- Short, Concise & to the Point (5/20/2022)
- Finding Lenders, now new rules (5/5/2022)
Bank Regulatory Agencies Issue Joint Notice of Proposed Rulemaking for CRA Regulations
WASHINGTON, D.C.–May 5, 2022–The three major federal bank regulatory agencies today issued a joint notice of proposed rulemaking to strengthen and modernize Community Reinvestment Act (CRA) regulations. The Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Fed) and Federal Deposit Insurance Corporation (FDIC) jointly issued the proposal, which would be the first significant interagency revision to the CRA since 1995. The proposal would adopt a metrics-based approach to CRA evaluation of retail lending and community development financing that includes public benchmarks. The rule would also clarify eligible CRA activities that are focused on low- and moderate-income, rural and underserved communities, including affordable housing. The OCC issued a proposed update to CRA regulations in June 2020, but rescinded that rule in December 2021 with a view to issuing a joint rule.
- Businesses Getting A Mortgage, Post Covid 19 (2/17/2021)
Small business owners and commercial property investors looking to finance their properties have many things to consider, especially if they are unable to get a bank loan. Covid 19 and the ensuing economy has created an overabundance of “risk aversion” for commercial banks. It’s important for borrowers to understand what their options are, how to leverage those options, and how to protect themselves when seeking financing.
Hard money, everything else being equal, should not be your first choice after a bank turndown – low loan to value, high costs and onerous terms. Moreover, if you are seeking more reasonable terms for your borrowed funds, you’ll need to look at: credit, collateral and capacity to repay.
Whether you’re dealing with past credit issues, an inability to verify your income to a bank’s satisfaction, or simply need a commercial mortgage faster than a bank can provide, non-bank commercial lenders are a great resource for non-bankable borrowers. These lenders understand alternate documentation, how to support the decisions being made that make sense but are not necessarily confined by federal banking documentation requirements. An example of this is accepting bank statements showing revenue as opposed to tax returns.
This is also an opportunity to “fine-tune” your business, making sure you have your sales and marketing up to speed, that you not only have continuity of income but diversity as well. Any good consultant will also review your business in view of industry standards and current trends to assure that you have not missed anything.
- Borrowing Havoc = Cashflow Havoc. How to Avoid. (8/15/2020)
It’s difficult to handle the current economic environment unless you know what you’re dealing with. The truth is that no one knows the depth, breadth or length of the current economic slump due to COVID-19. It’s been like a one, two punch. The default rates is out of control which, in turn, has caused banks to pull in there horns in lending.
GPA Capital, through its years of experience (this is not our first recession) is ready to help. Cash flow lending is challenging, particularly since one cannot produce stabilized revenue. However, we can look at our opportunistic fund for one. We can also look at changing asset class for collateral, which utilizes your self-liquidating assets such as Accounts Receivable, MVA’s, O&G Reserves or Other Pre-Sales and Invoice Financing. Projections are fine if supported appropriately.
Let’s talk further! Apply here to get started: https://gp-assoc.com/#/
- Capital Recapture (8/2/2020)
“I am more concerned with the return of my money than the return on my money,” interestingly was quoted by three powerhouse people of the past (Mark Twain, Will Rogers and John Maynard Keynes – the father of modern day economics). This is so powerful, yet simple, that I wanted to bring it up again as it is a more applicable statement today than ever before.
As I’ve worked and consulted with commercial banks in past recessions, the knee-jerk reaction is usually to litigate first and worry about capital recapture later. This one-way street leads the borrower to seek the protection of the US Bankruptcy Court. As a consequence, massive writeoffs are taken and all parties lose.
Alternatively, I’ve proven time and time again that the best path to a workout is to work with all parties, assessing concepts, business plans, capital stack, supply-demand for products and efficiency of workflow. The “project correction” can be (1) charged off, (2) the new business plan executed so that the endeavor is now profitable, (3) the charged off amount can now be amortized over the new project earnings, and finally, (4) recorded as capital gains, thus monetizing the tax benefit along with the capital recapture.
Not possible? Case Study: One of our bank clients was upside down by an inordinant amount. Why not buy the land next door with seller-held paper, double the size of the project and amortize the overage – it worked (Ocala, Florida). Whether Real Estate, Industrial or Energy, GPA Capital’s Elastic Amortization Method.
Feel free to email me your scenario…email@example.com
- Post Covid Office Metrics (5/16/2020)
Charles Pope, Certified Commercial Lender
In the new economy, post covid, there will be changes to this market. There will be a short term increase in money spent on tenant improvements (TI), which will be amortized through long term interior finish loans. This will result in an overall increase in NOI. Of course, their will be an accompanying correction to cap rates. How will this work?
For two reasons, there will most certainly be vacancies: 1) Small to medium businesses (SMB’s) will reel in expenses as product demand decreases. As employees are more comfortable working at home, this will become standard for many, allowing many of these small businesses to survive.
2) Medium to large Business’s that need the centralized workforce will have to lease more square footage.
The tenants necessarily will have to abide by the new rules on social distancing and safe work places. Now that there are fewer tenants, but with larger spaces, management fees will be lower on a pro rata basis which, in turn, will increase NOI. Of course, the larger tenants will negotiate lower square foot rates. The outcome of this will simply be, as it always is, supply and demand.
For those of our followers who find themselves in the office space re-do mode, we are excited to offer these loans at a 10 years, or the lease term, whichever is less. Whereas many banks are unable to perform on these requests due to the current default rate and deposit runoff, GPA Capital is here to help – as we always are. Click here for our initial [Application Request].
- State of Today’s Bank SBA Loans (5/5/2020)
Our recent anecdotal evidence shows that there is a logjam with most banks due to the overwhelming amount of disaster relief applications.
The Washington Post spelled it out in their interview with Small Business Administration director who blasts banks over failure to quickly distribute loans. Nevada district director Joseph Amato criticized big banks for failing to quickly distribute loans to small businesses during a web presentation posted on April 6 and later shared with The Post. GPA Capital works hard to vet our bank alliances – we know the performing ones.
Some bank lenders, as well as private equity funds, have put a hiatus on lending as they are analyzing investments in view of the proposed recovery. Will the recovery be “V” or “__”? Whereas this may be perceived as bad news, the good news is that GPA Capital has been reaching out through its network to bring lenders back to the table for well structured, self liquidating loans. Meaning, a strong exit strategy using strong compensating factors. Call us to discuss 877-247-2776. In the meantime, here are 8 things to consider to improve your funding chances.
- Oil & Gas Industry – Future (4/30/2020)
Recently we’ve heard market watchers tell us that the oil & gas future is uncertain. We challenge that attitude as evidenced by our success in financing our oil & gas clients. As most elements in business and finance, in general – it all has to do with supply and demand. The demand for oil is not going away. Travel may be weak at this time, but this is overtaken by the strong demand for the other products made from a barrel of oil – such as PPE, to name one in current demand. To the point that a picture is worth 1,000 words, please see below:
If you are an independent oil & gas producer, we can help you. Please call us at 877-247-2776.
- Not for Profit Lending (1/20/2020)
Not for Profit Organizations have no shareholders, show no excess cash to be used for debt service, therefore can’t show a debt service coverage ratio and report to the IRS on form 990 instead of 1120.
Most of these characteristics are not too well understood by traditional lenders, thus, GPA Capital is frequently called upon to advise. Of course, we make full use of a select numbers of Commercial Banking Alliances, as well as our Private Equity Partners.
Not having shareholders takes away the crutch that most lenders have of relying on a guarantor; there are no guarantors. This means that the underwriter (in this case, GPA Capital) must rely on the Non-Profit itself for the payback.
Having zero income does not mean “no capacity of payback”. This simply means the underwriter has to have a working knowledge of the CAFR, a Comprehensive Annual Financial Report; a set of U.S. government financial statements. By way of definition, this opens up scrutiny of Statements of Net Position and, important for debt service, Statement of Activities. Are the funds of the Not for Profit Major Funds, and, if not, where do the categories stack up? Are the assets designated?
For these reasons, if you are at Non-Profit AND, you do not have access to a tax base or other municipal funds, bond funds or special charity forums, you will be well served to give is a call. 877-247-2776.
- Learn 5 C’s of Lending (10/22/2019)
As Commercial Loan Advisors we can assertively tell you that by understanding the fundamentals of how your debt source analyzes potential loans, you become a much more formidable borrower. This will enable you to utilize your leverage to your best advantage.
We put together this informative eBook that is part of a 5 part series to bring you current with the state of the borrowing industry and how you might leverage your resources to improve your practice’s financial situation. The Five C’s Whitepaper, Educational Series 1 of 5. Enjoy!
- Commercial Appraisal Help (9/29/2019)
A commercial real estate appraisal differs quite a bit from appraisals done for residential properties. Value for a commercial building is based on the rentals received relative to the expenses paid out. The underlying asset is important, but not even close to the same way that a residential properties value asset.
In recent months our loan clients have asked many questions on how their property, and/or acquisition will be affected by the occupancy. The answer is: NOI (net operating income) means everything!
I can speak to this with some authority as I ran the appraisal department for my first employer – a regional bank. A commercial appraisal still contains the 3 value approaches (direct market comparison, cost reproduction approach and the income approach). As most things in business have to make sense the underlying premise is that there is no intrinsic value to an income producing property than the earnings stream. I could write an epistle, but, for brevity and time savings, here’s what you’ll focus on. Feel free to email me with any questions about your property. firstname.lastname@example.org
Key factors will be:
• Longevity of leases
• Diversity and continuity of income
• A tenant with a disproportionate percentage of space must be carefully evaluated
• Each tenant will be looked at for credit standing and an estimated of future performance
• Environmental survey and any remediation that must occur
• Engineering report to identify deferred maintenance
• Reserve for replacement from said engineer.
- Operating expenses? One important component to value! (8/24/2019)
Operating expenses are the costs associated with operating and maintaining a commercial property such as an office building or retail center.
Depending on the lease structure, you will either pay operating expenses as a component of gross rent or in addition to base rent. In the Austin market, triple net (NNN) leases are typical for Class A and B office space, and operating expenses are paid on top of the quoted NNN rental rate.
In a multi-tenant building, each tenant typically pays their pro-rata share of operating expenses based on the size of their space relative to the building, whereas in a single-tenant building, the tenant is typically responsible for 100% of total operating expenses.
What is included in operating expenses?
Operating expenses are made up of three main components:
Property Taxes: The taxes charged to the property owner by taxing entities. To learn more about how property taxes are calculated in Austin, read our article: What are Commercial Property Tax Rates in Austin, Texas.
Insurance: Insurance is the cost for the owner to ensure the building, which is typically required by the lender that is financing the property.
Common Area Maintenance fees: These expenses typically include management fees, building maintenance and repairs, utilities, administrative fees, management salaries and fees, property lighting, parking lot maintenance and more. Exactly what is included varies by property type and by landlord. Get more information on what is included in CAM fees in our article What Are Common Area Maintenance Fees?
What isn’t included in operating expenses?
Operating expenses should not include debt service, CAPEX, property marketing costs, capital reserves for future large repair projects, leasing commissions or tenant improvements allowances.
Is op/ex negotiable?
Typically, the the property tax and insurance components of operating expenses are not negotiable. These items are considered uncontrollable, and, therefore, they are passed directly through to the tenant.
Controllable expenses, such as CAM expenses, are negotiable to some degree as landlords and property managers can control how efficiently a building is being managed. Negotiating a cap on annual operating expense escalations is the most common form of tenant protection.
How do operating expense caps work?
There are three ways to cap operating expenses:
In a Year-to-Year Cap (also known as a Non-Cumulative Cap), there is a cap on the percent that the landlord can increase the CAM year-over-year.
With a 3% Year-to-Year Cap, if the CAM increased by 2% the first year, the tenant is responsible for paying that 2% increase.
If the next year, CAM increases by 4% the tenant is responsible for paying only a 3% increase, as they are protected by the Year-to-Year Cap.
For this reason, tenants prefer year-to-year caps, as it keeps CAM increases to a predictable level.
Cumulative Compounding Cap
In a Cumulative Compounding Cap, there is again a cap set on the percent that the landlord can increase the CAM each year. However, in this situation, the landlord can always recoup any unused increases from previous years. This is the most common form of operating expense cap.
With a 3% cumulative compounding cap, if CAM increased by 2% in the first year, the tenant is responsible for paying this 2% increase.
If the next year, CAM increases by 4% the tenant is responsible for paying this 4% increase because the landlord can collect the 3% cap for this year and the leftover 1% from last year.
For this reason, landlords prefer cumulative compounding caps, as it allows maximum flexibility.
- Loans Properly Structured (5/21/2019)
An important understanding when seeking loan capital is that “there is never a shortage loan funds/capital, only a shortage of properly structured transactions.” As so many borrowers lose hope of receiving the funding they need. They go from one lender or loan broker to another, looking for someone who has a magic wand – sorry to break the news, that does not exist. The good news, however, is that when properly structured, a solid loan transaction will reveal itself – many times not in the fashion you expected, but more than likely, an even better solution.. Therefore, we created this brief, but informative White Paper for our readers in an effort to save you the pain which comes from not being in the capital markets daily, as we are.We look forward to serving your capital needs for your new office, acquisition, expansion or refinance. Simply complete this short form [Inquiry] to set up a complimentary cash flow evaluation. 8 Things Small to Medium Size Businesses Should Know About Loans white-paper
- Bank-Loan Turndown? Hard Money Isn’t the Only Option! (5/6/2019)
What do you do when you are declined for a commercial mortgage loan at a bank? This is a question most borrowers are going to face at one time or another, since there are many small-business owners who will not qualify for traditional financing.
It might seem that after a bank turns down a loan request, a borrower’s options are very limited. To some, hard money might appear to be the only alternative.
In fact, this isn’t the case. Although some borrowers and commercial borrowers are going to be limited to hard money loans because of poor credit, seasoning issues and a variety of other factors, there are plenty who can qualify for a mortgage that combines the characteristics of bank and hard money loans. It’s important for the borrower to seek competent help brokers to understand their options from a professional loan consultant.
Hard money defined (some lenders like to make it sound less onerous by calling it “private money lender”)
Hard money loans are a type of asset-based financing through which you receive funds secured by a commercial property, generally at a high interest rate. These loans are typically interest-only products and tend to be short-term solutions — one or two years — with a balloon payment at the end.
Borrowers requiring a hard money loan often have experienced a distressed financial situation, such as a bankruptcy or foreclosure, which has damaged their credit. Interest rates are usually at least 12 percent and can often be much higher because lenders are taking on more risk with a hard money borrower’s situation. The other costs of a hard money loan also tend to be higher, with lenders charging as much as 10 points to close the deal. Many brokers prey on distressed borrowers.
Hard money loans aren’t cheap, but they do fill a void in the small-balance commercial mortgage market. So, it’s important to be able know what you will qualify and to select the right hard money lender.
When Hard Money Works
If your credit scores are particularly low, a hard money loan might be the only option. Hard money loans can be a way for borrowers in financial trouble to obtain the funds they need while reestablishing a positive payment history.
Seasoning issues also can keep a borrower from qualifying for a mortgage from a bank or some private lenders. Generally speaking, if you have owned a commercial property for less than two years, you will run into issues with seasoning. In this case, a hard money loan could be the right solution as these types of lenders usually don’t have seasoning requirements.
Borrowers who need a bridge loan and are planning to sell their property to pay it off also are potential candidates for hard money financing. Bank loans and some private-money mortgages are usually longer-term loans with prepayment penalties, so a hard money loan that can be paid off quickly without incurring additional fees may be the best fit.
Another case in which you may need a hard money loan is for a purchase-and-rehab property. Few banks are willing to provide financing to borrowers looking to rehabilitate small commercial properties, and even many nonconforming lenders shy away from these situations. If your borrower is looking to purchase a commercial property with the intent to fix it up and sell it, a hard money lender is going to be a good source for obtaining the necessary funds. Alternatively, as GPA Capital has, you might consider a Non-Bank Institutional Lender.
Finally, for some borrowers who need a commercial mortgage in a very short time frame, waiting for a bank loan to close simply isn’t an option. Commercial hard money lenders are known for closing deals quickly and, in the right situation, a borrower will think it’s worth the extra costs.
Hard money loans are a great option for some commercial borrowers. There are other options, however, for small-business owners who cannot qualify for bank loans but are looking for something relatively inexpensive and stable.
For the borrower between a bank and a hard money place, there’s another option: Pursuing the alternative.
Nonconforming commercial lenders with rates and terms in between those of banks and hard money lenders are a great option for many small-business owners looking to refinance or purchase a property. This niche is still relatively underserved, but there are lenders who are willing to work with non-bankable borrowers and their commercial mortgage broker to create long-term financing solutions that benefit all parties involved.
Your credit history is going to be an important factor. If your credit score disqualifies you for a bank loan but may not necessarily low enough to necessitate hard money financing, you could obtain an alternative nonconforming commercial mortgage. It’s also important to note why your score’s too low for bank financing. If your history has recent late mortgage payments, you’re likely only be able to obtain a hard money loan. Credit issues stemming from medical emergencies or financial problems unrelated to their business, however, are obstacles that some we can work with.
If you’re looking for long-term financing, a nonconforming commercial mortgage with the right lender is a great choice. For many borrower’s hard money loans, which require a fast exit strategy as the loans tend to balloon within two years, do not provide the longevity for positive, measured growth. For borrowers seeking a more secure and consistent financing option, an alternative small-balance commercial mortgage could be a good solution.
Commercial mortgages from nonconforming lenders also can function as an exit strategy for you if you currently have a hard money loan. Once you have reestablished a positive payment history and improved your credit, you’re more likely to qualify for one of these in-between loans with our services. Refinancing a hard money loan with an alternative small-balance commercial mortgage will put you on more secure financial footing.
• • •
Although there are some commercial borrowers who will require hard money financing, there are nonconforming lenders with alternative products that will be a better fit for some borrowers. Understanding our non-bankable borrowers and the type of commercial mortgage that suits their needs allows us to create a sound borrowing strategy for our clients.
- The Lending Equation (3/3/2019)
Common Sense Commercial Loan Criteria
Character. This is demonstrated by credit and most recently, credit score. Have you paid your bills in the past? Judgements? Percent debt against credit lines greater than 30%?
Capacity to Repay. This refers to the actual ability of the borrower to repay the debt and how this will be done. This can be from the earnings from a business, cash flow from the investment property, or, the sale of the investment property. It could even be a forward commitment from a long-term lender in the case of the initial loan being short term.
Collateral. Collateral is what will be liquidated should the borrower not pay the loan when due. Note: the lender requires a margin above the loan amount to cover collection costs should it come to that.
Liquidity. This is what the lender considers “Plan B”. In case the primary means of payback fails, you need at least “interest carry” in the bank until the situation is corrected. NOTE: this can also be satisfied in some cases by stable and substantial earnings of the borrow. Either from his/her “day job” or proven by historical tax returns where assuring the continuity.
“Skin in the deal”. The lender wants to make sure the borrower is taking great care of the collateral, doing everything possible to assure the project’s success. There is no better way assure this than the borrower’s hard cash investment in the project/property/collateral.
Conclusion: Whether a hard money loan, conventional, conforming loan, hybrid or alternate conforming loan, one or more of the above “always” come into pay. When the loan is reviewed by the lender, the transaction must make sense. Some new investors have been taught there is 100% hard money available. It does not fit into the equation since it costs 35% of the asset value to foreclose for non-payment. Thus, the maximum loan to value is 65%. Make sense?
If one of the above is weak, a strong “other” may compensate making for a loan approval, again, make sense?
- Real estate portfolio benefits? (2/7/2019)
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for [with properly leveraged funds], and managed with reasonable care, it is about the safest investment in the world.” Franklin D. Roosevelt. See GPA Capital/Investopedia Article
There is no better way to experience not only capital gains, but, long term stabilized income. Appreciation is an added benefit to this as well.
For this reason, as the economy is “heating up” GPA Capital has developed the tools you’ll need to take full advantage of these opportunities. See our website for useful tools including express loan applications. Here is a guide to help you choose the right business loan, or, if you’re interest in investment, please give a call for a one-on-one.
- Commercial Loans That Close (2/5/2019)
Now that you’ve printed out the GPA Capital 2019 Planner contained in our last blog, it’s time to get going. We’ve streamlined our website and focused on our “Core Business” of “Lending”. Please stay tuned for updates. We wanted to get the year started off right. We’ve aligned ourselves with wider and deeper Capital Partners. We’ve seen the results already; January was a banner month.
Loan application are easier and quicker for 2019. You can apply directly on-line for each of the three main products:
- Express Real Estate Loan Application
- Express Investor Real Estate Loan Application
- Working Capital and Operational Loan Application
- 2019 Funding Prep (12/28/2018)
To help you map out your profitable 2019, GPA Capital designed an exclusive planner for our readers [Planner]. This includes a full range of what you need to become more profitable, expand, fulfill your capital needs. For the next two weeks we are offering a no-cost review to help you learn your option to maximize your cash flow.
For a confidential consult, hand-write (or type) your input on the attached planner and fax back to my private fax line 866-892-1167.
As always, thank you for your trust and confidence!
- The Ugly Truth About Merchant Cash Advances (6/14/2018)
If your practice has either struggled financially in the past, or is struggling right now, you know the pressure is overwhelming. This leaves many doctors in a panic to take any deal available, including bad deals like a Merchant Cash Advance (MCA)*. To make things worse, once you’re in an MCA, you’re “un-bankable” to most other lenders until it’s paid off. Learn more about MCAs here.
We’ve had many doctors ask us if we can get them out of MCA’s that are putting a huge squeeze on their cash flow. Yes, we can!
GPA Capital will refinance your MCA (and other short term debts) into a long-term SBA Loan. But this is Step 2. Step 1 in the GPA Capital Plan is to first increase your Internal Capital Growth dramatically, allocating that revenue to pay off any MCA or other business/personal loans.
GPA Capital uses this reported income for those six months to qualify you for a long-term SBA loan. Apply Here so that we can get you out of this pressure and on the right track.
*On the average, Drs. receive 6 to 8 MCA solicitations/MO, yep and 24 hour funding to boot!
- Planning a Profitable 2018: A Daunting Task (12/29/2017)
Whereas Cash Flow is the “life blood” of any business, recording, collecting and analyzing your business’ operations is the “heart.” The goal, always, is Continuity and Diversity of Income. Therefore, successful practices start their fiscal year with a plan that describes the strategic goals of the organization, its financial and other resource needs. Capital partners such as banks may require a formal business plan before approving credit. GPA Capital has developed a Planning Tool to help our followers and clients. You will benefit by reviewing these Top 10 Strategies:
Strategies I: Strategic plan
Strategies II: Budget
Strategies III: Legal
Strategies IV: Finance
Strategies V: Insurance
Strategies VI: Credentialing/Third-party payors
Strategies VII: Facilities
Strategies VIII: Staffing
Strategies IX: Practice Management
Strategies X: Banking Relationship
For further assistance and direction, feel free to complete GPA Capital’s brief Medical Practice Questionnaire at no cost or obligation.[Start Here]
- Top 10 Reasons Physicians’ Commercial Loans Are Declined. (12/14/2017)
Whether expanding your existing practice, purchasing a practice or planning your exit, at some point you will be planning to borrow funds for your Medical Practice. Each loan is like “going to battle” with a bank. Listening to the horror stories of our clients who have come to us after being shot down for their commercial loan request, we felt that it would help future borrowers to share what we have learned. Below is the short list and attached is the whitepaper.
- Applying with the wrong lender. Simple, but the number one reason.
- Lack strong “compensating factors”
- Can’t properly document your income
- Inexperienced loan officer or mortgage broker
- Your reasons for seeking a long don’t make sense.
- You don’t have a solid business plan.
- The outside conditions are too risky.
- Picked the wrong type of venture or initiative
- Sandbagged by a know-nothing appraiser
- Bushwhacked by new rules
GPA Capital tailors each unique loan for its providers to best serve their needs. Equally as important, we structure the loan package for minimum chance of being declined. Plus, we always have backup plans 2 and 3. Funding to a conclusion is our goal. Please review the material and should you decide, you can get started here.
- Art & Science Behind Healthcare Borrowing (11/15/2017)
As commercial financiers with decades of experience, we recognize that successful healthcare borrowing requires both “art and science.” Unfortunately, many providers don’t understand this and after weeks spent rounding up documents and filling out forms (then more weeks of waiting), 62% of loan applications still get turned down due to inadequate paperwork or poor communication.
Producing a successful commercial loan package requires 2 different skill sets. In school, most people are either good in English/Creative Writing classes (art) or good in Math classes (science) – or if not good, at least prefer one or the other. However, a successful commercial financier must excel in both.
- Writing: Clearly summarizing a borrower’s past (especially details surrounding issues like bankruptcy), the current status of the practice and then presenting future goals that lender’s buy into is crucial. Two fundamental rules in writing are “know your audience” and “know your subject.” By having an MBA in Finance and decades as both a commercial loan officer and commercial loan broker, Chuck Pope at GPA Capital has both rules covered. Knowing how loan officers analyze loan packages and the skill developed from writing hundreds of them himself provides the skill required to focus on each application’s highlights and downplay any deficiencies. Like any good biography, the story must lineup with the facts – in this case, the attached financial documents.
- Math: Analyzing and extrapolating critical data from often thousands of pages of various personal and business financial documents going back years is hard. Then repackaging that data into clear and concise documentation that even the busiest loan officer can quickly find is even harder. By understanding exactly what data loan officers and underwriters are looking for, GPA Capital knows that, with a multitude of loan types and access to hundreds of lenders, with the right financial documentation, there is a fit for almost every situation.
By working closely with our clients, we craft loan applications that provides the required financial documentation and is framed in the best light possible. The result is a much faster loan with the best rates and terms available.
For more on this subject, get the free PDF Art & Science Behind Borrowing
To begin the loan application process, fill out this Confidential Conference Request.
If you have any questions or comments, please contact us at:
- The Existential Threats and Solutions to Small to Medium Practices (10/25/2017)
Part 3 of our educational series on Finance for Physicians. Now that you understand the fundamentals we laid out in week 1 educational series and week 2 educational series, our Healthcare Lending Team created the next whitepaper “The Existential Threats and Solutions to Small to Medium Practices”. Enjoy!
- How to think like your banker: GPA’s guide to lending (10/17/2017)
By understanding the fundamentals of how your banker analyzes potential loans, you become a much more formidable borrower. Plus, an educated and knowledgeable borrower is our best client.
Your banker subscribes to the “5 C’s” which he learned in banking school. We put together this informative eBook that is part of a 5 part series to bring you current with the state of the borrowing industry and how you might leverage your resources to improve your practice’s financial situation. The Five C’s Whitepaper, Educational Series 1 of 5. Enjoy!
- Understanding Replacement Reserves and Disaster Recovery (9/15/2017)
Understanding Replacement Reserves in View of Storm Season
- The topic of replacement reserves is often confusing for medical practice owners:
- How much should be set aside for replacement reserves?
- Should replacement reserves be included in net operating income?
- How do replacement reserves impact cap rates and value?
What are Replacement Reserves?
Replacement Reserves are funds set aside that provide for the periodic replacement of building components that wear out more rapidly than the building itself and therefore must be replaced during the building’s economic life (short lived items).
These components typically include the replacement of the equipment, furniture, hardware, software, file storage and most assets that are part of your practice.
Now, with the advent of hurricane season in the South and East, tornadoes in the Midwest and the myriad of natural occurrences everywhere in between, an “anticipatory disaster reserve” can now be justified. This is all handled within your budgeting process, i.e. Sources & Uses of Funds.
How much should be set aside for replacement reserves? You should start by working with your insurance agent, what is the “risk rating” in for your area and adjust replacements accordingly. A good rule of thumb is to:
- Estimate replacement value along with shipping, labor and training
- Subtract the insurance coverage
- Add 30 days Gross Earnings (based off your prior years 1120)
- Include 3X marketing expense to recapture lost market share.
Replacement reserves are an important line item in any healthcare business. Capital expenditures are necessary for Continuity of Income. Yet, many people gloss over the reserves for replacement line item and often exclude it completely from the NOI calculation. The fact is that, if you include it after Earnings and before Tax it will not affect your capitalized value and it will demonstrate sound management and planning which is critical for your sustainability. This is also an excellent time to “put adversity to work for you” and get up to speed with your practice analysis, diversity of income and compliance measures including payment performance programs.
- The Science and Art of a Flexible Budget (9/8/2017)
Some medical practices never manage to establish a budget, and many others establish a budget and never look at it again. As GPA Capital receives a loan request, we have a discovery session which can reveal too much overhead in proportion to the revenue being generated. Failure to identify the problems, and provide appropriate solutions, results in a working capital shortage and inability to meet current debt service not to mention future debt service for practice improvements, practice expansion, and may cause diminished practice value whether selling, purchasing or refinancing.
The science is to understand and implement an easy to maintain flexible budget and not a static budget. Assure that you seek qualified help to create continuous budgeting, not rolling. The art is to use this tool to identify and create diversity and continuity of income. To bring these two together, you must have a flexible, continuous budget which will then open your horizons to predictive financial modeling and achievement of your financial goals.
- 8 threats and solutions to physicians independence (9/1/2017)
GPA Capital recently updated its “assessment of threats to physicians’ independence” we now share the results of our Physicians’ Independence Research Update.
The bottom line… most physicians are finding it hard to compete in the current healthcare environment and at the same time, they would rather “not” go to work for someone else, retire, or worse yet, sell their practice for pennies on the dollar because it’s not generating the income it should be. Not only is our survey revealing, but so are the comments gleaned from our team of experts.
Consistent with debt coverage and additional cash available at the end of the month, GPA Capital has put together a program which specifically addresses the concerns of today’s independent physicians.
Looking forward to serving your capital needs for your new office, acquisition, expansion or refinance. Complete this short form [Express Loan App] and get it back me, (confidentially, of course). 24 hour loan approval in most cases.
- Case Study: 5 successful financial strategies for your medical practice or planning your exit (8/17/2017)
Considerations often overlooked when financing, particularly when planning your exit:
1. Direct access to the decision maker. 24 hour approval capability.
2. Obtain a practice analysis to maximize to your business value.
3. Survey the capital markets to assure the best rate/terms and loan structure.
4. Make sure you are using all revenue sources available for your specialty.
5. Make sure you are compliant and paying zero for merchant fees
GPA Capital recently arranged a $375,000 loan for the acquisition of a 30-year-old dental practice in South Florida. The operating Dentist was retiring and the existing office manager of 20 years purchased the business. The Manager partnered with one of the existing 1099 employed Dentist. GPA Capital arranged 90% financing on the purchase of the business and provided an additional $40,000 in operating capital to the new owners. Prior to the practice valuation GPA Capital implemented a strategy for cost savings, patient growth and revenue enhancement. Here is a white paper worth your reading [CLICK]
We look forward to serving your capital needs through our wide range available options. Simply complete this short Telephone Appointment Request to get started.
- Welcome to the GPA Capital Blog (8/15/2017)
Announcing the GPA Capital Blog where GPA will be bringing you news on Financing, Revenue Enhancements, Compliance and other topics that are important to you, our physician clients. As our loyal readers and followers, we will share with you our global and proprietary access to state-of-the-art Financial Solutions to meet your challenges.