Financing Help

[Junglebredcornfed]

Hello yall,

Looking for help with finding financing in my area. Found a few banks to shop around in my zip code, but wanted to see what's everyone's experience was before taking a shot gun approach.

Thank you in advance.

 

[Keno]

Would help to know what you are trying to finance and what area you are in. If it's SS with little to no experience, you have a long road ahead

 

[Junglebredcornfed]

6 bay SS operating in the Houston area. I’m in talks with the owner and he’s looking to move on.

 

[Keno]

Do you have any car wash or other business experience? What is the price range?

 

[Junglebredcornfed]

Short answer no but I understand it’s a hands on business and luckily I’m handy with mechanical issues coming from a blue collar background. 550k

 

[Waxman]

banks work off the numbers, so it all depends on income verification via tax returns of the business for the past 3 years, the value of the land and equipment and your own contribution ( downpayment).

20 years ago i used an sba 504 loan program in conjunction with a fairly local bank to get financed.

 

[Keno]

Short answer no but I understand it’s a hands on business and luckily I’m handy with mechanical issues coming from a blue collar background. 550k

In all honesty, not trying to be a Negative Nancy, you're going to have to work hard to get financing. Banks are already tightening up their lending. There was an owner on here within the last couple of months who has experience and owns other washes already, and he was having a hard time getting financing for another wash purchase. Best bet would be to get seller financing or sba. Also, down payment is going to be significant for a $550k asking price. Local banks will be a good place to start and having a good business plan that shows you will be making more than enough to pay the bank and your other expenses.

Being handy and fixing stuff is definitely a plus, but first and foremost you will be an owner/operator and will have to be able to make the business as a whole successful. You will be wearing many hats besides repair, and have to be able to get it all done, whether you develop the skills to do it yourself or find the right professionals to do it for you or guide you. The good thing is self serve is a pretty easy business to learn the basics, mastering it is a little more of a challenge.

Other thing to consider, if banks turn you down, ask them why, some will tell you the real reason and some won't. But the underwriters do this for a living, and can spot a bad deal probably before you can. That doesn't mean if they turn you down that it is a bad deal, it's just another set of eyes to help you out. They aren't necessarily the bad guy if they turn you down.

 

[Eric H]

Is owner financing a possibility?
Just went through a purchase and owner financed the deal to get it done without having to jump through the endless hoops from the banks.
Bank wanted at least 20% down. Bank would lend on the property, building and equipment value at current interest rates. The value “good will” value the business above the value of the property, building and equipment would have to go through the SBA. SBA administrator in my county said I would probably be in the 10-12% range for that portion of the loan.
If you can get the owner to finance the purchase at 6-7% for just 5 years (20 year amortization with a 5 year ballon) you may have enough equity at that time to refi with a traditional bank. Owner puts a significant amount of extra money in his pocket by owner financing this deal or even just the business value of the bank will finance the property.
You can use this calculator to run some loan payment scenarios:

Commercial Mortgage Calculator

www.mortgagecalculator.org

Don’t let any anecdotal information from anyone here, including mine, deter you from pursuing this purchase. The owner wants to sell. Someone will buy it if they can make the numbers work. You may need to take a closer look at the purchase price and may need to negotiate that down. There are a lot of factors involved to determine if this will flow enough cash to be profitable and reach your personal financial goals.

 

[Junglebredcornfed]

Unfortunately no owner financing. The thought is to do the due diligence up front and present with a loan rather than go through the process and hope for an SBA approval.

 

[Keno]

Unfortunately no owner financing. The thought is to do the due diligence up front and present with a loan rather than go through the process and hope for an SBA approval.

You should be trying to do all of these things simultaneously

 

[Junglebredcornfed]

Trust me the effort is there. Learning a lot as I go making sure the room is clear of fire before I advance.