Bankruptcy Gets An LOI For Funding! No comments yet

Lending Resources Group doesn’t get the easiest deals to work on. One client recently referred to us by their attorney is a company that has been installing granite and marble for residential and commercial properties since the early 1990’s. As a result of the dramatic downturn in the economy in general and the real estate industry specifically, this granite business has suffered severely. They have gone into default on their building. In addition, one of the 2 banks that have mortgages on their building also have liens on their residence and business inventory. Despite this difficult financial scenario, Lending Resources Group found a private lending source based in New York that was willing to provide this borrower with a Letter of Interest (LOI) to help them obtain up to $3 million in financing to pay off their bank loans and pay the fees involved. At this point the borrowers are still considering this LOI.  They’re not sure if the banks will reduce the principal enough to coincide with the reduction in value of their building to enable them to get a large enough loan to satisfy the mortgage debts and cover the lending points and fees.

Most lenders that were sought out for this loan turned it down without blinking. It’s hard enough these days to refinance a commercial property where the borrowers have good credit let alone a property where the borrowers are in bankruptcy court. The lending source stated very clearly that they believed they could get a loan commitment for this situation.  The main question is still what will their building appraise for in the current real estate devaluation marketplace in order to arrive at a loan commitment amount. Then the question will be whether that loan amount will be enough to cover the mortgages and loan fees. This will depend on whether or not they’re willing to pay a $5,000 retainer for the lender to perform the proper due diligence to make that determination. One thing is for certain, if they don’t pay the retainer they’ll never know what loan amount they could obtain.  Only time will tell!