by ARTIS COMMERCIAL CAPITAL | Sep 13, 2022 | Blog
A business owner will likely be very protective of what he or she has created. For this reason, he or she will want to have all the control over his or her business’s processes. The unfortunate fact of the matter is that no matter how hard he or she works, he or she cannot manage every single task that is required to keep a company’s plan in motion. This becomes especially the case when the business begins to grow and expand. At some certain points, all business owners must relinquish some control to the employees that he or she hires. Here are some reasons why.
1. He or She Needs To Focus on Running the Business
The job of a business owner should be to make sure that the business is running the way that it needs to run. He or she cannot focus on that task effectively if he or she is doing a multitude of other tasks. If a great business plan is not created and then adjusted with the market or with the progress of the business, then problems can start to occur. With enough of these, the whole business will end up failing. It may seem difficult to trust that employees will be able to handle smaller tasks on their own, but this is necessary.
2. Some Workers Can Do Tasks Better Than Her or Him
A business owner can have more trust in his or her employees when he or she realizes that employees have skill sets that he or she might not have. He or she is usually not able to have the levels of experience that his or her employees have in certain skill areas. Good accountants, for example, have gone through years of schooling and working in the area of accounting.
An owner can have these years of experience, but he or she probably won’t also have years of experience in something such as coding. Once he or she accepts this, he or she can recognize that allowing other people to assist in their dream business will only make the business stronger in the end.
Hiring employees is an eventual necessity for any business. All that owners can do is make sure that he or she is hiring people who have an ample amount of necessary skills and experience. In the end, when he or she sees the profits increase, he or she will be glad that this task was done.
by ARTIS COMMERCIAL CAPITAL | Sep 6, 2022 | Blog
If you are walking through a busy section of town, surrounded by shoppers, you may begin to wonder about the value of owning retail real estate. After all, in a high-performing neighborhood, it may seem like retail property would be an extremely reliable investment, one with steady cash flow that could easily pay for itself in time.
In practice, retail real estate can indeed sometimes be all it’s advertised to be. However, it takes careful consideration and sound investment decisions before determining whether this is definitively the case.
Read on to learn a little more about the investment value of the retail property.
Location Is Everything
Retail real estate is almost always dependent on in-person foot traffic for good business. Consequently, where a given retail space is located is of prime importance in understanding the property’s value as an investment.
How has business been in the given neighborhood traditionally? Is the neighborhood improving, or on the decline? Are there any factors — new construction, changes to permitting or zoning laws, or anything else — that might affect the future value of a retail location? Questions like these are extremely essential to understanding the value of a given site.
Reliable Cash Flow
Commercial property can often be an attractive investment because commercial leases tend to be longer and more stable than residential leases. That said, you will want to ensure that any property in which you consider investing has reliable tenants. Have the current businesses been present in that location for a long time? Financially, are they performing well? It is vital to understand how reliable cash flow will be at a given retail location.
Property Condition
Finally, it is essential to know about the condition of the property in which you are investing. A property that has been well-maintained for years can make a lovely ownership opportunity, requiring only limited upkeep.
However, sometimes retail sites have been neglected over the years, for one reason or another. Purchasing a retail real estate site and learning about plumbing, electrical, or other issues can be a major hassle. You will be on the hook for making necessary repairs, and keeping tenants happy. Thoroughly investigating any problems before purchasing is vital.
Ultimately, the retail property can make a great investment — but circumstances are important. Be sure to do all necessary legwork prior to a purchase to ensure that a given retail location is worth your time and investment.
by ARTIS COMMERCIAL CAPITAL | Aug 23, 2022 | Blog
How can you ensure you have the working capital at hand for your business to stay running full steam ahead? A business line of credit has worked for many companies, and this option may be right for you.
How Business Line of Credit Works
The closest analog to a line of credit is a credit card. Like the limit you have on your credit card to make purchases, a business line of credit has an express amount of funds you can draw from as needed. Similar to a credit card, your line of credit may be revolving credit, which means that what you repay becomes available again for borrowing.
The Cost of a Line of Credit
A business line of credit has different fees that depend on your particular agreement. Expect these four types of fees for a line of credit.
- Origination fees: The fee the lender charges when you enter the agreement.
- Draw fees: Similar to an origination fee, this charge is a percentage deducted before disbursal from your withdrawal amount.
- Bank wire fees: A possible charge for a money transfer.
- Maintenance fees: A charge by the lender for keeping the account open if you do not use it, something like an annual fee for a credit card or maintenance fees for other types of bank accounts.
Business Line of Credit Versus a Business Loan
When deciding which credit route to take, both business loans and business lines of credit have distinct advantages. A loan is typically approved for a specific purpose. A loan can be cheaper than a line of credit, but that is not a hard and fast rule.
A line of credit can be used as you need it, and this flexibility is a huge plus. Consider a line of credit as better for routine costs or emergencies that you can pay back rapidly. Credit lines are great to float you through slow periods. An available line of credit eliminates all the work of getting approved for a loan every time you need extra funds.
It is generally advantageous to keep a line of credit and open other business loans as needed. Responsible use of a credit line improves your credit score and makes it easier to get a bigger loan at the appropriate moment.
Business lines of credit can be a strategic addition to your credit portfolio. A credit line helps you have needed working capital at a reasonable rate while helping you improve your credit score when used responsibly.
by ARTIS COMMERCIAL CAPITAL | Aug 16, 2022 | Blog
If you want to start a business and are not independently wealthy, odds are you will need a business loan. In the simplest sense, a business loan is a sum lent that can help you establish a new business, which will be repaid as the business grows.
But for a number of reasons, business loans can sometimes be tough to access. You may have a limited or non-existent business history, making lenders reluctant to offer you money. On the other hand, your business idea may be unusual or risky, leading lenders to pursue safer investments.
Still, with hard work and attention to detail, there are many ways to access business loans. Below are several important things to keep in mind as you work to secure financing.
A Great Business Plan Is Key
One of the most important steps in accessing a business loan is creating a sterling business plan. A business plan is essentially a document that lays out, in sufficient detail, how you intend to operate your business and why it will have success. It will serve as a blueprint for prospective lenders, demonstrating that you have a workable plan and can repay any loan.
In your business plan, be sure not to go light on details! You will want to have thorough financial projections and analyses, including market research, to show you are prepared for what you are getting into.
Shop Around
There is more than one way to fund a business and more than one means of accessing a business loan. Be sure to do your research and find your best lending options.
Starting with a local bank or credit union is usually a great idea — but there are other options. For some business, crowdfunding can work well. For some individuals, a private loan may be an option. Work to determine what will make sense for you.
Be Realistic
Having a realistic sense of what is possible is important in accessing a loan. Don’t ask a bank for an exorbitant sum if you have no business experience. Seek out what you need, not just what you want. Demonstrate why you need a given amount of money, and work to prove it’s an appropriate amount for your idea.
Ultimately, even with limited experience, there are ways to access business loans. The tips above can help you as you endeavor to find the right loan for your new business.
by ARTIS COMMERCIAL CAPITAL | Aug 9, 2022 | Blog
Maybe after your latest marathon of home renovation shows, you’re ready to take the plunge into the home rehab market. Even if you have little experience and less than perfect credit, you can find financing through one of these loan options.
Home Equity Line of Credit (HELOC)
If you own your home, you have an excellent source for financing as you can borrow a line of credit with your home as collateral. HELOCs have great rates, and you may be able to borrow up to 85% of your home’s value. You are only charged interest on the amount of money you use, and you can withdraw money as needed, making this one of the least expensive loan options.
Investor or Partner
Combine skillsets with another person in a fix and flip business. Allocate your responsibilities and share of the profit. Search for a partner with cash and financial connections while you handle the labor and work to combine forces into a prosperous business relationship.
Personal Loans
Personal loans might be a reasonable option if you have excellent credit and don’t need a large sum of money. You may decide to use a personal loan to supplement another financing solution. A personal loan can be preferable because you don’t have restrictions on how you use the money.
Friends and Family
If the previous loan types are not feasible, you can try to secure financial support from friends and family. You are most likely to get the best rates from a relative or close friend. You won’t have to go through the heavy paperwork of a lending institution, but you may have to sharpen your pitch skills. That doesn’t mean you should eschew a contract. You can ruin a good relationship by neglecting to clarify expectations. Clearly define a repayment schedule and how to proceed in the event of a loss.
Hard Money Loans
Hard money loans are often used for fix and flip projects. The loan can provide all the funding you need in one agreement if you plan carefully. The APR is relatively high for hard money loans, but the rate might be worth it if you can quickly flip the house. No matter the financing you choose, remember to factor in carrying costs (property expenses, such as taxes and insurance), the origination fee, downpayment, material and labor charges, and closing costs at the home’s sale.
Real estate has always been a lucrative business. Decide on your best financing alternative, and you can get in on the home-flipping market.
by ARTIS COMMERCIAL CAPITAL | Aug 2, 2022 | Blog
There are a lot of ironies when it comes to financing for startups. On one hand, qualifying for many loans requires having a good credit score and a certain amount of time in business. On the other hand, for your business to even build a credit score, you need to get some type of loan or lease. Helping your new business get through the first few years successfully is much easier when you have financing in the first place!
How can you make it through this confusing maze of rules unscathed and get the things your startup needs for success? Several types of alternative financing can help.
Equipment Financing
There are several great things about equipment loans and leases for new businesses. First, having high-quality equipment is a major boost for your company and your ability to generate revenue. This makes it easier to “play with the big boys” from the very beginning as a startup.
Another advantage is that you don’t need a high credit score or a huge down payment to get equipment with this type of financing. The equipment you want to purchase or lease takes the place of collateral required, which helps you qualify more easily. True, startups generally have higher interest rates than longtime companies, but the rates are comfortable even for small businesses.
With equipment financing and leasing, your new business can get virtually any type of equipment. This includes point-of-sale terminals, computers, office equipment, restaurant equipment, construction tools and equipment, plumbing equipment, cleaning equipment, and many other items.
Crowdfunding Programs
Crowdfunding refers to raising small amounts of capital from a large number of “investors” or supporters. Some businesses use crowdfunding from launch and others rely on it to spur growth via specific projects. For example, you could show your followers expansion plans and set a funding goal for purchasing certain equipment.
The tricky part of crowdfunding is having a large social media following and the type of personality that can motivate people to support you because they believe in you. You’re not just selling an idea, you’re selling yourself and your vision.
Microloans
Microloans are easier to qualify for than traditional loans, but you have to know how to use them wisely. Limit microloans to short-term needs you can pay off quickly, such as inventory purchases, hiring costs, and computers. These loans have higher interest rates, so they’re only to get you started until you have good cash flow.
by ARTIS COMMERCIAL CAPITAL | Jul 26, 2022 | Blog
Congratulations on deciding to become a landlord. Owning an income property can be extremely beneficial, but there is a lot to learn. Unless you will be making a cash purchase, financing will be one of the first things you should familiarize yourself with. Below are a few tips to get you started.
Learn the Terminology
There are many types of income properties, so you should begin by familiarizing yourself with the terminology. Using the correct terms will help your Realtor match you to the best property and allow your lender to provide the appropriate loan options. A single-family home is a unit on its own land designed for one owner. Multifamily housing is a blanket term for a single property with multiple units, such as a duplex or apartment building. A building with five or more rental units is considered a commercial property.
Select a Lender
It is vital to select the right lender when purchasing an investment property. Don’t just look for a lender with great reviews. You should seek out someone who specializes in financing multifamily units. An experienced lender will be able to explain your loan options, break down the benefits of each, and make recommendations. If you plan to live in one of the units, you should let your lender know that the property will be owner-occupied.
Save a Down Payment
Investment properties typically require a heftier down payment unless you will be occupying one of the units. For an owner-occupied, multifamily property, you potentially can put down just 3.5%. However, the most common down payment for investment financing is 25%. It is also common for loan interest rates to be higher if you are not putting it towards a personal homestead. That means it may be advantageous to put an even larger payment down upfront. Your lender should be able to run numbers and help you with your decision.
Create an Emergency Fund
Before you purchase your investment, it’s wise to create an emergency fund. You don’t want to spend all your liquid assets on down payments and closing costs. Keeping your tenants happy is necessary for a successful business, and that means being able to quickly fix emergencies such as broken furnaces, leaky pipes, or faulty appliances.
Before you take the plunge into being a landlord, follow these steps. The more prepared you are, the happier and more successful you can be in purchasing a great property.
by ARTIS COMMERCIAL CAPITAL | Jul 19, 2022 | Blog
Opening a restaurant can be challenging — you’ll need to consider countless factors when building your business plan. Before you approach a lender for your startup funds, here are six things that should be included in your business model.
Target Demographic
Your target demographic is the population of customers you specifically plan to cater to with your concept. This isn’t a broad term; a target demographic is clearly defined and detailed. For example, your target might be women between the ages of 25 and 50 who are single mothers, have a college degree, and live in a certain county.
Location
Where you build your establishment makes all the difference in your success. If you’re in an area that’s isolated, difficult to access, surrounded by competition, or otherwise undesirable, you’ll probably have a hard time bringing in customers.
Menu
This is probably the first thing you considered when you thought about opening an eatery, but it should go beyond what dishes you want to serve. Your menu should follow a cohesive theme, include items that can cross-utilize the same ingredients, and cater to your target demographic’s tastes. It’s also a good idea to think about alternatives for customers with allergies or special diets (like vegan or gluten-free).
Sales Forecast
You’re ultimately opening a restaurant to make a living, so being able to accurately project how your sales will be throughout the year is crucial. Sales forecasts are based on a lot of factors and can be tricky to navigate, but the more you study and analyze, the better you’ll be.
Cost of Ingredients
Ingredients get expensive quickly! If you’re smart about designing a menu with dishes that use some of the same ingredients, you can reduce your overall costs when it’s time to restock. Remember: there are certain dishes you shouldn’t compromise on. A high-quality ribeye steak or Alaskan salmon might be expensive, but customers are usually willing to pay more for higher-quality meals.
Equipment Expenses
The cost of stocking a kitchen with ovens, gas ranges, hoods, mixers, sinks, dishwashers, and other equipment can easily drain your budget, so make sure you’ve got the funds in hand to pay for everything. Equipment financing is another option, although you won’t own your equipment outright until you’ve paid it off.
Building a business plan for your establishment can be challenging, but the right knowledge and a healthy attitude can help your business ultimately succeed!
by ARTIS COMMERCIAL CAPITAL | Jul 12, 2022 | Blog
Getting a small business loan can be tricky, and a lot of factors are at play when you apply for one. If you’re struggling to secure a loan for your small business, here are six things that might be holding you back,
Credit History
Lenders look at your business’ credit history and your personal credit history when considering you for a loan. If either is in bad shape, your chances of securing the loan instantly plummet. The good news is, that a bit of time and some practice with financing may be able to change this.
Business Concept
If your business concept doesn’t appear to have a successful outlook, lenders might be less inclined to loan money to you. This applies whether your business is already up-and-running or you’re trying to start the company from scratch. Either way, you can always adjust your concept and reapply.
Your Chosen Lender
Different lenders and financial institutions have different standards for loaning money, so make sure you know what your lenders look for when investing. Before you apply, speak with someone in the business to learn what you need to qualify.
Lack of Experience
Much like applying for a job, mortgage, or credit card, lenders want to see that you know what your doing; it means you’ll know what you’re doing when you’re spending their money. If your business hasn’t been afloat for very long or you’ve never opened a business before, lenders might not be interested in working with you.
Poor Cash Flow
Because you’re only borrowing money from a lender, your financial institution wants to see evidence that your business is bringing in enough money to cover your regular expenses. If your cash flow is inconsistent or insufficient to pay overhead and payroll, you’ll probably have a harder time securing that small business loan.
Incomplete Applications
Loan applications often come with mountains of paperwork, and it’s easy to overlook, lose or incorrectly fill out pages. Go back through your application with a fine-tooth comb once you’ve filled it out and make sure you’ve done it correctly and completely. You can also go over the application with someone in your financial institution before you officially submit it.
Getting a small business loan can be a challenge, but the right mindset and a little bit of time and research can make all the difference. Remember: if at first, you don’t succeed, assess what held you back, make some changes and try again!
by ARTIS COMMERCIAL CAPITAL | Jul 5, 2022 | Blog
Investors have very different needs from companies that buy property to use as an operational home. That’s why there are so many ways to finance commercial real estate. Skipping over items that are aimed at businesses acquiring infrastructure assets like the SBA’s 7a program, what do you have to choose from? How does it line up with your investment goals? These questions can be tough to figure out without experience, so let’s review the basics and put some options in mind for first-time investor financing.
1. Bridge Loans for Real Estate
Commercial properties are often in need of work before they can be occupied, and this work builds equity into the property, so it makes sense to avoid financing it with a long-term instrument if you’re going to do quick improvements. For those holding property for long-term income, a bridge loan provides a low-cost opportunity to close early and get the building ready for tenants before refinancing into something that has low monthly payments to optimize your time to a return.
These loans are even more impressive for short-term investors because you can do the improvements, remarket, and close before the principal payoff at the end of the loan. That lets you finance most if not all of the property’s purchase cost, saving most of your capital for the improvements.
2. Traditional Commercial Mortgages
These are the products the SBA’s 7a program is based on, but they do not typically require you to occupy the property, so they are a favorite for long-term purchases like apartment buildings that you will use as regular monthly income sources. You can also find private loans with similar low-interest rates and amortizing structures. They have less stringent credit requirements, but also slightly lower LTVs. Still, they are an accessible choice for first-timers who do not have perfect credit.
3. Cash Out Financing Options
The third type of loan requires you to have an asset with equity you can refinance, and it allows you to take cash out of that asset and put it to work on another investment. Asset-based capital loans and stated income commercial real estate loans are both prime examples of this type of financing. This is useful if you have a property like a home you have paid off and you want to use it to finance a real estate deal. Those with existing income properties branching out into new types of investment also find them very useful because they can be used to cover renovations as easily as property purchases.
