| Posted by: Greg k Nov 16 2002, 11:05 AM |
I have a seasonal retail business, and this fall sales have been down due to weather and the economy. I wanted to refinance my current property mortgage which is at a high interest rate and consolidate some debt as well as get a little extra capital to help in the off season. I also have a plan to reface my store frront over the winter and reopen this spring with a fresh look, attracting new customers. The amount I wanted to borrow with todays lower interest rate would keep my payment about the same. I am still well below the appraised value of my property before the face lift.
I have been to two local banks and they tell me that the "cash is a little tight" and can't give me the loan. Do you have any suggestions before I try a third bank?
Thanks,
Greg
email sargesmarket@aol.com |
| Posted by: loanuniverse Nov 16 2002, 11:52 AM |
Hello Greg:
Thanks for the visit and the post.
Are you refinancing your personal residence and using part of the proceeds for the business? If so, your approval will be dependent on your personal ability to service the debt, the loan to value and your credit history.
Are you refinancing your commercial property and putting the extra money in the business? If so take a look at this page http://www.loanuniverse.com/rental.html and replace the rental income line with EBIDA, which can be obtained here http://www.loanuniverse.com/tradcf.html
Frankly the "cash is a little tight" is a little bit too vague for me to do anything with it. I suspect that in either case the slowdown in your business has affected both the business capability to repay and your personal capability to repay the debt since your personal income comes from your business.
Edit: I just realized that the spreadsheet in http://www.loanuniverse.com/rental.html is not really the best for your case. Do not deduct 5% for vacancies since you don't have a tenant and do not deduct the operating expenses if they are already included in your business operating expenses or you will double count them.
In fact, the best advice I could give you is to go back to the lending officers of those banks and ask them for a more detailed explanation of why your request was turned down. Be professional and as unemotional as possible and ask specific questions on why and how. If they give you ratios, which reflect the reason write them down and ask them to explain them to you. However, be prepared to find out that some lending officers know as much about evaluating credit as the general public does. 
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