Expert: Terrence Cullen - 7/16/2008

Question
  Can you tell me the best avenue to take to obtain a refi for a convenience store? I need
a cash out of about 30K for updating and equipment. Here are some basics about
the c-store.



Bought 3/2005, financing from two private loans. One was assumed and the other
was an original.



Assumed loan: 143,093.19  @ 8%, monthly payment of 2102.43, current balance is  
89,147.02, will pay off in four years 9/2012



Second private loan: 30,000.00  @ 5%, monthly payment of 484.07, Current balance
is 14,474.11, will pay off in 3/2011.



This is the only debt for the c-store. Both loans are 2,586.50/month



2007 sales were 1.7 million (250,000 inside and 1,450,000 gas)



2008 trend 2.2 million (300,000 inside and 1,900,000 gas)



sell aprox 45,000 gallons/month on consignment @ .05/gallon net profit with a 10
year guaranteed contract.



The only real property appraisal was by the insurance co.(building only) @ 218,000



My income last year was 30K.







My credit is good


 



Honestly, I almost hate to refinance. I am right on the verge of a hefty pay
raise with zero debt, but some of the things I need to do cant wait 4 years.







What do you suggest, and what sources do you suggest?  


 I appreciate your time.



            Thanks, John  

Answer
John,
  The loan terms you have currently are consistent with the market but
if you want borrow more money you must lower your payments and the only way increase your amortization.
   
   I would contact the holder of the first and investigate whether they will increase the loan term and add $30,000 to the first. They don't have to do it but if you have been on time they will might reject it and offer you a possible credit line.

  Keep in mind also that equipment can be leased fairly cheaply and you might be able to get some of the work done through the barter system.

  Commercial lending is in unstable phase right now and if you are not going to be able to take a third loan on the property unless you do a receipt or credit card loan and the cost is very high (at least 11%). If you are convinced thta is your solution I will walk you through the process.
 
Good luck,
TC