Posts Tagged ‘home’

Funeral Home Loans and Golf Course Financing

Golf course loans and funeral home financing provide a particularly challenging set of circumstances for both refinancing and purchases. For most small business loan programs involving specialized properties like funeral homes and golf courses, the prevailing chaotic bank lending climate has made a bad situation even worse. These specialized businesses are among the most difficult small business finance situations for commercial borrowers.

Buying or refinancing a golf course or funeral home is usually difficult to finalize. Funeral home financing and golf course financing involve problems not found in most commercial loan situations. Refinancing for both of these business categories is likely to be more complicated than the original business financing for purchase.

Fewer Business Lenders – Golf Course and Funeral Home Financing

As a further complication for a difficult business loan for a golf course or funeral home, fewer business lenders are currently willing to offer competitive small business finance terms. There has recently been a noticeable shrinkage in regional and local banks which offer commercial mortgage programs for golf course loans and funeral home loans.

Buy a Business – Business Opportunity Financing

Business financing to buy a business opportunity is a special commercial loan variation in which commercial property is not purchased. In such a situation, the buildings and land are typically subject to a long-term lease. Similar to a conventional mortgage to buy a golf course or funeral home, competitive business opportunity financing is not easy to find.

Avoiding Problematic Commercial Mortgage Terms

Some regional and local banks will probably offer short-term business financing instead of a long-term business loan for golf course financing and funeral home financing. Another key term that can vary significantly is the percentage of value for the commercial financing. It is of critical importance to avoid undesirable commercial loan terms, especially commercial mortgage loan conditions involving length of loan and percentage of value when buying or refinancing a funeral home or golf course business.

Stated Income Business Financing Difficulties

Stated income small business loans (involving minimal or no income verification for the borrower) are not widely available for commercial real estate financing in the current restrictive lending conditions. The use of stated income business financing is not recommended for a funeral home loan or golf course loan, even though a stated income commercial loan has a certain number of benefits when available. A major limitation of a stated income commercial mortgage is the maximum amount which can be financed. A further limitation is the low percentage of value for stated income commercial financing involving either golf course financing or funeral home financing. In other words, a stated income approach to financing funeral homes and golf courses is not recommended even if it were an option.

When Commercial Real Estate Loan Value is Less Than Business Value

For golf course loans and funeral home loans, the commercial real estate loan value is often less than the business value. This is particularly true with a funeral home appraisal. The problem with this disparity is that many business lenders will provide a business loan that includes only the commercial mortgage loan value, and this will produce significantly reduced business financing.

Exorbitant Commercial Loan Fees for Funeral Home and Golf Course Financing

Business owners should be prepared for reasonable business financing fees during the beginning of the business loan process for golf course financing and funeral home financing. Several lenders are taking advantage of the shortage of commercial loan choices for building, purchasing and refinancing a golf course or funeral home. A common tactic is to charge excessive fees of ,000 and more even if the commercial financing is not finished.

Fewer Commercial Lender Options for Funeral Home Loans and Golf Course Loans

As already noted, the availability of suitable lenders for this specialized type of business loan is shrinking. A viable commercial mortgage for funeral home financing or golf course financing will depend upon a prudent choice involving the lender. It is critical to select a lender with the ability to successfully complete the complex business loan process and at the same time avoid the commercial mortgage obstacles described earlier. It is important for a borrower seeking to buy a golf course or funeral home to be prepared in advance for the limited number of acceptable business financing lenders.

One Solution – Business Consulting and Small Business Finance Experts

In complex commercial loan and SBA business loan financing, the use of a small business finance consulting expert should be conducive to a better understanding of difficulties to anticipate. Since funeral home loans and golf course loans are among the more difficult commercial financing situations that a commercial borrower is likely to encounter, the use of preliminary business consulting should be helpful in obtaining better terms and avoiding serious problems.

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Home Business Financing Alternatives

While unconventional financing can cost you money in the long run, it does allow you to avoid borrowing money as a loan that needs to be paid back… whether or not your business makes a profit. With the alternative financing options presented here – if your business fails, your obligation to pay back the money expires. These alternatives, to heading down to your local bank or credit union for a personal loan, are venture capitalists and so-called “angel” investors. In both instances, you are asking individuals to invest their money in your business in exchange for a share of the profits.

Venture Capitalists
Venture capitalists provide money or capital to all types of start-up businesses but should only be considered if your home business concept is focused around technology and if you had access to better hardware it would allow you to make a bigger profit. Venture capitalists primarily look for businesses that have the potential to grow quickly and are run by an experienced and confident owner or management team.

Approaching a venture capitalist is similar to approaching a bank to ask for a loan, except you need to make a more convincing case. The venture capitalist you meet with will be a specialist in whatever industry you’re planning to enter and they will turn and run faster than they can say hello and goodbye, if you don’t convince them beyond a shadow of a doubt that you know exactly what you are doing. Research any venture capital company before you meet with them. Verify what they are looking for and who their existing clients are.

An important point to remember is that if they ever ask you to pay anything, you are being scammed, so be very wary of anyone who insists that they won’t sign an NDA (non-disclosure agreement or privacy agreement) before they see your idea because they might hand it over to one of the companies they’ve already invested in.

Normally, venture capital funding is very competitive… so be prepared. The ideal situation is to build a solid version of your business on a small scale and then wait for them to come to you. You should also be aware that accepting venture capital funding will give the venture capitalists a significant say in how your company is run. They will try to force you to grow the company as large as possible but they will effectively take over your company. They may help you get rich but not much fun if you’re out to start your own business to get away from the typical corporate way of life.

“Angel” Investors
Angel investors are similar to venture capitalists but on a much smaller scale. They are “real people” who will invest in smaller companies. For a home business, angel investors are a much better idea than venture capitalists.

Angels tend to behave more like a business partner. In many instances, they will invest half the required start-up funds and then take a personal role in the day-to-day running of the business. This contrasts dramatically with venture capitalists which have a tendency to be a more sterile, faceless entity and issue written demands if you’re not making an acceptable profit. In addition to providing financing, most business angels also bring with them knowledge and experience which can be a great asset to your business.

On the other hand, you need to remember that they are in this for one reason and one reason only – to make a big profit. When you build your business with the help of an investing angel you need to be able to show them how you will be able to provide them with twice the money they put in and how soon. This doesn’t necessarily mean that your business needs to grow rapidly, but it does mean that whatever you plan to spend “their money on” needs to be some kind of tool for making a big return over a relatively short period of time.

The Best Alternative – Staying Independent
Of course, the best way to stay completely independent is to avoid accepting any outside investment. However, if you really need the funding, there are still a few ways to take it and still stay relatively independent.

Regardless of the number of investors, make sure you retain control of at least 51% of your business… otherwise it’s no longer your business. Remember, if you have a genuinely solid business plan, then the investors are the ones who should be begging you for the opportunity to invest for such a good return. If you ever feel like you’re entering some kind of big overwhelming system that requires you to play by to many of other people’s rules then don’t. Last but not least, and I must stress that I would only go with this option as a last resort, you might be able to persuade your friends or family to provide the financing. Plus, you’ll get far better terms and less intervention in the daily operation of your business.

Business Financing Through Home Equity – Smart Move or Too Risky?

Are you willing to risk your home to finance your business? One way to infuse your business or startup business concern with cash is by tapping the equity in your home. Is it a smart move? The answer depends on a number of different factors.

Financing a Business

One of the biggest stumbling blocks for a new business owner is acquiring financing for the early costs of establishing the business. Unless you have an established banking relationship or collateral to put down, few banks or lenders are willing to make a loan without a personal guarantee of some sort. It makes sense for a homeowner to turn to their largest asset as collateral. A home equity loan or line of credit is often the easiest way for a new business owner to acquire a sum of money that can be used to fund their business startup.

The Case against Home Equity Business Financing

Financial experts almost unanimously warn against using your home as financing for a business. It’s a risky move. If your business fails, you could be putting your home in danger. Since most entrepreneurs begin a business with the intent of supporting their families, does it really make sense to put your family’s biggest asset at risk?

On the other hand, your home is the biggest asset. Using it as collateral can be a very cost-effective way of financing a new beginning. Home equity loans often carry the lowest rates of interest of any other type of loan. Add to that the fact that many banks will require a personal guarantee for a business loan to a startup, and the effect is about the same. You’ll still be personally liable for paying the money back if your business fails.

The trick is to borrow smart. Before you decide to put your house on line to finance your business, do a bit of soul-searching and a lot of research. Here are some factors to consider before you decide to put your home up as collateral for a business loan.

1. Are you counting on the success of the business to pay back the loan?

Keep in mind that most business concerns do not turn a profit within the first year. Can you make payments on a home equity loan for a year without tapping business profits? If you can, then a home equity loan may be a good option for you. Even if the business fails, as long as you know you can make the payments on your loan, your home is safe.

2. Is a home equity line of credit an option?

A home equity loan makes sense if you need a chunk of money to purchase equipment and pay starting expenses. A home equity line of credit has a number of advantages over a closed-end loan under some conditions. While you may be paying slightly higher interest rates on a line of credit, one of the biggest advantages is the revolving feature. In other words, when you pay back money on a line of credit, it becomes available for you to borrow against again. A second advantage is that you’ll only be paying interest on what you actually owe. A home equity line of credit for business purposes is a good way to have cash in reserves for emergencies without having to pay interest on it until you use it.

3. Do you have an exit plan?

One of the biggest failings for most business owners is that they fail to plan for failure as well as success. We all hope that our businesses will be wildly successful, and it’s easy to make big plans based on that dream. But there’s a real danger in not planning what you’ll do in case of failure. At what point will you decide that enough is enough, and what steps will you take to get out with the least possible damage? Deciding when to call it quits can save you from disaster if the business doesn’t fly as high as you hoped.

4. Should you tell your lender that your loan is for business?

While home equity loans can generally be used for any purpose, including funding a new business, some loan experts recommend against volunteering the information to your lender. They may feel obligated to direct you to the commercial lending arm of their institution if that’s bank policy. If, on the other hand, you are asked directly, it’s best to be honest. Lying about your purpose for the loan could be construed as misrepresentation and open you to charges of fraud. Misrepresenting yourself could also negate the loan and call it due immediately.

The long and short of it is this: your home is probably your best source of funding for your business in the early stages. If you do decide to use a home equity loan to finance your business, be sure to think it through and safeguard your home before signing on the dotted line.

My credit score is 529, and I would like to purchase a home. Will I be able to get a loan with this kind of score?

I want to buy another home, move, & then sell my old home. Are there ways to finance the new home using the equity of the old home to secure the loan?

Do they loose their value? Can you take out equity? I guess I want to know if it is a smart financial move in looking at the future stability of my finances.

I keep everything at home and a lot of it I did not need, but recently moved and somehow lost most of it. Yes, I certainly do blame myself….How many years of tax returns should we keep and where? ( i can only find 2 yrs back) What documents should we have concerning our home (title, deed of trust, etc). Where and how can I get copies of these docs that I need?

I keep everything at home and a lot of it I did not need, but recently moved and somehow lost most of it. Yes, I certainly do blame myself….How many years of tax returns should we keep and where? ( i can only find 2 yrs back) What documents should we have concerning our home (title, deed of trust, etc). Where and how can I get copies of these docs that I need?

We bough our home in 2007, put 20% down and now with the market plummeting, we owe more in our house than what it’s worth. We make our payments fine, just have no equity to fix a major bathroom problem.

I know…I know… there are a lot of other variables ivolved. However, if you had to give a straight from the hip answer about this question, what would you say? On average, how much per year does a guy have to earn if he wants to live in a house worth $300,000?