|
The Widget Store is purchasing a tract of land on which it will build a new
office/warehouse facility to house the company's operations. As part of the sales
contract, the seller has agreed to finance $40,000 of the land purchase and subordinate
this financing to the Bank/SBA loan. Based on bids obtained from local contractors,
construction of the new building will cost $300,000 (including construction
contingency). In addition to the real estate expansion, the company needs to
purchase additional inventory in the amount of $40,000 and add new equipment in the amount
of $100,000. It will cost approximately $34,000 for the company to relocate to the
new facility. Application and closing costs are estimated at approximately
$26,000. Total funds required are thus $600,000. The borrower will make a 10%
down payment ($60,000), and after the seller note of $40,000, a SBA loan in the amount of
$500,000 is requested to complete the transaction.
|
Use
of Funds |
Total
Funds |
Borrower
|
Seller
/ Other |
Loan
Request |
| Purchase Land |
$100,000 |
$0 |
$0 |
$100,000 |
| Construct Building |
300,000 |
0 |
0 |
300,000 |
| Purchase Equipment |
100,000 |
0 |
0 |
100,000 |
| Purchase Inventory |
40,000 |
0 |
40,000 |
0 |
| Working Capital |
34,000 |
34,000 |
0 |
0 |
| Application / Closing |
26,000 |
26,000 |
0 |
0 |
Total |
$600,000
|
$60,000
|
$40,000
|
$500,000
|
The loan will be 75% ($375,000) guaranteed by the U. S. Small Business Administration
(SBA), payable over a term of twenty-one (21) years in monthly installments of
$4,102*, at
an interest rate of Low Wall Street Journal Prime Floating + 2.00%, adjusted quarterly.*
This payment is based on a prime rate of 6.0%. The $400,000 real estate portion of
the SBA loan is eligible for a 25 year term, and the $100,000 equipment portion is
eligible for a 7 year term. Twenty-one (21) years represents a weighted average of
the two loan maturities.
|
|
