Need Money to Build or Expand Your Real Estate Portfolio?

  One of the things I try to explain to business owners is that buying a business is one thing. Buying a business and the real estate it operates from can be a very different transaction.

That was the situation with a client who wanted to purchase an established assisted living facility.

The opportunity made sense. The business was already operating, the facility had residents, employees were in place, and the real estate was included in the sale.

The challenge was putting the entire transaction together in a way that could actually be financed.

He was not simply buying a commercial building. He was acquiring the operating business, the property, furniture and equipment, and he also needed enough working capital to comfortably take over the operation.

That is where CREI Funding became involved.

We first looked at the transaction as a whole... the purchase price, the business cash flow, the value of the real estate, his experience, the existing operation, and how much capital would be needed after closing.

Once we understood the complete picture, we were able to help structure the financing around an SBA loan program that was designed to accommodate the business acquisition along with the owner-occupied real estate.

The important part was not simply submitting a loan application.

It was making sure the transaction made sense before it reached underwriting and presenting it in a way the lender could clearly understand.

There were questions that had to be answered. Was the business generating enough cash flow to support the debt?  Did the borrower have the right experience to operate the facility? Was the real estate properly valued?  How much working capital would remain after the acquisition?

Those are the kinds of questions that can determine whether a transaction moves forward or falls apart.

We worked through those issues with him, helped organize the financing request, and stayed involved throughout the process.

Ultimately, the financing was approved and he was able to purchase both the assisted living business and the real estate.

What I like about this particular transaction is that it represents something many entrepreneurs do not initially realize is possible.

You may be looking at a business that includes valuable real estate, and you may not have to finance every component separately.

Depending on the transaction and your qualifications, SBA financing may allow you to combine several eligible costs into one financing structure, including the acquisition of the business, owner-occupied commercial real estate, equipment, certain improvements, closing expenses, and working capital.

That can make a significant difference.

So, if you are considering buying an established business and the real estate is included — whether it is an assisted living facility, medical practice, childcare center, automotive business, manufacturing company, professional service business, or another owner-operated company — do not assume the transaction is too complicated before having it properly evaluated.

Sometimes the opportunity is stronger than it first appears.

The key is understanding how to structure it.

That is where CREI Funding can help.

We will look at the complete transaction with you, identify the strengths and potential obstacles, explain the financing options that may be available, and help you determine whether there is a practical path forward.

If you are considering purchasing a business with real estate, let’s take a look at the numbers and determine what may be possible.

LET’S MAKE IT HAPPEN FOR YOU, AS WELL.

This case study is provided for illustrative purposes. Certain names and identifying details may have been changed. Results will vary, and past transactions do not guarantee future financing or approval. All loans are subject to lender underwriting, credit approval, SBA eligibility requirements, property evaluation, program guidelines, and other restrictions or limitations. CREI Funding does not provide tax, legal, accounting, investment, or regulatory advice. Borrowers should consult their appropriate professional advisors regarding these matters.