Problem: In an effort to streamline operations and improve productivity, management decided to relocate to a larger building. The building appraisal was lower than what the bank and borrower anticipated and the bank was unable to support all of the purchase price and required improvements. The business needed an additional $400,000 in financing.
Solution: The Business Development Company provided a $400,000 five-year term loan. Although we took a second mortgage on the building behind the primary bank, roughly 40% of our loan was unsecured. Our structure included interest only payments for the first six months.
Epilog: The business thrived in the new building. In fact, two years after the deal closed, The Business Development Company provided an additional $100,000 term loan to finance the purchase of equipment needed to support the growing business.