One of my SBA loan clients who I have been working with over three months to secure multi million dollar financing to buy an upscale arcade just fell through.
The reason - the landlord refusing to give a new lease past the two years left on the current contract. Every part of this deal was fantastic for a SBA loan - the buyer had great management experience, a 20% down payment, the business produced growing adjusted net income numbers that were huge . . . and on & on.
Only one piece of the puzzle was missing - a copy of the lease and whether the leasing company would renew the current terms or a new lease could be obtained (to match the ten year term of a SBA loan). No phone calls were returned from the landlord to my client for over a six week period - yet he kept moving forward, despite my dire warnings that he should get the lease situation resolved before going ahead!
Finally he got through to someone who informed him that they were going to sell the building and that they were not renegotiating any leases in the future!
My client is now out over $6,000 in CPA fees for due-diligence and attorney fees for contract reviews, over 120 hours over a three month period, when he should have pressed harder in the begining (one key item on my checklist for financing clients) to check with the landlord about future lease terms!•
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