It happens all the time…banks are taken over by other banks and the new bank wants or needs to consolidate the loan portfolio of the bank they just purchased or merged with. Since commercial loans are usually 5-year balloons and they need to be renewed every 5 years that is the easiest time for a bank to get a loan off their books. Just tell the client they are not renewing the loan and they will either have to find a new loan from another source or they will foreclose on the property… That is the commercial game…
My client found himself in this very scenario when his small community bank was sold to a larger commercial bank. The new bank said they did not want his loan anymore and he needed to find a new home for it or they would just take over the property and sell it off to the highest bidder. This is a very stressful situation for someone who is just trying to make a living as a contractor and doesn’t have the time or resources to find another commercial mortgage source.
The issue for this particular business is they were not profitable on paper for another bank to seriously look at. Banks will always determine cash-flow based on tax returns. If the tax returns are not sufficient, they will not do the deal.
They were making money…Just not showing it on tax returns. We were able to use a hedge fund who would look at the Profit and Loss statements of the company and the leases for the other tenants of the building to determine they had sufficient cash-flow to pay a mortgage.
We were able to close the deal based on bank statements, Profit and Loss Statements of the business, and a rent roll for the other tenants that were in the building. Another successful project put together! The contractor can now worry about bidding on jobs and not on financing a property!