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Commercial mortgage borrowers should be prepared to avoid certain problematic commercial lenders unless alternative business loan options are impossible. One of the most serious commercial loan situations is a commercial lender that causes problems for their commercial borrowers on a repeating basis. The conclusions in this article are based on a regular pattern of lending abuses observed by advising businesses for an extended period of time. I have encountered numerous business loan situations which have involved commercial lenders that I would not recommend as a result. Based on these experiences and daily conversations with other commercial loan professionals, I strongly believe that there are quite a few business lenders to avoid. This business loan strategy article will describe the importance of avoiding "problem commercial lenders". The article will not name specific lenders to avoid, but key examples will be provided to illustrate why prudent commercial borrowers should be prepared to avoid a wide variety of existing commercial lenders when seeking viable commercial mortgage and business financing strategies. Ineffective Pre-approvals for Business Financing Business borrowers often want an early pre-approval for their business loan. The apparent result of the preliminary business financing approval is that it will allow the borrower to make other business commitments which are dependent on the commercial mortgage being approved. Any form of commercial mortgage approval will be treated as a binding action by ethical lenders. Commercial borrowers should expect that a valid approval will not be regularly issued in a day or so. Since this approach to pre-approvals frequently produces surprises for the commercial loan borrower, borrowers must be extremely wary of any commercial lenders that use this approach. There are several business lenders who provide this shortened and misleading version of a pre-approval within a few days of receiving initial applications. Why do several business lenders utilize misleading business loan pre-approvals? There are several motivations and here are two of them. (1) To employ a commercial mortgage pre-approval approach that is similar to a residential loan process. (2) To prompt the commercial borrower to stop considering other lenders. Because many commercial loan situations are facilitated by residential mortgage brokers who are typically unfamiliar with normal business financing requirements, this reason will be especially relevant with business lenders that primarily work with residential mortgage brokerage firms. Such a lender should be avoided for most commercial mortgage circumstances. Yes or No for a Commercial Mortgage Business Loan? I published an earlier article which reported the questionable technique of many local and regional banks to say "yes" when they mean "no". When this happens, a bank will attach non-competitive commercial mortgage terms to business loans instead of refusing the loan. Business borrowers should explore other business financing options instead of accepting such unacceptable commercial loan terms. Think Outside the Bank for a Commercial Mortgage In smaller metropolitan markets, it is not unusual for a dominant commercial lender to impose harsher commercial loan terms than would typically be seen in a more competitive business financing market. Such commercial lenders routinely take advantage of a relative lack of other commercial lenders in their local market. An appropriate response by commercial borrowers is to seek out non-bank commercial loan options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for commercial mortgage solutions. For most business loan situations, a non-local and non-bank commercial lender is likely to provide improved business financing terms because they are accustomed to competing aggressively with other commercial lenders. Commercial Property Commercial Loan Appraisals For a business loan based on commercial real estate value, commercial appraisals are an essential step in business loan underwriting. A commercial mortgage appraisal is typically expensive and lengthy. Bypassing problematic lenders which have exhibited a pattern of commercial appraisal abuses will help the borrower by saving them money, time and frustrations. Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.
Article Source: http://www.financemanual.com
Steve Bush and AEX Commercial Financing Group provide commercial mortgage - commercial loan and business cash advance - credit card processing assistance You can get a unique content version of this article.
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