When Real Estate Is a Deal Component
Sometimes, financing deals have real estate components to them. Some lenders lend against real estate; some don’t. We don’t but we have contacts in different market segments who do, to which we refer; which brings us to the main issue – is the bank willing to bifurcate the loan (get paid off on the real estate separately from the other assets)?
Usually, banks aren’t as pressed to get real estate off their books but want the other assets (accounts receivable, inventory and/or equipment) re-financed as quickly as possible. Bifurcating the loan is usually better for the bank as re-financing real estate is a much longer process. Its usually better for the borrower, too, as they can get new financing on the other assets working for them more quickly.
Next time you have a deal with a real estate component, first step: understand the bank’s focus in terms of getting the assets off its books – splitting them or not – and then refer to a lender who can take care of any scenario.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.