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I have published many articles which are designed to assist commercial borrowers in avoiding commercial loan problems. One of the most serious commercial mortgage business loan situations is a commercial lender that causes problems for their commercial borrowers on a recurring basis. It is particularly this type of commercial lender which prudent commercial borrowers should be prepared to avoid unless viable alternative business financing options do not realistically exist. 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 commercial loan strategy overview will discuss the value of avoiding "problem business lenders", but we will not attempt to name specific commercial lenders to avoid. Key examples will be provided to explain why commercial borrowers should be prepared to avoid a number of commercial lenders when looking for successful business loan programs. Ineffective Pre-approvals for Business Financing An early commercial mortgage pre-approval is often sought by commercial borrowers. The expected advantage to this initial commercial loan approval is that the business borrower can make other business arrangements which are based on the business financing being completed. 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. However, there are lenders who prepare a misleading and questionable version of a pre-approval shortly after receiving minimal application data. Because this approach often produces surprises for the borrower as the commercial mortgage process moves forward, borrowers should be wary of any lenders that do this. Why should a lender use a questionable commercial loan pre-approval? Here are two primary possibilities. (1) To encourage the borrower to end their consideration of other commercial lenders. (2) To use a business financing pre-approval that is like a residential mortgage structure. Since many commercial mortgage loans are arranged by residential mortgage brokers who are frequently unfamiliar with common business loan procedures, this reason will be especially applicable when dealing with commercial lenders that specialize in dealing with residential mortgage brokers. This type of commercial lender should be avoided at all costs for most business financing situations. Misleading Yes or No Business Loan Situations I have previously published a report which describes the unfortunate practice of some regional and local banks to say "yes" when they mean "no". These banks will often impose excessive business loan requirements for commercial financing rather than reject the loan. Commercial borrowers should pursue other commercial loan choices rather than agreeing to business financing terms that are unacceptable. Commercial Mortgage Business Loan Options: Think Outside the Bank It is not unusual for the leading business lender in some markets to use more restrictive commercial mortgage terms. Such lenders often take advantage of a lack of other local commercial lenders. 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 Mortgage Business Loan Appraisal Process For a commercial loan involving commercial real estate, commercial appraisals are a necessary part of the business financing underwriting. A commercial appraisal is usually costly and time-consuming. Eliminating business lenders which have known problems with commercial appraisals will help business borrowers to avoid frustrations as well as save money and time. Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.
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About the author: S.A. Bush provides commercial loan - business opportunity - working capital advice. Free AEX series of Commercial Loan - Credit Card Processing reports Don't reprint this article. Instead, reprint a free unique content version of this same article.
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