The Situation
The clients, a married couple, had run their flower business from a leased retail building in Metro Vancouver for twenty years, with a second shop downtown. When the building's owner died, the family tried to sell around them despite a first right of refusal; after a lawsuit it was sold to the clients and a third partner in 2022 for about $1.3 million, roughly $1 million under its appraisal. The purchase was financed by a major bank on the strength of the two businesses.
The Challenge
At the bank's annual review the clients' accountant, who was not a CPA, failed to supply the documents requested, and the file showed CRA debt of about $178,000, a large part of it from 2014. The bank called the loan. On top of the payout of roughly $1 million, the clients wanted to buy out the third partner, about $415,000, and clear around $70,000 of credit card balances, and they needed to keep both businesses running from the building while it happened. A commercial lender reads corporate financials first, and these were the problem.
The Solution
We moved the file to a small-commercial program that qualifies on bank statements rather than on the accountant's work: twelve months of deposits for each business, about $744,000 and $612,000 gross, with half deducted for expenses, gave a net income the lender could use. The property had been appraised at about $2.6 million, so a new first mortgage of roughly $1.7 million sat at about 65% loan-to-value. A private commercial lender advanced it on a one-year closed term, interest-only, which keeps the payment manageable while the books are brought up to the standard a bank's annual review expects. The proceeds paid out the bank in full, bought out the partner, cleared the cards and the CRA balance, and left the clients' owner-occupied home and rental condo untouched.
The Outcome
The clients own the building their business has lived in for two decades, now 100% between the two of them, with one commercial mortgage in place of a called loan, a partner's share and a tax bill. The lesson is one we see often: a bank calling a loan is rarely about the property. It is about the paperwork, and a file rebuilt on bank statements and a current appraisal can be placed within weeks.