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Welcome back to our channel! In today's discussion, we delve into the intriguing details of a recently closed deal involving the acquisition of a marina business, complete with boat slips, a bar, and a restaurant. This venture not only secured the present but also harbors potential for future expansion.
Meet Beau Eckstein: Your Commercial Finance Guide
Before we dive into the deal specifics, allow me to introduce myself. I'm Beau Eckstein, a seasoned Commercial Finance Advisor specializing in business and commercial loans, real estate investing, and entrepreneurship. Join me as I unravel the intricacies of this successful venture, highlighting the challenges, solutions, and the pivotal role played by SBA 7a financing.
The Deal Unveiled
The marina opportunity emerged when a sponsor, introduced through a mutual friend, discovered a gem of a property with promising potential. This property not only boasted boat slips but also included land suitable for future boat storage and tiny home communities. The sponsor, equipped with solid credit and W-2 income, became an ideal borrower for the acquisition.
Navigating Hurdles
However, the journey was not without its challenges. The majority of the marina's income relied on the restaurant, posing a hurdle in the lending process. Lenders typically seek restaurant experience from sponsors due to the industry's high failure rate. Additionally, the sponsor aimed to get creative with the equity injection, having recently acquired another property, minimizing out-of-pocket expenses.
The Financing Maze
Undeterred, I swiftly engaged SBA lending partners, identifying two banks willing to finance the deal. The initial bank's acquisition setback led us to a second bank adhering strictly to SBA guidelines. After a series of negotiations and back-and-forth discussions, the second bank issued a term sheet.
Creative Solutions in Action
Despite progress, a funding gap of $100,000 remained. Creative negotiations with the seller, including a standby arrangement, and the securing of $109,000 in working capital demonstrated the flexibility offered by SBA deals. These deals allow financing up to 90% of total project costs, creating a versatile capital stack.
Closing the Deal
The sponsor's commitment, combined with my expertise in securing investors, bridged the remaining gap. The SBA closing process, acknowledged as potentially challenging, ultimately provided financing opportunities that traditional sources wouldn't offer.
Conclusion: Transformative Moves Await
In closing, this marina and restaurant business acquisition exemplifies the transformative potential of strategic financing. As we continue sharing case studies on closings, our goal remains to provide valuable insights into the world of business acquisitions, franchise purchases, and investment properties.
Take the Next Step
If you're in the market for a business, franchise, or investment property, you've come to the right place. Understanding deal structuring and navigating the complexities of financing is crucial for success. Schedule a call with us, and let's embark on your journey to acquiring the right business or investment property. Don't forget to hit the subscribe button for more exciting episodes!