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SBA Loans

Russell -

I think you mean me. I was quite active for awhile. Gone for awhile. Now trying to get back more often. The financial markets over the last few months have made car wash financing more difficult, but certainly not impossible.
 
I am not trying to jack your thread but I have a question for you Alan. I financed my wash using a SBA 504 loan. What kind of options do I have for external financing? I would like to get an automatic in there as soon as possible, but I cannot refinance until year end of 2010! Thanks for any help.
 
Bubbles -

A borrower can refinance or move the 1st lien portion of a 504 loan anytime. Of course there is often a prepayment penalty on the 1st lien portion that prevents or discourages borrowers from moving the loan in the initial years.

The solution for you probably is to simply go back to your first lien lender and get a SBA 7a loan for the additional equipment. That will likely be a 10-year term. You could apply for an equipment lease. Your equipment dealer or equipment manufacturer will likely have a source for that. One serious issue with leases is that they can be difficult for a relative newcomer to the industry to get, and the relatively short terms can squeeze cash flow compared to a longer-term loan.
 
I am sure Alan knows more about the loan end of it but leases are increasingly easier to get than in the past. Although the term is usually shorter ( I know you can go to 7 years with most and I think as much as 8 with some others) and their terms are usually very flexible. You can back load the lease to keep the initial payments down. Some leasing companies will even give you a lease on used equipment.

One of the features I like with a lease as oppposed to a longer term loan is that with the loan you usually end up paying on a piece of equipment that you have already replaced.
 
I guess what I am concerned about in regards to leasing is: Can the lender call the note due if I am to go out and get 'external' financing to put in some upgrades like an automatic? With the 504 loan after three years there is no penalty to refinance, but I would like to get the auto in sooner if possible.
 
Bubbles -

If you are concerned about violating some covenant with your existing loans, just pick up the phone and call those lenders about your plans. Lenders are OK with discussions like this. Heck, they might even have a sweetheart loan or lease for you.
 
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