Avoiding Commercial Real Estate Loan Problems
AN IMPORTANT NOTE FOR COMMERCIAL BORROWERS:
AEX Commercial Financing Group provides a personalized and individualized level of service that is uncommon in the business financing field. Because AEX routinely works with more difficult commercial loan situations, our successful commercial financing approach requires that we have direct communication with the commercial borrower from the beginning of our involvement.
We have found this increasingly difficult to achieve (for various reasons) when working with residential and commercial loan brokers. Commercial borrowers needing assistance with difficult commercial loan situations should contact AEX Commercial Financing Group directly.
Key Business Loan Problem Number 1: Tax Returns versus a Stated Income Commercial Loan
Most traditional banks will require several years of tax returns in order to qualify for a commercial real estate loan. The alternative is to use a Stated Income Lender that does not verify personal income or assets.
Many borrowers will simply not qualify for a commercial mortgage loan if tax returns are used due to high business expenses (and low net income). Many lenders using tax returns will also continue to verify income AFTER the loan closes. Stated Income Lenders will not engage in this practice.
Key Commercial Mortgage Problem Number 2: Special Purpose Properties
It is becoming increasingly difficult to get a commercial loan for special purpose properties. Properties that do not fall in the categories of apartments or retail/office buildings are often placed in this special purpose classification.
This means that business acquisition loans for commercial properties such as restaurants/bars and auto service businesses are frequently hard to find. Commercial financing will be even more difficult to locate for such specialized properties as churches, funeral homes, nursing homes and gas stations.
Key Business Finance Problem Number 3: SBA Loan Refinancing Difficulties
AEX is now offering an SBA Loan and Business Finance program to eliminate most common problems in refinancing a Small Business Administration loan. Obtaining an SBA loan and refinancing an SBA loan are among the most complex business loan scenarios encountered by business owners.
According to Steve Bush, AEX Founder/CEO, "AEX is pleased to be a part of recent developments which now make it more feasible to refinance SBA loans. In today’s suddenly chaotic financial world, many business owners should be able to benefit from the improved business liquidity that prudent refinancing can provide."
Key Commercial Loan Problem Number 4: Online Business Loan Applications
Stephen Bush and AEX Commercial Financing Group advise business borrowers NOT to submit an online commercial loan - business cash advance application.
There are many commercial mortgage - business finance sites that ask borrowers to "Fill out our easy application!" before a business owner has a preliminary conversation with a prospective lender. In submitting an online business financing application, business owners are providing confidential business and personal information to a lender before it is appropriate. Don't do it!
Commercial Financing and Commercial Mortgage Loan Help for Special Purpose Properties
10 Other Key Business Loan and Commercial Mortgage Problems to Avoid
The following terms are common in traditional bank commercial real estate loans and should be avoided if feasible (special circumstances will periodically make some of these business loan terms unavoidable):
- Recall/balloon features (used by many banks to effectively shorten most business acquisition loans to 3-7 years).
- Short-term loans (less than fifteen years): LONG-TERM commercial property loans are available.
- Up-front Commitment fees: under most circumstances, borrowers should not pay such a fee. Please note that we are not including processing/retainer fees in the same category as commitment fees. We view processing/retainer fees as an acceptable and standard business practice when dealing with commercial loans.
- Business Plans: under most circumstances, commercial borrowers should not use a lender that requires a business plan.
- Cross-collateralization: commercial borrowers should not be required to use their personal assets as collateral for a commercial property loan.
- Sourcing and seasoning assets. Seasoning of ownership.
- Requirement to sign IRS Form 4506 (see sidebar)
- Debt Service Coverage Ratio in excess of 1.2 for a business acquisition loan (see sidebar)
- Minimum commercial property loan size that is too high for your commercial mortgage needs. It is not unusual to encounter a minimum commercial loan requirement of $500,000 to $1,000,000.
- Excessive length of the commercial real estate loan process: Many traditional banks require three to nine months to close a commercial mortgage. A more action-oriented commercial lender will close a business acquisition loan in 45 to 60 days.
Commercial Real Estate Financing - Commercial Mortgage Loan Programs
Business Financing Solutions
There are practical business financing solutions to all of the problems noted above. Please follow the links in the left sidebar for detailed information. Or contact me directly:
Stephen Bush
Chief Executive Officer
Phone: (937) 780-4030
bush@aexllc.com
PO Box 353, Leesburg OH 45135-0353 USA
Stephen Bush is a commercial real estate loan and business financing expert. AEX Commercial Financing Group specializes in quick closings for difficult commercial mortgage loans from $100,000 to $25 million (up to $2 million on a Stated Income basis) and business cash advances up to $300,000 throughout the United States. AEX Commercial Financing Group can also provide cash up to $1 million by refinancing commercial property.
Business Financing Advice - About AEX Commercial Financing Group
AEX Resource Data Page - Business Financing & Working Capital Management
AEX Commercial Financing Group has developed highly-specialized strategies for avoiding business financing problems. Information and strategies designed especially for those who will appreciate a conversational approach to commercial financing. Straightforward and candid business financing advice.