Case Studies


Professional Medical Practice in Michigan

Borrower: A twenty year old professional medical practice in Michigan.

Use of proceeds: Refinance mortgage on medical condominium that the practice occupies.

Loan amount: Mortgage for $333,000 & Term Loan for $113,000 Total – $446,000

Summary: Since this state was affected more than others with the recent recession their current lender, Bank of America chose NOT to renew their mortgage which had recently ballooned. In a state of despair, they called their banker, who called Newtek to discuss the situation. We asked for additional information. They supplied us with a recent tax return which evidenced this practice has been around for many years and was quite profitable. With this information, we were able to provide a mortgage for 90% of the appraised value, $333,000. Knowing that the BofA mortgage was $446,000 and this would not be enough to take out BofA completely, due to the depressed real estate market, we provided a term loan to the practice, for the difference of $113,000. The term loan was secured by practice and personal assets of the doctor.

How this loan assisted the Borrower: Newtek was able to structure two loans for the doctor, a mortgage and a term loan, with the proceeds completely refinancing the Bank of America debt plus all closing costs. The doctor did not have to come up with any funds whatsoever.

Catering service firm based in New Hampshire

Borrower: A firm based in New Hampshire, which provides catering services for summer and specialty camps throughout the northeast.

Use of proceeds: Working Capital

Loan amount: $100,000

Summary: Many of their customers are private, non-profit camps that must first receive their funding from the State before they can pay the borrower. Hence, he has some outstanding receivables affecting cash flow. Due to the aging of his accounts, we were not able to make an A/R fit the box. However, in reviewing his overall financial situation we found he had initially funded his business with high interest credit cards. Therefore, we offered the applicant a term loan of $100,000 repayable over ten years that would provide him the working capital he needed to support his receivables as well as the funds to refinance his existing debt.

How this loan assisted the Borrower: This new loan, at 6% payable over 10 years greatly reduced what he was currently paying on his credit cards and provided him the working capital to both support his receivables and allow him to expand his product offering from just catering to janitorial as well.

Wholesaler of lawn and garden goods

Borrower: Wholesaler of lawn and garden goods manufactured in China which are then sold to both big box stores (Home Depot) as well as local lawn and garden centers.

Use of proceeds: Purchase of warehouse to expand business

Loan amount: Mortgage for $739,000

Summary: The wholesaler wanted to expand his business by buying a warehouse. However, his local bank’s credit criteria were very tight and would not approve a loan to this well established, profitable business. Under SBA guidelines, we were able to structure a loan that allowed him to acquire the warehouse. We were able to offer a commercial mortgage of $739,000. His bank only provides conventional commercial mortgages which require an equity injection of 25% and are only amortized over a period of 20 years. The SBA program only requires a 10% injection. In this case, that’s $77,000 instead of $193,000. The SBA program also amortizes the loan over 25 years instead of 20 which reduced his monthly payment to a more affordable payment.

How this loan assisted the Borrower: Borrower was able to purchase the warehouse with a longer amortization and less down payment, which preserved his working capital.

An exhaust manufacturer located in the western US

Borrower: An exhaust manufacturer located in the western US.

Use of proceeds: Working Capital

Loan amount: Two Mortgages for a total of $5,000,000

Summary: Though an established business, it was certainly affected by the recession in 2008 and experienced a slight downturn in revenue. Their Bank had two mortgages to them and was looking to reduce their exposure in commercial real estate. As a result, they sold their mortgages to a private lender at a discount. This private lender came to us to review the background and financial position of their borrower in an attempt to refinance the mortgages. After a financial review and appraisal, we were able to offer two mortgages to the borrower, totaling $5 million. Proceeds of these two loans paid off the two mortgage held by the private lender as well as cover closing costs. The balance of his current loans totaled $5.3 million. However, as the current lender purchased the debt from Citibank at a discount (below $5.3). This loan actually allowed the borrower to pay them completely off.

How this loan assisted the Borrower: The borrower was happy as he had his current loans reduced from $5.3 million and had them amortized over 25 years with no balloon payments.

Doctor acquires a new home infusion business

Borrower: A new firm which operates a home infusion business by a doctor who has a long history of operating a similar firm for many years.

Use of proceeds: Working Capital

Loan amount: Term Loan of $1,600,000

Summary: The doctor recently acquired this business but needed working capital to grow. He contacted his private banker who not able to help him. We were able to grant a $1.6 million term loan to the business, secured by real estate as well as provide them a $750m account receivable line of credit.

How this loan assisted the Borrower: This loan provided the firm the funds to hire the staff (sales, financial and IT) to grow their firm in a prudent fashion. Since that time, we have extended a second term loan to the firm of $1 million as they are well ahead of projections and needed additional working capital to keep up with their level of sales.

Dunkin Donuts in the Midwest

Borrower: Dunkin' Donuts in the Midwest

Use of proceeds: Business Acquisition Loan

Loan amount: Term Loan of $1,750,000

Summary: Client was in the need of financing to acquire two existing Dunkin' Donuts franchises. We were able to structure a term loan of $1,750,000 repayable over ten years to accommodate their needs.

How this loan assisted the Borrower:The loan allowed the company to acquire the franchise. This loan was structured as a business acquisition loan and as such, the purchase price represented an amount over and above the assets included in the price. This is known as Goodwill. Traditional banks do not like to finance Goodwill. They only like to finance hard assets. As a result, they tend to look at these transactions as start-ups since the new owners do not have a track record. As such, conventional bank financing for business acquisitions is difficult to obtain in this credit environment. SBA financing does allow us to finance Goodwill which made sense for this type of loan purpose. This program allows us to examine the buyer’s management experience and the seller’s historic financial operating performance, as well as the collateral being offered to support the request.

A new apparel design and manufacturing firm located in California

Borrower: A new apparel design and manufacturing firm located in California.

Use of proceeds: Working Capital

Loan amount: Term Loan of $175,000

Summary: This firm had been designing women’s golf attire for a couple years with limited results. They were starting to receive many new orders, appearing in commercials and were planning on attending the annual golf expo.

How this loan assisted the Borrower: We were able to provide this business with a loan in order to fund their expansion. Since this company was young (in business less than 3 years) obtaining conventional financing was difficult. We like to see historical operating results to support a loan which did not exist in this case. However, it was clear the borrower had experience and now she was on the road to develop increased revenue due to her new contracts. Newtek was able to be comfortable with the transaction based on an outside income, collateral, and orders on hand for goods to support the loan. When approaching local banks, she was being told she had no historical operating results and was considered a start-up.

One of the largest manufacturers of tinsel and other holiday decorating goods

Borrower: One of the largest manufacturers of tinsel and other holiday decorating goods. They’ve been in business since the 1930’s.

Use of proceeds: Refinancing

Loan amount: Mortgage $1,980,000

Summary: They had a term loan with a bank but were in the need of additional funds to replace their roof. Based on discussions with the borrower and their bank, we were able to determine both the original purpose of their loan (to acquire the Commercial Real Estate) and the intended use of the new proceeds (to renovate the roof). As a result, under the SBA Program, this information allowed us to qualify the loan with a repayment of 25 years, compared to their banks 5 year term. This substantially reduced the borrower’s monthly payments ($12,000 compared to $38,000).

How this loan assisted the Borrower: By amortizing our loan over 25 years, we greatly reduced their monthly payment AND provided them the new funds to replace their roof (on their 1 million square foot facility). We discovered in our conversations the borrower had a loan with the local Economic Development Authority for $250,000 maturing in two years. We were also able to roll the balance of this loan into our loan, which was amortized over 25 years.

A commercial printing firm in the Southeast US.

Borrower: A commercial printing firm in the Southeast US.

Use of proceeds: Refinancing Debt

Loan amount: Term Loan of $2,300,000

Summary: This business was the result of the merger of 3 local printing firms, their bank was not able to accommodate their needs. Not all of the owners wanted to be a part of the new entity. This transaction was both a refinance and Business Acquisition. Conventional banks look at a Business Acquisition as a start-up. We looked at this request and the extensive experience of the remaining two partners. We also reviewed their historical operating performance, as well as the proposed collateral to determine this was not a start-up and qualified as a business expansion under SBA Guidelines. As a result, we were able to provide this firm with a term loan of $2.3 million which refinanced much of their existing debt over a longer term. This alone improved their working capital by reducing their payments by $20,000 a month.

How this loan assisted the Borrower: In addition to reducing their monthly loan payment by $20,000 a month, our loan also provided this firm with funds to acquire new equipment as well as working capital to facilitate their continued growth. We were also able to provide this firm with an Account Receivable Line of Credit for $1.5 million for the additional working capital needs associated with the collection of their receivables.

Farm and Garden Center

Borrower: Farm and Garden Center

Use of proceeds: Refinance debt and obtain working capital

Loan amount: $1,950,000

Summary: This 30 year old business had suffered in the recent recession, as did many other retail firms. As a result their recent financial performance was not sufficient to convince their current lender to provide them with additional funds to pay down vendors and improve working capital. However, the financial performance was not bad. Additionally, they owned the commercial real estate which had over $2 million in equity. The business was owned by 3 brothers who have been involved in for many years.

How this loan assisted the Borrower: The loan we structured will amortize their existing debt over a longer term than what they currently have. This alone, will save them $4,000 a month. Additionally, our loan will provide them $500,000 in working capital which they can use to pay down existing vendors which will allow them to buy new inventory at reduced costs, thereby improving gross margins.