CASE STUDY: Business turns a corner and needs more cash

A business approached us that has just come out of two years of very difficult times but seems to have turned a corner for the better. Going into 2008 they had plenty of capital and then used that capital to pay expenses for 2008 and most of 2009. Near the end of 2009 business began to pick up and it appears that they know have over 6 months of strong cash flow and future business prospects. They own their building and have a mortgage that is less than 60% of what the property is worth. Because of the way in which their financial statements present 2008 and 2009, the bank that holds the mortgage has become very difficult to deal with and they are looking for us to help them payout the mortgage and get them a new one. At the same time, one of the principals of the business is looking to have money he put into the business paid out which would be added to the new mortgage amount.

If you would like some feedback or comments on your situation, please email dylan@bridgecap.ca or visit www.bridgecap.ca/dylan

5 questions every bank asks

Whether you are looking to borrow money for a residential mortgage, a commercial mortgage or business loan you should be aware of the 5 most important points a bank or lender will look for in determining your approval.

1. Character – Do you make your payments on time?
2. Capacity – Do you have money to make the payments?
3. Capital – Do you have financial stability and net worth?
4. Collateral – Do you have an asset that can be used to as security for the loan?
5. Conditions – Other items related to your request like location, property type, etc.

Your answers affect your interest rate, the amount a bank will lend you and how much (if any) they will charge you as a fee. A mortgage broker can help you put together your 5 answers and can also explain them to a bank on your behalf. If you want to know how you strong your 5 answers are, please email us at dylan@bridgecap.ca or visit www.bridgecap.ca/dylan