Lenders to Avoid for Commercial Mortgages and Commercial Loans
Avoiding critical problems is vital for a small business owner seeking help with commercial loans. Successful working capital management especially requires that problem lenders be avoided for business loans and commercial mortgage financing. One of the most serious commercial loan situations is a small business commercial lender that causes problems for their commercial borrowers on a repeating basis. Commercial borrowers should be prepared to avoid certain problematic commercial lenders unless alternative working capital loan options are impossible. This article will not name specific lenders to avoid. However, we will describe the importance of avoiding "problem commercial lenders".
We will provide several examples to demonstrate why commercial borrowers should be prepared to avoid a number of commercial lenders when seeking commercial mortgages and small business financing. 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. As a first example of lenders to avoid, I have published an article which discusses the tendency of many banks to say "yes" when they mean "no". Such banks will typically attach onerous business financing conditions to commercial loans instead of simply declining the loan.
Business owners should explore other commercial mortgage alternatives before accepting commercial financing terms that put them at a competitive disadvantage. The second example of lenders to avoid involves the commercial appraisal process. For commercial mortgage loans, commercial appraisals are an unavoidable part of the commercial loan underwriting process. The process to obtain commercial appraisals is expensive and lengthy. 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.
The third example of lenders to avoid
is illustrated by those which provide worthless pre-approvals for
commercial loans. 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.
Commercial borrowers should expect that a valid
approval will not be regularly issued in a day or so. Any form of
commercial financing approval will be treated as a binding action by
ethical lenders. Nevertheless there are commercial lenders who provide
their own special version of a pre-approval within just a few days of
receiving preliminary application information. Because this abbreviated
approach to pre-approvals almost always produces unexpected surprises
for the commercial borrower as the business loan process goes forward,
commercial borrowers need to be extremely wary of any commercial lenders
that take this approach.
You might ask why any lender would use a misleading pre-approval for a commercial loan? Here are two primary possibilities. If you loved this post and you want to receive more information about roofing companies orland park il generously visit the webpage. The first is to use a business financing pre-approval that is like a
residential mortgage structure. A second reason is to cause borrowers to
prematurely end their financing search due to the often false hope
created by an artificial approval. Since many commercial mortgage loans
are arranged by residential mortgage brokers who are frequently
unfamiliar with common commercial 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.
The fourth example of lenders to avoid is
related to lack of sufficient lending competition. It is not unusual for
the leading small business lender in some markets to use more
restrictive commercial loan terms. This lack of other local lenders is
often taken advantage of by such problem lenders. It is not wise for
borrowers to rely upon local and regional banks for most business
financing requirements. For most lending scenarios, a non-local lender
can probably provide better business loan terms because they are
normally competing with other business lenders on a regular basis.