property acquisition & reno
Lender Type: Bank & CDC/SBA
Loan Amount: $3MM
Term & Rate: Senior Debt (Bank) $1.6MM / 31 years / Prime +1 resets every 6 years at Prime +1.
Subordinated Debt (CDC/SBA) $1.4MM / 25 years / fixedLoan to Cost: 90%
Closed in: 5 Months (with some extenuating circumstances)
“Hey Jeff, all I can say is that you’ve definitely earned this one - three times over - in ways you probably never expected when we started out!
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Learn more about the strategic use of SBA 7a & 504 Loans to Finance Equipment.
Conclusion – Post Finance Update
We’re thrilled to have helped strategically fund the future for this impressive woman-owned business. The new location is fully built out - and drop dead beautiful! She is now poised for future expansion and growth.
Do you need a strategic partner to advise you on your next business loan?
Is an SBA 7a loan right for your business? Or SBA 504? Or something else? If you want to dig in and learn more about SBA 7a loans, take a moment to read our SBA 7a White Paper for the latest news and Congressional changes.
The Speritas Capital team is always happy to hear your story, learn more about your financing needs and answer your questions. We bring our 30+ years of banking experience and our transparent, strategic approach to every client and every deal, both large and small.
And we never take up front fees.
Jeff Bardos, CEO Speritas Capital Partners
CONTACT INFO
Jeffrey Bardos
CEO Speritas Capital Partners
Call/text Jeff at 203-247-4358
Email Jeff with your financing questions
Schedule a call with Jeff using our online scheduling tool.
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