Commercial Cash Corner

The following are excerpts from an interview with Mr. Josh Miller of Union Planters/Regions Commercial Lending Division.

We are a business growing out of our existing space and we would like to purchase a larger facility. How important is our “business plan” and what recommendations would you have for developing one?

“A business plan is a necessity for start-ups. Some important considerations for us would be the experience of the principals and the company’s logic for achieving their projections. For existing companies seeking additional capital it is important to explain the need for capital in the business plan. For instance, expanding companies may outline how the increased capital will be used to enhance the current growth. Companies positioning themselves for a growth phase may find it helpful to outline how the increased capital will be used to accommodate the projected growth phase.”

I have identified a commercial property that includes an established business. What kind of financing would you recommend?

“The rule of thumb for owner-occupied businesses is to provide a five-year note on a fifteen-year amortization schedule. When the loan comes due in five years the owner has the option to pay off the loan or refinance for another five year term. This offers a tremendous amount of flexibility to business owners.”

What kinds of trends are you seeing in commercial real estate lending in the Memphis area?

“The re-financing boom of 2004 seems to have slowed down as we will soon be entering the second quarter of 2005. We are seeing significant increases in acquisitions of existing properties and new construction activity."

What do you view as key qualities in selecting a commercial lender?

“I think that a commercial lender should have a sound reputation and willingness to remain alert to the needs of the business community. On a personal level, I think that it is crucial that lenders possess the quality of flexibility because each client and situation is unique.”

What is your outlook for commercial loan interest rates in 2005?

“Not intending to speak for Chairman Greenspan but from my own observation interest rates appear to be rising slightly in proportion to the rate at which the economy builds steam.”

If you have questions or comments for Mr. Miller at the Commercial Cash Corner please drop us a note.