Bank Loans

[Dean Taylor]

I've talked with quite a few distributors around the country who are telling me the Banks are still not providing loans for new car washes.

One of my distributors has seven tunnel washes on hold because the banks won't loan them money. Actually, they will loan money but are wanting 50% to 70% down and most people can't afford that.

I was just wanting to get input from others in the industry to see how many are running into the same thing.

I know we are in a recession but how will we ever get out of it if the banks won't move money?

Where are all of the "Obama Bailout Bucks"?

 

[Bubbles Galore]

That's what I ran into while trying to set something up for my automatic I want to put in. It was minimum 35% down with a ridiculous rate or 50% down with a decent rate.

Where's all this stimulus supposed to be?

 

[Jim L.]

A local RV dealer closed their doors this year after 30 years of business. They told me that business was slow but the few customers they had were having trouble getting financing.

 

[wagsnwheels]

I had the same problem. The new SBA rules for 7a loans supposedly back up to 90% of a loan but the banks I talked to said that they aren't giving out 90% loans. That's just what the SBA would back if they were willing to give it out. They aren't willing. The best deal I could work up was 70/30 if I could back half of the other 70 with personal collateral. If I could do that I wouldn't need the loan. Some stimulus package, eh? I say instead of getting banks to earn money by loaning it we just give them money. That way we still have banks. We won't have any businesses but we will have banks.

 

[rph9168]

We are seeing the same problems here. Not only are they not lending money but are also foreclosing faster than in the past and are not really dealing on the foreclosures. Until money loosens up I don't see things getting much better.

 

[mac]

Give Magic Wand a call if you are buying equipment only. They are financing their stuff.

 

[Earl Weiss]

Same issues here for Real Estate in all areas. One lender wanted my business for years and strung me along for 4 months before making up excuses why they would not loan me money. Since I do real estate law I knew they were full of BS. They should have just told me they did not have $ . Went to anothe rlender my clients use. First asked if they had $ to lend. They said yes. Closed deal within 30 days.

 

[wardaddy]

I've done two deals in the past few months involving low 7 figures with washes and it was the usual 75-80% loan to value

20 year amortization @ 5.2%...5 year balloon

 

[pitzerwm]

Personally, haven't signed a 10 year balloon, once and watched 5 years go by in a blink, I wouldn't sign anything balloon again. You guys probably don't remember the later 70's with 20% interest, with whats going on now, we will see that again within the 5 years, assuming that capitalism as we know it doesn't get blown up.

 

[Waxman]

Just closed on the sba portion for carwash/detail shop loan; fixed 4.31%

 

[soapy]

I talked to a friend of mine who sold his new pharmacy business about a year ago to Walgreens. He kept the building which is less than 5 years old. He has had 3 offers for it in the last year all got the fianancing turned down. 2 of the 3 were doctors who the bank would not loan to.

 

[Waxman]

I heard many doctors are geniuses but poor money managers.

That said, banks are scared and need to loosen up with lending to do their part in improving captialism.

After all, I'm still spending money!

And it's not like they don't make a bundle of money off what they lend, even when they borrow it from somewhere else.

SoaPY; why doesn't your friend tote the note?

 

[dbrewer]

Please let us know the name of the bank.Thanks,don

 

[robert roman]

I have worked with several developers last year that obtained financing for new carwash projects with a wide variety of conditions and terms.

There are also a couple of lenders specializing in carwash that have access to capital for real estate and equipment that are actively pursuing "good" carwash projects.

By "good", I am not referring to build it and they will come. Lenders are not willing to assume the same exposure for certain carwash projects as they did in the past. They are placing a lot of emphasis on the market and management viability of the business idea. If the market doesn't glow (purchasing power and distinct competitive advantage) and you don't have industry experience or a lot of very closely related experience, the developer is going to have a hard time obtaining financing for certain carwash projects. Even if the criteria is met, lenders want more down than normal although the cost of capital is relatively low.

Given the current economic and financial environment, lenders are being prudent by requiring certain developers to take a larger stakeholder position by injecting 30% or more. This requirement is not determined arbitrarily but on a case-by-case basis.

There is so much pent-up demand for deal making that a balloon might not be a bad idea considering that the economy should be on the upswing within the next two years. If you don't believe that the economy is going to improve, why bother with a new carwash project?

The ability to get a loan also depends on geography. For example, although there are areas in Michigan, Ohio and Florida that are experiencing growth, many lenders are, for the time being, not interested in doing carwash loans in these states.

Quite frankly, lenders can no longer afford the take-the-money-and-run aspect of the carwash industry.

 

[mala1967]

Do you have the names of the Lenders. We have 3 sites picked out and are having a hard time with financing.

 

[raisetheprice]

If one can't put up the $ up front...what makes anyone think you can prop it up when you reach the end of the $ before the end of the month again & again? You either pay up at the front (30% or more is what I wished we'd have put into it) or pour more in as you go, if you can. Carwashes are just like car dealerships...WAY too many. There's a guy installing a new express near a friend's self-serve...over $2M in one location. More good and well operated carwashes than you can shake a stick at within 10 minutes to compete with. And I thought I couldn't sleep at night....