I had meeting this past week with an accountant and we were discussing the Business Development Bank of Canada. He did not have good things to say about them based on a past experience and as we talked through the experience a few things became evident that I thought were important to share. Here are three (3) things to know if you are looking to borrow money (forgive me if they seem obvious): Continue reading “Banks want to lend you money (really they do)”
What do you think? Generally speaking, is Canada risk adverse? Many of my recent blog entries have detailed different aspects of Canadian banks and lenders being adverse to any kind of default risk which may have served us well during the last downturn but today may be responsible for minimal economic growth within the small business market. I appreciate that the TSX has demonstrated that it can raise risk money for oil and gas but what about other industries? Is there a general sense of “no risk here please” in Canada?
“I own a business and we need some money, can you help?”
“What do you need the money for?”
“Oh lots of things…”
“How long do you need the money for?”
“Maybe 6 months to a year”
“How will you pay it back”
“Well we are having a really good year and just seem to be a little short so we need to borrow some money to get over the hump”
This is the most common conversation I have with small businesses who are looking to borrow money. They do not always know exactly why they need money and are not able to articulate how they are going to pay it back. The most popular business loan request we get is for a business line of credit. The problem is that a business line of credit usually means “working capital” (see blog here). Working capital (and lines of credit) are very difficult to get.
Here is an excerpt from a major bank in Canada that sent a message to brokers today (keep in mind that today is October 18)
“we…currently working on deals that were submitted on Friday October 11…please set proper expectations with your clients and referral resources…”
There is much more to the message but you get the idea. This bank is only looking at requests they received October 11 and are running a week behind. Why is this important? Continue reading “Bank is 7 days behind (and its not their problem)”
I had breakfast today with a colleague who is in the commercial industrial sales/leasing market and we were talking about that moment he has with clients when they do a gut check about financing. He gave me some examples of clients that take months to consider a real estate transaction only to get to a point where then have to answer questions like: Continue reading “That moment when someone asks “can you afford it””
The following article has some interesting points in it about the Canadian real estate market and banks (see http://www.financialpost.com/m/wp/news/fp-street/blog.html?b=business.financialpost.com/2013/05/30/why-its-dangerous-to-short-the-canadian-banks) and their short term future. For those of us who actively work in the market with banks to get individuals and businesses money it has not been easy since the financial crash and seems each day to be getting harder. Continue reading “US to short Canadian banks”
There was an article posted today in the Financial Post that was headlined “End-of-the-party feel to BMO results” (see http://business.financialpost.com/2013/05/29/end-of-the-party-feel-to-bmo-results/“) which continued the recent run of articles on the declining or thinning NIM of the major banks in our county. NIM stands for Net Interest Margin or basically the spread that a bank earns between the bank’s cost of money and the interest rate that they earn on lending it out to consumers and businesses.
Another big file off our desk this week. We completed our third transaction for a group that purchases land and then works to increase the value for eventual sale or development. At a little less than a quarter of an acre the borrower did a great job of negotiating the purchase price and undoubtedly will have a successful development on their hands in the future. This transaction is interesting for many reasons the least of which is Continue reading “CASE STUDY – Land…they are not making more of it”
One of the easiest places to start with a commercial mortgage is the equity that will be involved. In previous posts we have discussed the three (3) different types of financing available including Traditional Banks, Mid Market and Private Lenders Continue reading “Commercial Mortgages Part 1 – Equity [VIDEO]”
“Good work ain’t cheap and cheap work ain’t good”
Isn’t the only saying true – you get what you pay for. This is especially true when using a broker. Most brokers that help you find financing earn a commission for successfully finding you the money you need. Because you don’t pay them like you would any other professional you may be less impressed with the level of service delivered. The reason is simple – if you are not paying someone to look after your interests chances are very good that they are taking care of their own interests at your expense. Continue reading “You get what you pay for”