Commercial Mortgage and Business Loan Lender Problems

One of the most serious business financing scenarios is a lender that causes difficulties for their commercial borrowers on a regular basis. It is specifically this kind of commercial lender which informed commercial borrowers should be prepared to avoid unless realistic alternative commercial mortgage business loan options are totally impractical.

As a direct result of my commercial loan experiences advising business owners for over 25 years and regular conversations with other business financing professionals, I do in fact believe that there are a number of commercial lenders that should be avoided. This conclusion is based on a recurring pattern of lending abuses by some business lenders.

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.

Meaningless Pre-approvals for a Commercial Mortgage Business Loan

Commercial borrowers frequently want a commercial lender to approve their commercial loan at the earliest possible point. The assumed benefit to this early commercial mortgage approval is that it will enable the commercial borrower to make other business plans which depend on the business loan being finalized.

An ethical business lender will view any business loan approval as a serious and binding action. Borrowers should not expect that a such an approval is routinely possible in a day or two.

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.

Due to the fact that numerous business loan processes are coordinated by residential mortgage brokers who are unfamiliar with typical commercial mortgage situations, this factor will be particularly pertinent when working with lenders that focus on business financing originated by less-experienced residential mortgage brokers. Such a misleading business lender should not even be considered for most commercial loan scenarios.

Commercial Mortgage Loan - 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 accepting such unacceptable commercial loan terms.

Thinking Outside the Bank for Business Financing

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.

It is not necessary for borrowers to use only local banks for business loan needs. A wise strategy for business borrowers is to actively consider non-bank commercial mortgage alternatives.

Commercial Mortgage Business Loan Appraisal Process

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.

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Contact S.A. Bush at The AEX Commercial Real Estate Loan - Commercial Financing Guide for buying a business opportunity - commercial loan solutions

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