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Recently Funded Deal: Meat Processing Company and Wholesaler

Recently Funded Deal: Meat Processing Company and Wholesaler

Situation:

  • A meat processer and wholesaler operating out of Jersey City, NJ wanted to purchase the warehouse it was leasing from an unrelated third party landlord.
  • The business also wanted to refinance the remainder of the seller mortgage for the lot adjacent to its property, which the business purchased in 2011 and uses for truck parking and access to the warehouse’s loading docks.
  • A partner bank referred the business to The 504 Company to pursue financing through the SBA 504 program to acquire the property they occupied and to refinance the mortgage.

Solution:

  • The SBA 504 program made it possible to finance the project with just a 10% owner-equity requirement. This requirement was fulfilled by a combination of land equity and business cash. As the equity in the land totaled $280,000, the business needed to inject only $30,000 in cash.
  • The SBA 504 loan program funded $2.79 million of a $3.1 million property purchase and debt refinance project.

Impact:

  • With the land equity as part of the business’s equity injection, they were able to keep more cash in the business by injecting just $30,000 business cash.
  • In purchasing the building, the business reduced its monthly payments on the property with an estimated annual savings of $130,000.
  • The business reduced its monthly loan payments on the seller mortgage by 45.75% and increased the size of property it owns to 1.96 acres.

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