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How to Buy a Commercial Real Estate Property for Your Retail Business

The location of your retail business has a huge impact on its performance. Factors like availability of access routes, the appearance of the area, visibility, and zoning regulations are vital aspects to consider when buying commercial property for your retail business.

Regardless of whether you are setting up a new retail venture or an additional branch for your existing venture, choosing the right physical setting for it is essential.

Though the process is complex, commercial properties have a more straightforward approach to pricing compared to residential properties.

However, there are also some crucial risks involved. Here are some things you need to know before investing in a commercial property for your retail business.

How to Begin the Journey of Purchasing Your Commercial Real Estate:

Consider the Nature of Your Retail Business

The type and nature of your retail business is probably the first thing to consider when looking for commercial property. For instance, if you plan to open a coffee shop, gaming studio or book store for youngsters, then a building located near a school or university would be ideal. This will help you capture the attention of your target audience and boost your visibility.

Determine Your Spending Capacity:

Have a good estimate of the amount of money you can invest in your property. Take everything into consideration including the initial down payment, closing costs, and renovation costs. Renovations may be necessary to attract customers to your retail business. A badly designed retail space can also negatively impact the productivity levels of your employees. However, if you have to deal with exponential renovation costs, then it may not make sense to buy the specific property.

Financing Your Commercial Real Estate Purchase

This is a no-brainer. No real estate transaction can be carried out without capital. But it doesn’t have to be from your own pocket. Financing your property is not as complicated as many beginners make it out to be. So, start searching and try to secure financing even before you start searching for your retail property.

The financing option you’re able to secure will depend on your personal and business credit scores, the type of property you’re buying and the type of loan that’s best for you. Retail business owners can choose from several financing options including private money lenders, hard money lenders, traditional commercial real estate loans and seller financing to name a few.

Perform Due Diligence

Once you have selected a commercial property, start doing your homework. Inspect the property thoroughly and look out for discrepancies. Review any lease agreements, title documentation and surveys related to the property. Also, check if the layout and structure of the building are good for your retail business.

Remember, no matter how much information you gather pre-purchase, it’s never too much! Therefore, it is always advisable to hire professionals for this since you may miss out on important details. Moreover, most lenders prefer valid inspection documents that have been prepared by reliable sources.

Find the Right Experts to Partner With

Buying commercial real estate involves lots of complicated rules. Thus, you need to have the right team of experts to help you process the deal smoothly. These professionals can help you secure financing and warn you about potential problems from the beginning.

Here are some professionals you will surely need to collaborate with to purchase commercial real estate properties:

  • Commercial Realtor
  • Accountant
  • Commercial real estate attorney
  • Commercial real estate broker
  • Tax attorney

In fact, it’s better to have your team ready before you start searching for potential properties. This process of hiring professionals may not be cheap, but it could save you from costly mistakes and unnecessary harassment in the long run.

Start Searching the Real Estate Market

Once the budget, desired property type and other necessary requirements are confirmed, it is time to search for available commercial properties. Look specifically for properties that will match your commercial requirements. Searching online is a good option, and it’s recommended you seek help from an agent who can shortlist commercial properties based on your requirements.

Alternatively, you could also opt for help from experienced professionals of REIT – Real Estate Investment Trust.

Check Terms, Make an Offer and Close the Deal

Once you find the perfect property and make an offer, make sure the deed contains an inspection contingency clause. An inspection contingency clause will allow you to opt out if the commercial property doesn’t pass the inspection.

A professional commercial real estate agent will help you write up the purchase offer. However, it’s always best to get it reviewed thoroughly by your attorney before you sign and submit it. Make sure that the offer includes a due diligence period so that all documents can be reviewed properly.

There’s a lot that goes into a commercial real estate transaction, so make sure you take your time and follow all procedures step-by-step. As mentioned earlier, it is crucial to work with a reliable team of experts in advance. These professionals can guide you through the many complex steps involved in this process.

Apart from investing in commercial property for your own retail business, you can also be prepared for other investment strategies if the need ever arises and prepare documents accordingly. These strategies can also give you good returns and profits.

All real estate investments, whether commercial or residential, come with risks. Thus, it’s vital to ensure you cover all the bases when you enter a commercial real estate transaction. The whole idea may be overwhelming to a non-expert. This is where expert help can be useful.

Lendistry can help you through the process and help make sure you’re not wasting valuable time and hard-earned money.

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Black Owned FinTech Firm Selected To Disburse $500M in Relief Grants

Lendistry is a Black owned Fintech (Financial technology) firm that provides short-term loans and other types of financing to small businesses. Small businesses can use Lendistry to finance new projects, purchase new equipment, and more.

Lendistry is also designated both a Community Development Financial Institution (CDFI) and a Community Development Entity (CDE) small business and commercial real estate lender.

On November 30, 2020, the State of California announced that it has selected Lendistry to act as the intermediary charged with disbursing $500 million in COVID-19 grants to California small businesses and non-profits.

The Small Business COVID-19 Relief Grant Program is administered by California’s Office of the Small Business Advocate (CalOSBA), part of the Governor’s Office of Business and Economic Development (GO-Biz).

black owned fintech
Everett Sands, Founder and CEO of Lendistry

“As an organization dedicated to efficiently providing capital to underserved small businesses, and with a deeply experienced senior management team that mirrors the diversity of our home state of California, Lendistry is proud to partner with the CalOSBA in this bold and critical effort,” said Everett K. Sands, Lendistry’s founder, and CEO.

 

Tony O. Lawson


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Coronavirus Student Loan Relief: 7 Things You Need to Know

The $2 trillion stimulus bill — formally known as the CARES Act — was recently signed into law. Among its many provisions designed to help the economy weather the COVID-19 pandemic and recession, there are some big implications for student loan borrowers.

The two biggest student loan relief measures include a forbearance on all federal student loans through September and a 0% interest rate for the duration of the pandemic. However, many borrowers understandably have some unanswered questions, so let’s see if we can clear some things up.

1. The forbearance is automatic

Here’s the answer to the biggest question I’ve heard from federal student loan borrowers: Your payment obligation will automatically stop from March 13 through September 30. This includes borrowers who are on automatic payment plans.

It could take your loan servicer a little while to get its system updated with all of the provisions of the CARES Act. As of 8 a.m. EDT on April 2, for example, my federal student loan payment is still showing as due on April 5. And to be fair, it takes time to make the necessary modifications for millions of borrowers. But the key point is that you don’t need to do anything to get the forbearance.

2. You might be able to get a refund on your March payment

This brings up a natural follow-up question: What happens if you made a student loan payment after March 13 when the forbearance period started? Or what if your servicer auto-debits your April payment before its system is updated to reflect the suspension of payments?

The good news is that any payment you make to your federal student loans during the forbearance period can be refunded. This includes payments made manually and any automatic payments. While servicers are still working out the process, you can request a refund for any payment directly from them (hopefully within the next few weeks).

3. You can still make payments if you want to

Another common question is whether borrowers can continue to make student loan payments during the forbearance period. The answer is yes, and if you can afford to do so, it could certainly be a smart financial decision.

Since federal student loans are currently set to 0% interest, this means that anything you choose to pay will be applied to reducing the principal, which will not only allow you to pay off your loans sooner, but also save you significant money on interest charges over the long run.

4. It only applies to federal student loans

The Department of Education has no legal authority over private lenders, so the CARES Act student loan relief provisions only affect federal student loan borrowers. Unless you’ve been told otherwise by your lender, any private student loans you have are still due as usual.

Having said that, if you’ve lost income due to the coronavirus outbreak and you might have trouble paying your private student loans, the best thing you can do is contact your lender right away. The good news is that while the 0% interest or automatic forbearance doesn’t apply to private loans, most lenders are willing to help affected borrowers by allowing the temporary suspension of payments or through other relief measures.

5. When does the 0% interest period run?

The 0% interest period applies for the same dates as the forbearance — from March 13 through September 30.

However, it’s worth noting that the CARES Act wasn’t signed into law until March 27, so your loan may still have accumulated interest for the early part of the forbearance period. This will be changed retroactively by your lender if it hasn’t been already.

6. How much will this relief save you?

It depends on your loan balance and your normal interest rate. A borrower with $50,000 in federal student loans at an average interest rate of 6% will save roughly $250 per month for the duration of the forbearance.

7. Not all federal student loans are eligible

The forbearance and 0% interest rate apply to most federal loans, including Direct Loans, FFEL Program Loans, and Federal Perkins loans. It even applies to loans in default.

However, it’s worth noting that some FFEL Program loans and Perkins Loans aren’t owned by the federal government. For example, some Perkins Loans are owned by the schools the borrower attended. However, if you have loans of this nature, you can consolidate them into a Direct Consolidation Loan that would be eligible.

New guidance is likely to emerge

As a final point, keep in mind that this is still a very fluid situation. The U.S. Department of Education and the federal loan servicers are all scrambling to keep up with the latest federal guidance, and it’s entirely possible for the relief measures to change in the future as the coronavirus pandemic unfolds.

The Federal Student Aid website has set up a coronavirus information page to keep borrowers updated, so if you’re a federal student loan borrower, it’s a good idea to check it frequently for the most up-to-date information.

Source: The Motley Fool

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What You Should Know About Loan Forgiveness under The CARES Act

The Coronavirus Aid, Relief, and Economic Security Act, commonly known as the “CARES Act” (the “Act”) was signed by President Trump on March 27, 2020.

The Act offers unprecedented benefits to help American employers during this national crisis. This article will focus on the loan forgiveness program promulgated under the Act.

In sum, the Act provides that that employers of 500 or fewer employees may borrow up to 2.5 times their average monthly payroll costs, subject to a maximum of $10,000,000, on a non-recourse basis, that is, without collateral and personal guarantees, for a period of up to ten years at the maximum interest rate of 4% per annum.

In the interest of brevity, I have excluded certain outliers or non-traditional employers such as seasonal employers, multi-office employers, and employers who were not in business during the first half of 2019.

Payroll Costs

The Act defines “Payroll Costs” as the sum of “(aa) (AA) salary, wage, commission, or similar compensation; (BB) payment of cash tip or equivalent; (CC) payment for vacation, parental, family, medical, or sick leave;(DD) allowance for dismissal or separation; (EE) payment required for the provisions of group health care benefits, including insurance premiums; (FF) payment of any retirement benefit; or (GG) payment of State or local tax assessed on the compensation of employees; and (bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period.”

Please note that Payroll Costs do not include: (a) compensation of more than $100,000 for each employee; (b) Federal Withholding and Payroll taxes, and (c) qualified sick and family leave wages under the Families First Coronavirus Response Act.

Independent Contractors/Self-Employed

Fortunately, independent contractors, sole proprietors and self-employed individuals are eligible to receive a loan. These individuals must present documentation such as 1099 and other proof of income to confirm their eligibility.

Maximum Loan Amount

The maximum loan amount is the lesser of (a) 2.5 times the average monthly payroll costs of the Employer during the 1 year period before the date of the loan less any SBA loans already taken by the Employer from on or after January 31, 2020, which such loans may be eligible for refinancing under the Act or (b) $10,000,000.

Allowable Uses of Loan Proceeds

During the covered period (February 15, 2020 to June 30, 2020), the Employer may use proceeds from the loan for: (a) payroll costs; (b) costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; (c) employee salaries, commissions, or similar compensations; (d) payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation); (e) rent (including rent under a lease agreement); (f) utilities; and (g) interest on any other debt obligations that were incurred before the covered period.

Nonrecourse; No Personal Guarantee

The Act provides that the loan will be nonrecourse, without collateral and without personal guarantees, from any individual shareholder, member, or partner of an eligible borrower, except if the proceeds are used for purposes not authorized by the Act.

Loan Forgiveness

Loan forgiveness is perhaps the most favorable provision of the Act. Borrowers will be eligible for tax-free forgiveness of principal due under the loan equal to the sum of the following amounts during the 8 week period following the loan closing: (a) payroll costs; (b) payments of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation); (c) payments on any covered rent obligation; and (d) covered utility payments.

Forgiveness is of course predicated on the Borrower maintaining the number of full-time equivalent employees for the 8-week period that were employed during the period of February 15, 2019 to June 30, 2019 or the period of January 1, 2020 to February 29, 2020.

Any reduction of employees will result in a proportionate reduction in the forgiveness amount. The amount of forgiveness is also reduced for any salary reduction in in excess of 25% of the total salary or wages of the employee for most recent full quarter. Borrowers will be allowed to maintain their employee count by rehiring terminated or laid off employees during the period commencing February 15, 2020 to April 27, 2020.

by Damon Gamble

Loan Forgiveness

Damon Gamble is the Owner and Managing Partner of Gamble and Associates, a a full-service Certified Public Accounting firm that provides accounting, tax and business consulting services to high net-worth individuals, and Small Businesses such as Sole Proprietorships, Corporations, S-Corporations, Partnerships, LLC’S and Trusts.

For more questions, please contact Damon at info@gamble-assoc.com.

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Startup loans to Black Entrepreneurs to ‘interject some balance in capitalism’

GW “Chef” Chew loves to cook and is an ardent vegan. He combines the two passions through a new company, Something Better Foods, that has created a line of plant-based meats, from Philly cheesesteaks to fried chicken, as well as with a nonprofit Oakland restaurant, the Veg Hub.

black entrepreneurs
GW “Chef” Chew, who received a $20,000 loan from the Runway Project, creates sandwiches behind the counter of the Veg Hub in Oakland.
Photo: Jessica Christian / The Chronicle

Chew needed financial backing to get Something Better off the ground. That’s where Oakland’s Runway Project stepped in and lent him $20,000.

“That money was a blessing,” he said. It helped him land a manufacturing site in Vallejo. Runway also helped with advice, coaching him on his business and marketing plans. He’s now raising more money to prepare for a distribution deal he landed with Whole Foods for next year.

Runway offers loans and other support to help black entrepreneurs start businesses. Many startups tap friends and family for early money, but minorities often don’t have well-heeled personal or professional networks. While the median net worth of white households is $171,000, that of black households is $17,200, according to the Federal Reserve.

The racial wealth disparity “is a big gap,” said Claudia Viek, founder of the Invest in Women Entrepreneurs Initiative, a nonprofit that is not affiliated with Runway. “Providing that early-stage, more-patient capital meets an acute need. It’s a way to interject some balance in capitalism.”

Runway founder Jessica Norwood calls the loans “believe-in-you money” but hastens to add: “It’s more than the money part. This is a story about what it means to be friends and family to one another, to be in deep community with each other. This is saying to folks who have been chugging away that we believe in them.”

The enterprises funded aren’t pitching the next big tech thing. Instead they’re Main Street stalwarts with products such as floral arrangements, fashion accessories, apparel, artisan juice, handmade pies and skin care creams.

Runway’s approach sounds terrific, said Ben Mangan, executive director of the Center for Social Sector Leadership at UC Berkeley’s Haas School of Business, who has no ties to Runway.

“There’s a huge need for this kind of capital, and it’s almost impossible to find it,” he said. “We have a massive problem to solve when it comes to creating wealth for people who have a disproportionately small share. We need every smart, viable experiment we get.”

GW “Chef” Chew prepares a plant-based Philly cheesesteak sandwich at the Veg Hub in Oakland. Minorities often don’t have well-heeled personal or professional networks.Photo: Jessica Christian / The Chronicle

Runway is small. It’s made 13 loans over the past year — and so far has a 100 percent repayment rate. But it has big ambitions to spread nationwide, and is currently raising money and developing a model for that.

Runway’s five-year, no-collateral loans carry a 4 percent interest rate, and repayments are interest-only the first two years.

The Self-Help Federal Credit Union administers the loans. Community members can support loans by taking out certificates of deposit at Self-Help. As with all CDs, their money is federally insured. In lieu of collateral from the entrepreneurs, Runway raised philanthropic money to act as a guarantee — for every $1 it lends, it has $1 sitting in an account at Self-Help as a backstop.

San Francisco’s RSF Social Finance provided some of that backstop capital.

GW “Chef” Chew explains the benefits of a plant-based diet to a customer at the Veg Hub in Oakland. The Runway Project provided advice to Chew, coaching him on his business and marketing plan. Photo: Photos by Jessica Christian / The Chronicle

“It was a real moment of joy for me and for Jessica to do that,” said Lynne Hoey, RSF’s senior director of credit, adding that there’s “a multibillion-dollar market opportunity to fund entrepreneurs” who otherwise are shut out.

Along with the Runway loans comes help in the form of retreats, peer support groups and weekly coaching from Oakland’s Uptima Business Bootcamp.

Uptima co-founder Rani Langer-Croager chairs Runway’s credit committee, helping to identify and screen loan applicants.

“These loans have provided immediate impact for each of these entrepreneurs we work with,” she said. “People who might previously have had to put inventory on a credit card were able to have more-favorable terms to open brick-and-mortar stores, to buy vehicles.”

One entrepreneur bought a truck for her mobile florist business; another bought a vehicle for business-to-business deliveries; another opened a mall kiosk for her beauty products, and another opened a lemonade stand in a kiosk on Valencia Street.

Moreover, the initial funding helped Runway’s early cohort raise at least $100,000 more in backing. “It takes money to raise money,” Langer-Croager said.

Stevonne Ratliff got a $20,000 Runway loan last year for Beija Flor Naturals,an eco-friendly line of beauty products.

“You need capital to expand, but it’s pretty difficult to find,” she said. She was making all her products by hand, so she couldn’t make enough to supply large retailers. The Runway money allowed her to outsource production of her two top sellers — hair care products Creme Brulee for Kinks, Curls and Coils and Maracuja Beauty Milk.

GW “Chef” Chew hands a drink to a customer at the Veg Hub in Oakland. The Runway Project helped Chew land a manufacturing site in Vallejo.
Photo: Jessica Christian / The Chronicle

Besides offloading the “soul-draining” manufacturing, she appreciated the mentorship. “You have a group of advisers working together for your success,” she said. “They’re saying, ‘Go for this, we’re here to support you.’

“It gave me confidence to go for things I wouldn’t otherwise have gone for because I was so cash-strapped,” she said. She participated in Essence magazine’s annual festival in New Orleans, a high-end beauty show in New York and a pitch competition in Florida — which she won, landing a $25,000 grant. “When you have money in the bank and support, you feel a lot more confident,” she said.

Norwood summed Runway up like this: “We’re at the intersection of love, finance and culture. We don’t just look at products; we understand people at their core.”

Source: San Fransisco Chronicle