Commercial Financing Advice: Avoiding Commercial Lenders Which Regularly Cause Problems for Commercial Borrowers
by Stephen Bush
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.
I have been advising business owners for many years, and I have encountered many commercial loan situations which have involved commercial lenders that I would not recommend as a result. This conclusion is typically based on an obvious pattern of lending abuses by select business financing providers.
This article will not name specific lenders to avoid, but specific examples will be provided to show why informed commercial borrowers should be ready to avoid a variety of business lenders in their search for viable commercial loan solutions. This business financing strategy article will illustrate the significant benefits of avoiding "problem lenders".
EXAMPLE NUMBER 1 - Worthless Commercial Mortgage Pre-approvals
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 do some commercial lenders provide such meaningless pre-approvals for a commercial mortgage? There are two likely reasons. (1) To motivate the commercial borrower to stop considering other potential commercial lenders. (2) To provide a business loan pre-approval that is similar to a structure prevalent with residential loans.
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.
EXAMPLE NUMBER 2 - Yes or No?
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 agreeing to such unacceptable commercial loan terms.
EXAMPLE NUMBER 3 - Business Loans Without Banks
In some non-competitive business markets, it is unfortunately common for a lender to employ business loan terms that would typically not be seen in a more competitive commercial loan environment. Such business lenders can repeatedly take advantage of a non-competitive commercial lending imbalance.
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.
EXAMPLE NUMBER 4 - The Commercial Appraisal Process
For commercial mortgage loans, commercial appraisals are an unavoidable part of the commercial loan underwriting process. The commercial appraisal process is lengthy and expensive, so avoiding commercial lenders which have displayed a pattern of problems and abuses in this area will benefit the commercial borrower by saving them both time and money.
Contact Information
Chief Executive Officer
Phone: (937) 780-4030
bush@aexllc.com
PO Box 353, Leesburg OH 45135-0353 USA
AEX Commercial Financing Group specializes in quick closings for difficult commercial real estate loans from $100,000 to $25 million and business cash advances up to $300,000 throughout the United States.
About AEX Commercial Financing Group
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