Financing looking good for new detail shop!

[Waxman]

Met with a banker Friday to finally discuss some terms for the loan for my new detail shop. I don't know if I've ever discussed this before, but I've been leasing a location for about 11 years. In that time, I built up and refined my full-service detailing business and purchased 3 commercial lots next door to me that came up for sale. That was about 9 years ago and the plan was to build a car wash someday. Well, the wash got built on 2 of the lots and the new detail center will be located on the third lot.

I'm excited to be getting this project started. Realistically, I should've lumped the whole project together when the wash was financed, but even the amount I borrowed for the wash (low by today's standards) was scary to me and I couldn't see borrowing more to add a detail shop, too.

So, here we go again with the documentation process for a new loan, compiling building quotes, etc. I'll update the progress in future posts!

 

[pitzerwm]

Good Luck, but don't sign a stupid loan out of frustration or "the love of the project"

 

[Waxman]

Thank you, Bill. Define a "stupid Loan" please. I do love the project, but I need to get better at negotiating in general, so any advice is appreciated. Thanks.

 

[pitzerwm]

IMO a stupid loan is one in which you will eventually be getting screwed by the bank without any kisses. i.e. You think that your project needs $300K, which really means that you will need $400K, but the bank only offers you $200K and you go ahead and borrow the $200K thinking that God, will come and save you. Guaranteed failure. Don't laugh I've seen it done. Another stupid loan; any 5-7 ?? year call option for the bank. A floating interest rate. IMO you will have enough surprises before the loan is paid off, that you don't need to buy any surprises. Thankfully, I didn't get or take a number of loans when I started out, what it taught me was how to accomplish what I wanted to accomplish without the bank. Eventually, I was/am loaning the banks money. If you think that banker is "on your side" or "likes" you, you are mistaken. He has no balls and is jealous of you because he can see that you do. He knows that in 30 years he'll still be a banker and you will be very successful.

I understand that you need to work with banks, I've started a community bank, & wouldn't even keep my money there after awhile. I've made a lot of money in banking. What I'm saying is don't be naive and think that "he's on your side". MAYBE, the real small town banker is, for the minute, but don't jump into any quicksand, just because, "you know that you can make it work". No matter how big the rocket is that you stick to your butt, in the end gravity still works.

 

[trentu]

Items you can negotiate - interest rate to an extent (if you aren't near or below prime look for another bank); variable or not, if variable then length of variable (longer = better for you), amount of interest movement up or down at variable change time (don't let them go more than 2% up, 1.25 is better); closing costs (title insurance, who pays appraisal, any added points, etc...); terms such as ballon payments, pre-payment amounts/penalties, etc... Good luck

 

[galen]

Yep, I'm going through this right now with my loan that ballooned this month. It was 6 1/4. Dave, what do you think the new building is going to cost? I'm thinking of building one right now. I've got bids out now.

 

[Waxman]

Galen,

40' x 32' x 12' ceiling. Small office, bathroom w/stand up shower stall. Already own the land. Project budget: $80,000 complete. Call me or email direct, Galen and I'll tell you more if you'd like!

 

[galen]

Yep, sounds like just what I'm going to do. I may even fax you my plans to see if you see anything that needs changing. Afterall you know the business and you know what you want in there and what is not needed.

 

[Waxman]

Can't wait for my new place! It features an office and bath, and space to detail 3 cars, maybe 4 if need be, at a time.

I'd love to look at your plans.

 

[galen]

I'll get them sometime next week Dave. What kind of interest are you looking at?

 

[Waxman]

7.37% for 35% of total, fixed for 20 yrs. 7.75 for 50% fixed for 15years, and 8% fixed for 10 years for 15%. 50% bank loan, 35% SBA company, 15% local C.D.C loan fund.

 

[dogwasher]

Can't wait for my new place! It features an office and bath, and space to detail 3 cars, maybe 4 if need be, at a time.

I'd love to look at your plans.

I wish you guys lived near Chicago, I would have liked to meet the guy that drew up your plans. I'm looking into adding a building for a Dog wash and a bay for detailing and Im not sure where to get a guy that can draw me a good looking set up. Does your new building look nice or is it just a basic shell?
Thanks!

 

[Waxman]

Interest rate update:

Main portion of my loan is at 6.5% fixed/20 years. Bank sweetened it up a little. SBA will close probably this summer. That rate depends upon prime when it closes.

ps: I'm the guy who designed my building. The drawing up of plans was done by my builder as a part of his overall fee. No big design challenges here, just a basic yet nice looking building!