Hi,

I would like to know - how commercial loans work. I am planning to purchase a board and care facility, (a residential home that has been licensed/converted to care for 6 or more elderly clients) I need to know - for example - The asking price is $800,000.00 - the house is appraised at $750,000.00 and the buisness is estimated at $50,000.00. Does a lien go on the business/home and I have to put up a 10% or 20% down payment or does the lien go against my personal home? Or is there another option? Please explain and advise me.

Thank you.

Sc

The real estate will be financed separately, and will require at least a 20% down payment. The $50,000 for the business would have to be financed by itself.

Some thoughts.

1- Read this article about someone asking for financing a similar facility http://www.loanuniverse.com/hospital.html

2- There is very little chance that you will get financing for either portion. Since I published that article, I have had the opportunity to look at a similar deal that brought up a point that I had missed {a lender would not want to foreclose on an assisted living facility} There is too much liability involved.

3- Loans on real estate are secured with a mortgage.

4- Loans on businesses are secured with a UCC lien.

Can you please refer me to any banks that will do loans for Board and Care Facilities in California? Thank you.

Tom Vota
tvota@hotmail.com

Tom

I have an interested financial source that loves assisted living projects. However, it depends on a case by case basis. They must be designated as an assisted living establishment. The smaller types that are considered "Ma and Pa" facilities would most likely be welcomed by your local bank. If this is a Professional Care Facility (A.L.F.) we can chat and see if it makes sense.

Good Luck in the Interim