Logistical Financing
Commercial Real Estate Financing Logistical Financing
Author: Valerie Mellema
Date posted: 11.14.24

Two friends in the Midwest wanted to get out of the rat race and own their own business. They were both experienced and knowledgeable about logistics and decided this would be a good choice for a business. Working together was something they had always wanted so they decided to co-own the business and bring it to life. The main focus of the business is to transport imported goods from a port location to various destinations. The trucks would move across the state to a selection of cities and huge companies that needed quick and efficient transport services.

When Growth Causes a Business to Stagnate

In the first few years of business, things went well, The company experienced serious profitability and exceptional growth. It had moved from having a single truck to six of them and the staff grew to over 10 people after starting with only two.

 

However, with success comes other issues. The operation had reached its capacity. Growing any larger and finding success would be impossible without bringing in some form of financing. It seemed the only choice was to research the options and see what was possible.

 

The Funds Needed to Drive Toward Success

The expansion for this phase of the business was going to be a serious one. To begin the process, the owners sat down and went over all of their wants and needs. They challenged each other and meticulously broke things down to determine how much money would be needed for the things they saw as essential.

 

Expanding through new trucks, equipment, and employees was going to be expensive. However, in the end, it was decided that $500,000 was needed to move forward. Despite the substantial figure, they pressed on to explore whether it would be possible to secure financing that could effectively help them meet their needs.

Logistical Financing

Taking a Look at Financing Options

Turning our attention to financing was a source of concern due to the owners’ previous encounters with bad debt. Even though those days were behind them, their business still carried a less-than-ideal credit history. Despite this, they meticulously explored all available avenues before arriving at a final decision.

Conventional lenders didn’t present themselves as the optimal option, considering the credit score and other variables. Nevertheless, it soon became apparent that several alternative financing solutions held more promise. Ultimately, the choice fell upon a commercial real estate loan.

What Made Commercial Real Estate Financing Stand Out

Several factors made commercial real estate financing appear as the best choice. First, it didn’t require a perfect credit score. Additionally, it offered greater flexibility compared to a traditional business loan, with flexible underwriting terms and lower debt coverage ratios.

Although the co-owners had been growing frustrated due to the limited viable options, this financing avenue aligned perfectly with their needs. They could leverage their existing real estate to secure a loan, enabling them to achieve expansion and broaden their operations to additional cities and stores.

The End of the Line and What Happened Next

The logistics company accomplished an impressive feat when they successfully secured a CRE loan. This strategic financial move empowered them to embark on a journey of business expansion, allowing them to take on additional projects and hire a greater number of workers. These actions directly led to a substantial increase in profits, perfectly aligning with the co-owners’ aspirations. This success highlights that even with a lower credit score and existing debt, individuals can still access the assistance they require.

Thanks to this financial support, the logistics company managed to overcome its challenges. Now, it is steadily advancing towards a more prominent position in the industry with each passing day. Furthermore, this achievement demonstrates the potential for companies to turn their fortunes around with strategic financial decisions. Consequently, the logistics company’s journey serves as an inspiring testament to the transformative power of logistical financing in facilitating growth and success.

Logistical Financing
About The Author | Valerie Mellema

Valerie has over 16 years of experience as a professional writer of blogs, eBooks, articles and press releases, with a focus on finance and alternative lending. Valerie resides with her family in Texas and is passionate about her horses.

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