Asking A Lender To Do Interest Only For a Next Location

1,118 Views | 2 Replies | Last: 2 yr ago by cgh1999
Jimmy Conway
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Don't want to get into too many specifics but wanted to get board opinion on something. Let's say an existing business has 3 current locations and all doing reasonably well. A 4th location is about to go up and has been approved for a construction to permanent loan package by the lender. However, as construction went on interest rates went up drastically and now the business owner would like the added safety of paying a little less each month to grow business at the new location and so they ask the lender to change the permanent to interest only on that loan for only the first 6 mths.

Do you guys think this request is unreasonable? Do you think the lender (which also has another location financed) will get nervous about such a request? Does it make the business owner seem unstable or his business iffy?
Hanrahan
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AG
no bank will be suprised by someone asking that, espcially given crazy fast rise in rates. No red flags. And if the other locations are doing well (ie you are a safe risk) and its a nimble (ie small) bank, they should easily pivot. The bigger the bank, the more pushback you will recieve, as the big boys have 50 layers any modifications will have to go through again and they aren't going to want to do the work.... so hopefully you are using a small or regional bank.
cgh1999
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AG
It's fairly standard to allow ramp up time for new locations - particularly if the primary source of repayment is income generated by that location.
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