Raising funds is a funny thing – especially for a start-up. You’re basically selling the idea of your proposed company to potential investors/financiers. I’ve worked sales in the past and I was never really one of those ‘always-be-closing’, stereotypical sales types. I always went for more of an altruistic approach and Warren and Neil seemed to be the same way. We just talked about opening a brewery, why we were excited about it and the conversation kind of took off from there (I wasn’t exactly shy about the fact that we were looking for investors though). People were genuinely interested in being a part of the process and getting involved.
After we had the business plan dialed, the investors came relatively easy – at least compared to banks/credit unions. I’ve worked for a credit union on and off since I was 18 so I knew the ropes enough to understand how difficult it is to lock in lending as a startup. The credit union I work for is one that (in part) differentiates based on its ability to approve loans that other financial institutions won’t – primarily when there’s positive community impact. So being a community-oriented taproom dedicated to creating positive impact, we thought we stood a pretty good chance. Pairing that with a substantial down payment, a solid business plan and a good relationship with the lender, we’d for sure be approved, right? Nope. Application denied. It was then that I realized I needed to get used to that feeling.
Remember in the last post how I said that we were really happy since we negotiated a 5 month period between our offer on the property and the closing date? That was pretty clutch. We wound up removing subjects (ie. putting down a 20K deposit that we’d give up if we couldn't complete) without having firm financing in place. That’s kind of crazy… but the real estate market had absolutely taken off between when we had an accepted offer on the place, and subject removal. So we figured that worse case, we’d just sell it to another buyer and start from square one – probably break even on the whole thing.
When it was all said and done, we submitted applications to 10 different financial institutions and 3 private brokers. That meant hours and hours and hours of meeting with lenders, gathering documentation, filling out lengthy applications, and many follow up sessions. We were nearing our closing date and it was starting to look a little grim. We could close, sure, but it would have meant being wayyyy more expensive than we would have liked (tens of thousands of dollars more expensive), being fragmented across multiple lenders (which would be annoying from a bookkeeping and re-financing perspective), require us to do corporate re-structuring and probably raising some more investor money. Finally, though, all our efforts paid off. We were approved for more lending than we initially requested, at a single bank (Scotiabank), at an excellent interest rate, with minimal fees and absolutely lovely people looking over our application. Hell. Yes.
We pressed hard against our deadline to get the best deal possible – but that meant we’d cut it reaaaallly close for the appraisal, lawyers and bank to work their magic. The seller’s realtor apparently didn’t explain that the offer we made had him paying the GST (over $20K), so if we didn’t get the funds by the closing date, he definitely would have kept our $20,000 deposit, put it back on the market and sold it for more than we’d paid. There was also the issue of the money we’d poured in to this specific property over those 5 months: application fees, appraisal, not to mention the countless hours of our life.
When Scotia told us we likely needed to push back the closing date, a steady river of blood rushed to my head, "We'll lose the property, we'll lose all our investors money. Bankruptcy." Apparently the fact that it’s a government backed loan added to the paperwork, complexity, and most importantly, the length of time required to prepare documents. I resorted to persistent follow ups with everyone I could. The bank, the appraiser, the notary (who I barely understood). I was real annoying. Closing day came and we didn’t get confirmation for many excruciating hours but at about 5pm, we were told the building was ours.
Drenched in sweat, exhausted from desperation, I hopped on the ferry with a smile on my face. Time to get those keys and celebrate.