Commercial Real Estate

Greg and Chip had a great closing experience a few weeks ago, and even received a great writeup from Client, Debora Jandle, L.M.S.W.  The property was small office building right on the edge of Heritage Hill, and the buyer was a law firm looking for a Grand Rapids location.  Always nice to hear from our clients about the work that we are doing, and we certainly hope to have more to add throughout the rest of 2010!

Congratulations to the sellers and the purchasers of a great location near downtown Grand Rapids!

Diane Karns, CCIM recently represented both the Landlord and Tenant in the leasing of 1,000 sf of office space in Rockford, MI.

Acclaim Private Home Care’s corporate office is located in Kalamazoo, MI and specializes in the highest attainable quality of compassionate health care in a home environment.  Acclaim Private Home Care, Inc. works closely with the person that has the disability, their families, physicians, case managers, and discharge planners to insure a smooth transition to their home.  They felt a need to be in the Rockford market as their business needs were expanding.  Bella Vista Drive offered them exactly what they were looking for in a new office location.

Welcome to Kent County Acclaim Private Home Care!

June’s SBA 504 20-year effective rate is 5.29%.  10-year bonds are funded every other month so the next sale will be in July.  The May SBA 504 10-year bond effective rate was 4.61%.  (Rates may vary slightly based on approval date.)

On Thursday, June 3, our Executive Director had the opportunity to attend a Federal Reserve event in which the guest speaker was Federal Reserve Chairman, Ben Bernanke.  The article below highlights the event.

The second article is a repeat of the newsflash sent out last week.  At this time the SBA loan queue is still in place for projects seeking the reduced fees and additional funds have not been approved yet to extend the Recovery Act program.  It is anticipated that this will be approved by Congress in the next few weeks.

Fed Chief Speaks in Detroit

Thursday, June 3, Federal Reserve Chairman Ben Bernanke spoke to a group at the Federal Reserve Bank of Chicago’s branch in Detroit.  Mr. Bernanke’s speech focused on urging banks to do more for Small Business.

Mr. Bernanke stated that outstanding loans to small businesses declined to $660 billion in the first quarter of 2010, from almost $700 billion two years ago.  He wasn’t clear if this is a result of reduced demand or tightened credit standards.

Mr. Bernanke stated that in 2009 only 40 percent of small businesses that tried to borrower had all their needs satisfied.  As a result, he urged banks to examine loan applicants’ businesses thoroughly and to “avoid mechanical, automatic rejections” based solely on the companies’ industry, location or other negative factors.

Our Executive Director, Sandy Bloem, had the opportunity to attend the event held in Detroit. “I’m encouraged to see that the Federal Government is recognizing that small businesses are the engine that will create the new jobs in our economy, and that the owners are having challenges in getting access to capital.  Now is the time for Congress to continue their support for the SBA programs.”

To read the full article:

Fed Chief Urges Banks to Do More for Small Business

Loan Queue

Once again, funds provided by the American Reinvestment and Recovery Act have been exhausted and SBA has reactivated the loan queue.

As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7(a) and 504 loans. The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December. Those funds were exhausted in late February. An additional $60 million was provided to extend the programs through March. SBA was authorized for an additional $40 million in late March, and an additional $80 million was provided in mid-April to support the programs through May 31.

A bill for extending the fee waivers is currently in front of Congress, however, it has not yet been passed by both the House and the Senate.

Please call EDF for any questions regarding the loan queue.

EDF Contacts

Ph.  616-459-4825
Fax 616-458-5736
TF  888-330-1776

Sandy Bloem
Executive Director
sandy@growmichigan.com

Bradd Pierce
Loan Officer
bradd@growmichigan.com

Gary Witkowski
Relationship Manager
gary@growmichigan.com

*Due to the confidential nature of this transaction some information will be withheld without a proper confidentiality agreement in place*

Callander Commercial is very proud to present this local family restaurant business opportunity. Recently remodeled and forecasting $415,000 in gross sales for 2010, this is a great opportunity for a first time owner/investor or a seasoned veteran. Very favorable lease terms, solid loyal following, and great proximity to residential housing makes this opportunity very attractive. It is located on a major thoroughfare averaging 30,000 cars daily traffic and has great foot traffic due to some of the businesses located next door.

Restaurant has shown solid growth since 2007 with sales averaging a $40,000 increase for the last 3 years and is on track to do the same in 2010 – around $415,000. Numbers are very healthy with 28% food cost and 25% payroll so far this year. Asking price is 2x what yearly owner benefit amount is projected to be for 2010. Very solid numbers during these difficulty economic times.

Owner operator hours are favorable and current owner is willing to stay on board post closing for employee training, etc. There are still many avenues of additional growth that could be pursued with this restaurant.

*Please note: SERIOUS PROSPECTS ONLY*

Thank You,
Greg Mahalick
Callander Commercial
616-459-8000

By Jonathan J. Siebers, Esq.*

It seems everyone is talking these days about “troubled” or “distressed” assets.  Owners of troubled assets often feel like they are cornered and without any decent options.  Some of these owners are correct, but not all of them.  Before sinking into a state of hopelessness, an owner of a troubled asset should do a comprehensive review to assess their situation and to determine what, if any, options they have.  They may be surprised that things are not as bad as they once seemed.

The first thing the troubled asset owner needs to consider is why the asset is troubled. Just as each commercial property is different, each troubled asset is different. Most notably, troubled assets differ in how they are troubled.  Some assets are troubled because they no longer cash flow, resulting in hardship for the owner in making debt, tax and insurance payments. Other assets are troubled because they have dropped in value below the ratio required to be maintained in the loan documents.  Still other assets are troubled not because there is something wrong with the asset itself, but because there is something wrong with the borrower or one or more guarantors.  To determine whether a troubled asset owner has any options, then, it is critical for the owner to determine what category of “troubled” they fit within.

Second, the troubled asset owner should review the type of debt they have with their lender and whether they have other loans with this or another lender that are impacted by the troubled asset.  With respect to the type of debt, is it non-recourse, partial recourse or fully recourse debt?  Further, does the owner have other loans with this lender with cross-default and cross-collateralization provisions?  If there are no cross-default provisions but you have other loans with this lender, how will a default in this debt affect your relationship with the lender? Obviously, the best-case scenario for a troubled asset owner is to have non-recourse debt and no other debt, but a troubled asset owner may have options even if they are not in that choice scenario.

Third, if the debt is recourse, the troubled asset owner should consider what type of guaranty was given and what other assets the owner owns.  Is the guaranty unlimited and continuing?  Is it pro rata?  Is it secured?  Is it signed by the owner’s spouse?  Does the owner own any other assets?  If so, are the other assets owned free and clear or are they collateral for some other loan?  Do the assets fall within a safe harbor that protects them from creditors?  Are the assets owned as tenants by the entireties with a spouse?  The answers to these questions can help the troubled asset owner determine the likelihood that the bank will pursue the owner personally.

Fourth, the troubled asset owner should read carefully all of the loan documents to determine whether there are any special provisions that either protect the borrower or protect the lender.  While most commercial loan documents are pretty similar, one should not assume that all default provisions and remedies provisions are created equally.

Finally, the troubled asset owner should at least consider speaking with a bankruptcy attorney.  The simple question to ponder with the bankruptcy attorney is whether the owner will fair better in bankruptcy than it would if it did not file.

If you own a troubled asset, the sooner you undertake the foregoing review, the sooner you will gain an understanding of your situation and your options.  The foregoing review contains many variables that can change the outcome, so don’t assume that your troubled asset is like that of your neighbor down the street, or that the solution to your problem is the same as the neighbor’s solution.  Finally, any review such as this should be undertaken with your real estate and legal advisors so that they can help you understand your situation and your options.

* Jon Siebers is a shareholder with the Grand Rapids law firm Smith Haughey Rice & Roegge and chairs the firm’s Real Estate and Construction Practice Group.  Jon can be reached for questions at jsiebers@shrr.com or (616) 458-5298.

The oldest Bait and Tackle Shop in Greater Grand Rapids is available for sale; it sits in an excellent location on 28th St. just east of Wilson Avenue.  Huge traffic counts, and potentially a great place for future development.  Perfect spot for a quick stop-off before hopping on the highway, or if you dare, fishing in the Grand River!  The property is currently listed for $275,000 $235,000; the building is approximately 2000 sq. ft.  Included in the asking price are the fixtures, inventory, and equipment.  There is a home attached to the store as well, which could be occupied by the owner or rented out for additional income.  Financial information is available with a signed confidentiality form, please feel free to contact clafleur@ccmichigan.com or dkarns@ccmichigan.com for any further information – or just click on the photo above to be taken to CPIX.net for the basic listing information.

May’s SBA 504 20-year effective rate is 5.52%.  10-year bonds were also funded this month, and the 10-year bond effective rate was 4.60%.  (Rates may vary slightly based on approval date.)

The first article below congratulates one of our existing customers; DornerWorks, Ltd.  The company was named one of the 50 companies to watch for 2010 at the Michigan Celebrates Small Business Awards!

The second article details the SBA ReadyTalk Session on May 6, 2010, offered by SBA’s Detroit District Office.  Details and directions are in the second article below.

50 Companies to Watch for 2010

We would like to congratulate one of our existing customers, DornerWorks, Ltd., for being named one of the 50 companies to watch for 2010.  The announcement came at the Michigan Celebrates Small Business awards in Lansing on April 29th.  DornerWorks financed a building purchase and renovation in 2007 using an SBA 504 loan with EDF.  This expansion helped create almost 50 jobs!

DornerWorks, Ltd is an engineering consulting firm located in Grand Rapids.  The company was founded in 2000 and provides expertise on embedded systems, for example, airplane flight controls or surgical tools where people’s lives could be affected by a system failure.

DornerWorks, Ltd has seen growth in recent years due to an expansion of their services to the medical markets.

Again, congratulations to DornerWorks, Ltd on being named as one of the 50 companies to watch for 2010!

SBA ReadyTalk Session

The next monthly ReadyTalk session for lenders is scheduled for Thursday, May 6 at 10:00 a.m. and will cover the following topics:

• Recovery Act update
• Lender portal presentation
• Updates on loan activity
• General Q & A

ReadyTalk is a Webinar program utilizing the Internet and a conference call system. To access the system:

From your computer:

1. Logon to www.readytalk.com

2. Login as a participant using the access code 3051501

3. Enter your name, email address, and company name as requested

From your telephone:

1. Dial 866.740.1260

2. Enter the Access Code 3051501 and press #

3. Say hello!

EDF Contacts

Ph.  616-459-4825
Fax 616-458-5736
TF  888-330-1776

Sandy Bloem
Executive Director
sandy@growmichigan.com

Bradd Pierce
Loan Officer
bradd@growmichigan.com

Gary Witkowski
Relationship Manager
gary@growmichigan.com

This is the first time this property has been offered on the market in several years.  This property is extremely well equipped.  The building is 12,000 SF, zoned Industrial and situated on 9+ Acres with a large retention pond in place.  The building has many add-ons, new HVAC, heated floors, AC, rainroom (RV leak testing) and power to 440 available. Currently the front approximately 1/4 of the building is used as retail space, with large windows and easy access, even for larger vehicles or trailers.  Contact Chip LaFleur or Greg Mahalick to schedule a showing!

April’s SBA 504 20-year effective rate is 5.77%.  10-year bonds are funded every other month so the next sale will be in May.  The March SBA 504 10-year bond effective rate was 4.60.  (Rates may vary slightly based on approval date.)

The 12^th Annual Michigan SBA Lender’s Conference was held on March 23, 2010.  It included several informative break-out sessions on SBA lending.  The conference also gave EDF the opportunity to honor our 2009 Lender of the Year, Brent Kehrwecker of Byron Bank.  A portion of the press release is below.

The second article details the next ReadyTalk Session on May 6, 2010, offered by SBA’s Detroit District Office.  Details and directions are in the second article below.

The last article is another reminder regarding the fee waiver extension through April.  A borrower has until the end of the month to obtain an Authorization that includes the fee waivers.

Lender of the Year

Economic Development Foundation (EDF) is pleased to announce Brent Kehrwecker, Second Vice President, Commercial Banking Loan Officer at Byron Bank, as their “Small Business Administration (SBA) 504 Lender of the Year”.  This award is given annually to a lender that shows leadership and resourcefulness by working closely with small businesses to help them finance fixed assets through the SBA 504 program.

Brent was awarded this honor by partnering with EDF on several SBA 504 loans throughout 2009 that assisted small businesses to create and retain jobs in Michigan.  “We need bankers like Brent that help the State of Michigan back to economic recovery by lending money to businesses that are expanding”, EDF President Sandy Bloem said during the presentation at the Michigan SBA Lenders Conference in Lansing on March 23, 2010.

“Despite obvious challenges in our economy, Byron Bank remains dedicated to supporting the growth of the West Michigan business community, ” said Joel Rahn, Byron Bank’s Executive Vice President, Commercial Banking. “Brent’s work with the SBA 504 program is an excellent example of this. Brent is an important part of our lending team.”

Thank you Brent for being a great advocate of the SBA 504 program and Economic Development Foundation!

SBA ReadyTalk Session

The next monthly ReadyTalk session for lenders is scheduled for Thursday, May 6 at 10:00 a.m. and will cover the following topics:

• Recovery Act update
• Lender portal presentation
• Updates on loan activity
• General Q & A

ReadyTalk is a Webinar program utilizing the Internet and a conference call system. To access the system:

From your computer:

1. Logon to www.readytalk.com

2. Login as a participant using the access code 3051501

3. Enter your name, email address, and company name as requested

From your telephone:

1. Dial 866.740.1260

2. Enter the Access Code 3051501 and press #

3. Say hello!

Recovery Act Update

New legislation was introduced and passed by the House and the Senate on March 25, 2010 (H.R. 4938) to provide additional funds to cover the fees for both 504 and 7(a)!

Up to $40 million is made available for 504 and 7(a) fee reductions and 90% 7(a) guarantees.  These new funds should enable SBA to continue providing loan authorizations for much of April.  The bill also extends the sunset on 90% 7(a) guarantees to April 30th.

There is also a bill that has been approved by the Senate and is being considered by the House (H.R. 4302) that will provide both the $5 million debenture limit and the ability to refinance existing debt through 504.  Stay tuned!

EDF Contacts

Ph.  616-459-4825
Fax 616-458-5736

TF  888-330-1776

Sandy Bloem
Executive Director
sandy@growmichigan.com

Bradd Pierce
Loan Officer
bradd@growmichigan.com

Gary Witkowski
Relationship Manager
gary@growmichigan.com

You don’t need to win a federal government contract to have the federal government as a client.  Many businesses are realizing the value of partnering with HUBZone, 8(a) and Service-Disabled Veteran-owned certified companies.

The federal government is the largest purchasing organization in the country, procuring over $200 billion in goods and services each year.  Much of this is awarded to small businesses.  However, there is a greater advantage for those businesses that can qualify for HUBZone, 8(a) and service-disabled veteran (SDV) certification to access set-aside programs.

HUBZone certification requires the business be headquartered in a HUBZone (historically underutilized business zone) qualified area, 51% controlled by US citizens and employ 35% of their workforce who reside in such an area.  8(a) certification requires the business to meet the small business standards, be controlled by socially and economically disadvantaged individuals and demonstrate a potential for success.  Service-disabled veteran must be a small business, controlled and no less than 51% owned by veterans.  The certification process is not difficult and the staff at the Michigan Minority Business Enterprise Center can assist you with this.  However, the real work and opportunity begins after you are certified and looking to market your status to the various federal (and local) agencies.  See the tip list below on how to make the most of your certification.

Not able to qualify, don’t give up!  Partnering is a successful path to accessing government contracts. Many certified firms are looking for teaming opportunities to expand their capabilities to win larger contracts.  Creating a partnership requires a high level of trust, cooperation and high level of planning.  The partnership can be for a joint-venture which is commonly used for a specific project or length of time (i.e. servicing a client on a construction project) or a strategic alliance in which the companies remain independent but leans on each other for additional capacity, knowledge and ability.

Winning a federal government contract is not easy, no matter what the books, experts, and spam emails may say.  Just like the private-sector, suppliers must do their homework- research the client to understand their needs, analyze their buying habits, and read, re-read and read again (can we stress this enough!) the request for quotes (RFQ).  Government suppliers must be proficient in federal acquisition regulations (FAR), registrations & certifications (CRR/ORCA), and most importantly where to go for help.  Contact us at the Michigan Minority Business Enterprise Center, 616.776.1724 or visit our website, www.mmbec.com.

Tips:

• Contact your local Minority Business Enterprise Center office to become a client, www.mbda.gov
• Make contact with the agencies that buy your products and services through their Office of Small and Disadvantage Business Utilization
• Attend local sessions on how to market your certification
• Ask the Center to assist you in identifying procurement opportunities and preparing your bid

Valencia Cooper is an Executive Business Consultant at the Michigan Minority Business Enterprise Center.  She works with minority-owned companies to provide them access to markets, access to education and access to capital.  She can be reached at 616.776.1724 or vrcooper@mmbec.com.