| This business financing strategy article will describe the | | | | COMMERCIAL LENDERS TO AVOID EXAMPLE |
| importance of avoiding "problem commercial lenders". | | | | NUMBER 3 - Think Outside the Bank |
| The article will NOT name specific lenders to avoid, but | | | | In smaller metropolitan markets, it is not unusual for a |
| key examples will be provided to illustrate why prudent | | | | dominant commercial lender to impose harsher |
| commercial borrowers should be prepared to avoid a | | | | commercial loan terms than would typically be seen in |
| wide variety of existing commercial lenders in their | | | | a more competitive commercial financing market. Such |
| search for viable business financing strategies. | | | | commercial lenders routinely take advantage of a |
| I have been advising business owners for over 25 | | | | relative lack of other commercial lenders in their local |
| years, and I have encountered many business | | | | market. An appropriate response by commercial |
| financing situations which have involved commercial | | | | borrowers is to seek out non-bank business financing |
| lenders that I would not recommend as a result. These | | | | options. It is neither necessary nor wise for commercial |
| problematic situations have especially involved | | | | borrowers to depend only upon local traditional banks |
| commercial mortgage loans, business cash advance | | | | for working capital and business cash advance |
| situations and unsecured working capital loans. As a | | | | solutions. For most business financing situations, a |
| direct result of these experiences and daily | | | | non-local and non-bank commercial lender is likely to |
| conversations with other commercial loan | | | | provide improved commercial financing terms because |
| professionals, I do in fact believe that there are a | | | | they are accustomed to competing aggressively with |
| number of commercial lenders that should be avoided. | | | | other commercial lenders. |
| This conclusion is typically based on more than one | | | | BUSINESS FINANCING STRATEGIES AND |
| negative experience or an obvious pattern of lending | | | | COMMERCIAL LENDERS TO AVOID EXAMPLE |
| abuses. | | | | NUMBER 4 - Meaningless Pre-approvals |
| I have published many commercial loan articles which | | | | Commercial borrowers frequently want a commercial |
| are designed to assist commercial borrowers in | | | | lender to approve their commercial loan at the earliest |
| avoiding business loan problems. One of the most | | | | possible point. The assumed benefit to this early |
| serious business financing situations is a commercial | | | | business loan approval is that it will enable the |
| lender that causes business loan problems for their | | | | commercial borrower to make other business plans |
| commercial borrowers on a recurring basis. It is | | | | which depend on the business financing being finalized. |
| particularly this type of commercial lender which | | | | Because an ethical commercial lender will treat any |
| prudent commercial borrowers should be prepared to | | | | form of an approval very seriously, commercial |
| avoid unless viable alternative business financing | | | | borrowers should expect that a meaningful version of |
| options do not realistically exist. | | | | such an approval will not be realistically possible in just |
| Here are a few examples of why certain commercial | | | | two or three days. Nevertheless there are commercial |
| lenders should be avoided. | | | | lenders who provide their own special version of a |
| BUSINESS FINANCING STRATEGIES AND | | | | pre-approval within just a few days of receiving |
| COMMERCIAL LENDERS TO AVOID EXAMPLE | | | | preliminary application information. Because this |
| NUMBER 1 - Yes or No? | | | | abbreviated approach to pre-approvals almost always |
| I have published an article which discusses the | | | | produces unexpected surprises for the commercial |
| tendency of many banks to say "YES" when they | | | | borrower as the business financing process goes |
| mean "NO". Such banks will typically attach onerous | | | | forward, commercial borrowers need to be extremely |
| business financing conditions to commercial loans | | | | wary of any commercial lenders that take this |
| instead of simply declining the loan. Business owners | | | | approach. |
| should explore other commercial loan alternatives | | | | Why do some commercial lenders provide such |
| before accepting business financing terms that put | | | | meaningless pre-approvals? There are two likely |
| them at a competitive disadvantage. | | | | reasons. (1) To motivate the commercial borrower to |
| BUSINESS FINANCING STRATEGIES AND | | | | stop considering other potential commercial lenders. (2) |
| COMMERCIAL LENDERS TO AVOID EXAMPLE | | | | To provide a pre-approval that is similar to a structure |
| NUMBER 2 - The Commercial Appraisal Process | | | | prevalent with residential mortgage loans. Since many |
| For commercial real estate loans, commercial | | | | business loans are arranged by residential mortgage |
| appraisals are an unavoidable part of the commercial | | | | brokers who are frequently unfamiliar with common |
| loan underwriting process. The commercial appraisal | | | | business financing procedures, this reason will be |
| process is lengthy and expensive, so avoiding | | | | especially applicable when dealing with commercial |
| commercial lenders which have displayed a pattern of | | | | lenders that specialize in dealing with residential |
| problems and abuses in this area will benefit the | | | | mortgage brokers. |
| commercial borrower by saving them both time and | | | | Copyright 2005-2007 AEX Commercial Financing |
| money. | | | | Group, LLC. All Rights Reserved. |
| BUSINESS FINANCING STRATEGIES AND | | | | |