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Commercial Lending
First and foremost always remember that a Commercial Lender is Not a Commercial Lender when it is a Bank. If experts are to be believed a commercial lending offers loans backed by hard collateral, usually real estate. It is worth mentioning in this regard that usually a commercial lenders lending criteria will be less stringent than at the local bank.
This is because of the simple reason that most banks focus on providing private residential financing for individuals of the local community, not large amount loans for real estate or commercial property acquisition. As a matter of fact most commercial lenders are not so much concerned with the borrowers financial record and qualifications as they are about the mortgage property value.
As is pretty much the case with most banks, commercial lenders are able to provide a loan in a short amount of time-usually within several weeks depending on the mortgage terms. Theoretically speaking commercial lenders also offer a wide variety of loan products. In an ideal scenario the most popular of these products is the bridge loan. Believe it or not bridge loans are most often used to take advantage of time sensitive real estate opportunities or to avoid foreclosure.
Point to be noted in this regard is that a commercial lending is Not a Commercial Lender When it is a Commercial Broker. It is worthwhile remembering that sometimes a commercial broker will pose as a commercial lender. In simple terms the difference between the two is that a commercial lender actually provides money, while a commercial broker provides a convenient way for borrowers to find lenders. Point to be noted in this regard is that in most cases where a broker is used, there is no direct contact between the borrower and commercial lender. Indeed, it is worthwhile remembering from the brokers perspective, this would be a bad thing since they profit considerably from middleman fees charged to the borrower. So the question now arises: Why are commercial brokers in business There is no hiding the fact that by and large they are much more effective at advertising to potential borrowers than commercial lenders. In addition commercial brokers also provide the infrastructure necessary to carry out loan transactions. However, fact of the matter is with more and more business being done over the Internet, their chief value-add is their knowledge of, and access to, a long list of commercial lenders.
If experts are to be believed with more commercial lending marketing themselves all the time, the value of brokers may diminish significantly in the near future. In an ideal scenario there are several significant advantages to having direct access to a commercial lender: 1) No broker fees, 2) Timely answers. More often than not direct communication equals direct answers to your questions. Theoretically speaking a commercial lender either can, or cannot provide you with a loan-theres no incentive for them to waste time trying to figure out if you qualify or not. A broker, on the other side of the coin, will often times spend considerable time finding what deal is best for them by going from direct lender to direct lender. In case if a commercial lender cant help you, they will be able to tell you what other lender can. 3) Timely closings. There is no hiding the fact that by working directly with your lender, issues can be resolved, questions answered, and loans closed. In other word loans options not offered through a broker may be available by going directly to a commercial lender.
The question now arises: Whats the Trade-Off of Using a Commercial Lender It is worth mentioning in this regard that because of the quick turn around and conveyance provided by bridge loans and other high-risk commercial lender loan products, rates can be higher than at a bank. On the other hand if you have the time and the financial qualifications, you might be best served at your local bank. However, fact remained
that commercial lenders are a great option for people with near-bank loans, in other words, loans that were almost approved by the bank. According to experts with so many potential lenders available, it may seem a little daunting to find an option that works for you. Believe it or not many times the only significant factor that sets two commercial lenders apart is the quality of their customer service. Traditionally, there is no denying that the commercial loan market is notorious for being short on professionalism. It is advisable to find a lender who is willing to take the time you need to understand the details of your loan.
Theoretically speaking besides finding a commercial lender who will finance the type of property best suited for your business needs, you also need to consider what kind of loan options will be best for you. It is worthwhile remembering that some lenders are fairly flexible in their loan offerings; non-recourse, mezzanine, and bridge loans may all be useful options depending on your individual requirements and circumstances. In addition, always remember that many commercial lenders also provide construction financing for borrowers who would prefer a custom facility. In addition renovation and repair financing is also a common offering by many lenders.
Before you borrow from any commercial lending, it is quite mandatory that you make sure that your anticipated loan amount falls comfortably within the dollar range that the lender is willing to provide. It is worth mentioning in this regard that most lenders have a minimum loan amount of 100k to 300k although you will find the occasional institution willing to make loans as low as 25k. While there is no denying that the majority of lenders have a loan ceiling reaching $10 million, a few of the largest have no limit.
In few cases some commercial lending also provide opportunities to refinance property that youve previously purchased. While at first glance the a .5% decrease in interest may not seem like a big deal on a $25,000 loan, it can save you a substantial amount of money on your $50 million loan. On the other side of the coin a flexible lender may even give you the option of borrowing to avoid foreclosure. While there is no denying that this should always be the option of last resort, it may buy you enough time to make your business profitable enough to survive a sudden cash flow crisis. Other Articles |
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