Learn To Be A Fix & Flip Investor: commercial loans

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Thursday, November 2, 2017

Commercial Loans In Texas – What You Need To Know About Working With the SBA-Part 3 – Getting Started

So you have decided that obtaining a loan from the Small Business Administration is a route that you would like to take. And you have also determined that your small business is eligible, according to their guidelines. Here is what you need to do to prepare for an SBA commercial loan in Texas.

Congratulations on making it this far! The world of commercial lending can be an intimidating place, so the fact that a borrow starts to get their ducks in a row to apply for a loan is a huge step in the right direction, and is a giant leap forward in making business dreams come true.

But how does a potential borrower get started with a commercial loan? The first thing is to understand that the process does not happen overnight. It is going to take some time and that is okay. So just be patient. A borrower is going to spend a great deal of time organizing, gathering and sorting various financial documents.

So get organized. If you are not a numbers person, you might want to become one. If you have a professional accountant, now would be the time to begin to understand what exactly they do. If, however, you already have your nose in the books, then you are going to be just fine. If you understand how all of your accounts work, and how to access all of the information, you are already ahead of the game and will simply need to organize the information to present to a potential commercial loan application. In addition to this, know exactly how you will be using the loan and how it will benefit your business. This goes beyond simply crunching the numbers. A solid business plan, that is updated to include the expansion that will be possible with the commercial lending, might not be required by a lender, but it most certainly will not hurt to have in place before beginning the application process.

Also, pay attention to detail. It is far better to provide too much information than not enough. The SBA and the lender are going to determine if you are financially competent enough to not only be responsible with their money, but also if you are going to pay it back. If they have to pull information out of you, it does not bode well for you being fiscally capable of handling significant debt on your own. That is not an impression that you want to leave with potential lenders.

Finally, keep your financial records up to date. Not only does this apply to the application process, but also as the loan is current. You should try to fall no further behind than 60 days. If you are detail oriented and organized, this should not be a problem at all. No lender, who is looking to grant you a commercial loan, is going to make a decision based on financial information that is outdated.

What strategies can I use to ensure the highest degree of success with my commercial loan in Texas?

Plan to devote a great deal of time to this process. If you must, seek help, whether that be mentors or other small business owners who have gone through the process. Remember, you do not have to do this alone. There are plenty of others who have successfully obtained a commercial loan, but it does not come without a great deal effort.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Loans In Texas – What You Need To Know About Working With the SBA-Part 2 – Eligibility

Seeking funding for any commercial enterprise, whether it be real estate or business expansion, can be a confusing endeavor. There are so many different options that it is hard to know where to begin or to determine which is the best for you. So how do you know if seeking a commercial loan through the Small Business Administration in Texas is right for you?

Knowing what you are getting into before you begin the application process with the Small Business Administration (SBA) is very important, as the application process for a commercial loan is very arduous. The good news is that, if all else fails, you can consult a lender and ask them questions about SBA loans.

One of the ways that the Small Business Administration is able to work with small business owners is by partnering with lenders. The SBA does not directly lend the funds to small businesses, but they work with banks and other lenders to not only find the correct fit for a small business, but also to underwrite a portion of the commercial loan. This takes away a great deal of the risk from the lenders and enables them to be more flexible in their offerings. Because the Federal government is taking on a portion of the risk, lenders are able to grant loans to small businesses and individuals that would otherwise not meet their criteria.

Because of this, however, lenders are the ones to set the interest rate and it might vary from lender to lender. While this can be confusing, if a borrower is organized and detailed oriented, this will not be a problem.

Even still, not all businesses are eligible for a loan through the Small Business Administration. Because of the risk that the government is undertaking, there are additional requirements from the SBA. Lenders might also have a list of requirements (even if they are lowered from a traditional loan). Some of the basic requirements from the Small Business Administration in lending commercial loans are: the business must be “for profit,” the business must be of a certain size, and the business must be able to show that they will be capable of paying back the loan. A much more subjective requirement is that the business must have “reasonable” equity from the owner or partners.

Not every business is able to obtain a loan from the Small Business Administration. For example, even if a small business meets all of the requirements but is a financial institution or a certain type of insurance provider, they are automatically ineligible for any loan through the SBA.

What if I still don’t know if I am eligible to receive a commercial loan from the SBA for my business ventures in Texas?

If you have looked at all of the requirements and still have some confusion about if you are eligible, the best thing to do is to simply ask. It would be an absolute waste of time to go through the extensive process of applying for a commercial loan through the SBA, only to find out that you were not eligible from the start.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, October 30, 2017

Commercial Loans In Texas – What You Need To Know About Working With the SBA-Part 1 - Benefits

While there are many sources of commercial loans in booming economies, like that of Texas, many small business owners often turn to the Small Business Administration (SBA) for their lending needs. Even though many small business owners find lots of helps with the SBA, there is a lot to the process.

Dealing with the Small Business Administration is like dealing with any other government bureaucracy. The benefits might be very good for you, but wading through the endless amounts of red tape and paperwork can be discouraging to even the most stalwart of pursuers.

But why should a business owner pursue a commercial loan from the Small Business Administration anyway? Why is the SBA different than any other lender? There are actually a number of benefits that an SBA loan has over traditional lenders,

One of these benefits is that the cost of obtaining such a loan is usually lower than it would be by pursuing a similar loan through a bank or other traditional lender. This means that the borrower will have to put forward a smaller down payment (and some SBA loans actually include, or have provisions to include, the entire cost of the loan).

Another benefit that is incredibly appealing to many small businesses is that there are often lowered requirements in order to secure a loan. While many traditional lenders require sources of collateral or an excellent credit history in order to secure a commercial loan, the SBA, for the most part, does not require a borrower to have any collateral. In fact, the SBA often grants businesses loans based on cash flow, rather than credit history. This makes it an excellent source of funding for those business owners who have taken some financial hits in the past. If decent cash flow can be demonstrated, it is most likely that the SBA will be able to work with you to find funding.

Term lengths and interest rates are another appeal of the SBA to small business owners. The repayment terms are usually much longer than that of traditional lenders, with many commercial loans having a term of up to 25 years. That is a tremendously long period of time to pay a loan back in the world of commercial lending. In addition to a more agreeable timetable, the interest rates of loans from the SBA also has the potential (this is not always the case) to be lower than traditional sources and significantly lower than hard money loans. Longer terms and lower rates mean that small businesses can focus on growth, rather than debt.

How can I use the benefits to my advantage if I am looking for a commercial loan to expand my business in Texas?

If you are in a position where your small business needs access to capital, but you are either just starting out or have had some credit problems in the past, the Small Business Administration might be an excellent source of help with a commercial loan to help you achieve your business goals. This could even help you to take advantage of a great business opportunity with a commercial loan in Texas.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, October 15, 2017

How to Find the Right Commercial Lender for Your Business Loan Needs

When you determine that you are ready to obtain a loan for your company, it’s important that you do your research in all areas. One of the most important things to do it find a commercial lender that you feel confident will get the best loan terms for you.

The world of commercial loans can be complex and confusing. That’s why it’s all the more crucial to find a lender that will make your loan the priority. Your commercial lender has the power to negotiate better rates, terms, and repayment structures, and can point you in the right direction throughout the process of applying for a loan.

When you are seeking a loan for your company, there is no shortage of options. There are various types of loans that are specific to certain business needs, such as equipment financing, and there are even short term and long term loans that are defined by their loan amount and payback timeframe. If you are seeking your first loan, the waters can quickly get murky and you can easily become frustrated, and even make a hasty decision just because you are so weary from the process. Seeking the counsel of a commercial lender can help you avoid the pitfalls associated with applying for a first time loan.

Traditional banks can serve as a direct commercial lender when it comes to their commercial offerings, but working with conduit lenders is another option. This means a conduit lender can help approve a loan and maintain it for a specified amount of time. After that term, however, they can sell it to a third party agency that is security backed. This is typically done as a short-term investment called securitization. Loan payments are designed in this type of financing to avoid prepayment, which allows for a great deal of security.

Pretend you are interviewing an employee when you meet with a lender

Consider it an interview for the job of being your lender and advisor. When you talk to commercial lenders, make sure you ask plenty of questions about their area of expertise and if they have ever worked with a business similar to yours, with similar loan needs and budgetary restrictions. Getting testimonials is a good idea, too. Before seeking commercial lenders online, ask around – talk to other small business owners to see if they have pursued loans with the assistance of a lender and if they had a favorable experience. If you have a solid relationship with your bank, that is a good place to start as well.

Take heed: not every commercial lender will handle your loan application in the same way.

Sometimes there is no “hard and fast” way to tell if you have found the right lender for you. Some of it is about trust. Some of it may come down to customer service or a “feeling” that this person has your company’s best interest at heart. Regardless of how you proceed with your loan, make sure you are happy with all the terms before signing any documentation. It’s also a good idea to have an experience financial attorney look over the agreement to ensure there are no hidden fees or “fine print” that your lender failed to mention. All in all working with a lender should be a win-win situation.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Monday, October 9, 2017

Strategies For Negotiating With Commercial Lenders

In order to get the best rates and terms for your commercial loan, you are going to have to negotiate with commercial lenders. However, there are strategies that you can use to enhance your chances of successfully getting the terms that you want.

If you are like most borrowers, you might feel like you are at a disadvantage when it comes to dealing with commercial lenders. They know more about the process and they have something that you want. But this does not necessarily give them all of the power. In fact, you, as a borrower, do actually have power to wield in negotiations with lenders.

One of the biggest strategies that you have as a borrower is your ability to walk away from a lender. It might not always seem like it, but they want your loan. It is the way that they make money. Even though you are coming to them for the loan, commercial lenders only get paid on loans that are actually underwritten and taken, not on inquiries. This gives the borrower a great deal of power.

The best way to use this power is to play different lenders off against each other. Rather than directly negotiating with a lender, get them to offer better terms by letting them know that you have other options that are better. Commercial lenders are not going to drop their rates and terms easily if they know that they are your only option. This would only cost them money. But, if they might lose your business if they do not adjust to your needs to keep it, they are far more likely to drop their rates without you having to do any negotiating whatsoever.

Another strategy is to front end the majority of your negotiations. Once the application process has started, it is very difficult for a borrower to find any leverage to have anything in the deal changed. But before you sign on that dotted line, the lender does not know if you are going to sign or walk away from the deal. This, again, give you the leverage that you need to make sure that your critical issues are addressed properly by the lender.

These sound like great strategies for negotiating with commercial lenders, so what could possibly go wrong?

Now, this does not mean that you should be terribly aggressive about this tactic. Doing so in the incorrect manner might backfire. So, it is okay to play lenders against each other, but do not go overboard with it. Threatening and being combative is not going to win you any battles in this, and might end up burning you tremendously.

And when it comes to negotiating before you sign the application, make sure that you limit your demands to what is actually critical to you. Decide what this is going in to the negotiation and do not overreach. If you have too many demands, you are likely to upset the lender and working with you is going to look like more of a hassle than it is worth. So make critical demands before you sign that dotted line, but convey to the lender that you are detail oriented and not overreaching.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Why Do Commercial Mortgages Fail To Get Funded?

There are a variety of reasons why commercial mortgages fail throughout the process. It is the job of both the lender and the borrower to ensure that the loan process goes smoothly and does not fall apart at the last minute, but how can you make sure that your loan does not fail?

Even though a lending application has been approved and the process of finding an underwriting is well under way, there are still a number of factors that have the potential to make things difficult for the actual funds to be dispersed. As a borrower, the best thing that you can do to prepare for such an issue and prevent it from happening is to stay informed and ask questions. But what questions should you ask about commercial mortgages? Here are some suggestions:

-How is the Loan to Value determined?

This is important to understand right out of the gate, as it significantly affects both the security of a loan and the amount that a lender is going to be putting out. A borrower most certainly would not want to have the property overvalued by them only to find out that the lender has its value at a significantly lower price. Commercial mortgages are begun based on the estimates of the owner, but are completed based on the assessment of the lender. This will not only reduce the amount of the loan, which will surprise the borrower, but it also has the potential to prevent the loan from being completed altogether.

-What costs are associated with closing?

Again, this needs to be something that is well laid out at the beginning of the process. If closing costs are too high for you, as the borrower, to pay, then you will not be granted the loan. Imagine getting to the end of the process with your commercial mortgages, only to find out that you don’t have enough cash on hand to seal the deal. This will leave a sour taste in the mouth of the lender and has the potential to affect other commercial loans you might make in the future.

-Will I need a sponsor?

If you do not have enough experience in the industry, or if your financial situation, both personal and business-wise, are not up to the standards of the lender, they might require you to pursue a sponsor of some sort. This might be something that they require as the application process advances. It is simply to provide more security for their commercial mortgages. If you are going to need a sponsor and are caught off guard by this, it could lengthen or entirely end the process.

As a potential borrower, looking at various commercial mortgages, how do I get the answers to these questions?

The best way to approach this is to ask lenders directly, as all are slightly different. Even better than that would be to get their answers in writing so that you have a reference to compare lenders and also to protect yourself if something were to go wrong with your loan. With a little extra effort, you can ensure that you succeed where many commercial mortgages fail.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, October 8, 2017

Is One Commercial Lender Better Than Any Other?

When you venture out to seek funding for a commercial real estate project, the number of options can appear to be daunting. But which one is best for you? And is there really any difference between one commercial lender and any other?

In the commercial lending industry, there are a variety of sources of loans for borrowers, depending on a variety of factors, such as credit score, down payment size, property value and security collateral. Each type of commercial lender has different qualifications and benefits for their borrowers, which makes choosing the right type of lender highly subjective.

One type of commercial lender is a life insurance company. In fact, these lenders have the best rates and terms on the market. This, however, is most likely not going to fit the needs of any borrower with the exception of a very small few. Typically, receiving a loan from a life insurance company not only comes with a very large down payment (nearly half), but the loan is usually over $5 million. There are also very strict guidelines for the types of property that can be acquired with a loan from a life insurance company. If you manage to secure a loan, you are in a very good position for commercial real estate.

Another commercial lender with excellent terms are commercial mortgage-backed securities (CMBS). These lenders also deal with very large loan amounts and usually involve the purchase, building or renovating of multi-family housing units, offices spaces or large retail areas. CMBS lenders do not usually work with loans smaller than $3 million, but they are much more likely to deal with properties that need work, unlike life insurance companies.

One of the newest players in the commercial loan market are credit unions. Not only do they typically have better rates than commercial banks, but they are usually more localized and willing to work with business owners in the area. They have location restrictions on most of the properties that they are willing to finance and the loans that they grant have a tendency to be on the smaller side of commercial real estate (around $1 million).

The quickest type of commercial loan provided by a lender is a hard money loan. These are usually for much smaller amounts, but have a much higher interest rate. All things considered, however, they are much easier to qualify for and have much shorter repayment terms.

With all of the different types of loan and qualifications, how do I know which type of commercial lender is best for me?

The first thing to do is to start asking questions. If you are seeking a loan for a property, talk to lenders and figure out what will work best for you. It is better to spend some time figuring out where your property falls with a commercial lender than to apply for a loan that you will not receive. Or, even worse, to be granted a loan that doesn’t fit your needs and will end costing you in the end. Research requirements and the types of properties typically served by lenders in your area.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, October 1, 2017

Understanding REO Commercial Mortgage Texas

Purchasing a commercial property can be complicated. But what does it mean for your commercial mortgage Texas when you find the perfect property is an REO?

When you are searching for a commercial property you might find many options but you will want to be sure that you understand all of the real estate terminology that can have an impact on your ability to obtain a commercial mortgage Texas. One of the terms that you might be unfamiliar with is REO. The price of an REO property might make it very appealing but you need to understand that there can be a few risks associated with these properties.

The term REO is an acronym for “other real estate owned”. It is a common accounting term for a real estate property that is owned by a bank. Basically this means that the property was foreclosed on by the lender. The property is then placed in an auction by the local government at the county or state level. The lender gets to set the opening bid amount for the property and it normally will include fees and the balance of the loan. In some cases, that places the property above the current market value. In these cases, the property rarely sells at auction. Then the lender takes possession and it becomes an REO property.

Purchasing an REO commercial property can have more risk involved than purchasing another type of property. In many cases, the property has been vacant for some time and could be in disrepair or even have been vandalized. You will want to try to have a full inspection by a qualified professional before you consider making an offer on the property. The current condition of the property can have a huge impact on your ability to get a commercial mortgage Texas.

Know the Market

When a commercial property does not sell at auction, the owner is normally more motivated to drop the price and get it sold as quickly as possible. This can be great if you make an offer quickly but you should expect other potential buyers to be placing competitive offers. For this reason, it is good to have your financing in order and be ready to apply for a commercial mortgage Texas. It can take a few weeks or months to complete the process and you don’t want to lose a great opportunity.

Understand the Process

Buying a commercial property or an REO commercial property can be a complex process. But knowing what to expect and how to complete the process can eliminate a lot of the unneeded stress. If you are considering an REO property, then you might want to begin the prequalification process with a lender who is familiar with financing REO commercial mortgages. The purchase process might take a little bit longer than buying a conventionally owned property, but you could get a much better than market value price on an REO property. Understand that with an increased risk comes the potential for a greater reward.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Qualification for Hard Money Commercial Loans Texas

Conventional commercial loans Texas can be hard to qualify for. But a hard money lender offers a much more stream lined and speedy loan process.

Hard money commercial loans Texas require much less paperwork and third party reports than a convention loan. This is a great benefit to a borrower who needs funding quickly or does not have the credit history needed to qualify for a bank loan. Knowing what it takes to get a hard money loan will help you to decide if this is a solution that you should explore more in depth.

Some hard money commercial loans Texas lenders have an application process that is similar to a conventional lender but others focus on asset based lending. In the case of the asset based lenders, the primary concern is not the value of the commercial property that you are buying but the value of the assets that you are planning to use as collateral. The value of the assets will even be more important than your level of credit or your credit history. In some cases the assets can be inventory or equipment. In other cases, it could be accounts receivables or other property that the business owns.

Regardless of the type of collateral that you will provide, you will need to submit a certain amount of information to the lender. This is just the process for any loan request. But what you will not need to submit is the prior financial history of your business. You will also need to provide information about the reason for your request. In most cases, commercial loans Texas lenders will want to know a little bit about the property and also see photos of the interior and exterior of the property.

What Makes Hard Money Lending Different

Because you are requesting a hard money loan, you need to expect that the interest rate is going to be higher than a conventional commercial real estate loan. The lender is evaluating the risk associated with your business and its ability to repay the loan. They are also evaluating their ability to recover their investment should you fail to keep up with the payments. This could include an evaluation of how quickly and effortlessly they could liquidate your collateral assets. Selling property could be much faster than trying to find a person who is interested in buying old equipment or merchandise which was a part of your inventory.

It is a Viable Option

Even though the interest rate will be higher than a conventional lender, a hard money commercial loan could be a good solution for your business. If you have no credit history or cannot verify cash flow then securing a conventional loan could be impossible. But be sure that you fully understand the terms of the loan agreement before you sign the document. Just because the lender is not a loan company or bank does not mean that the contract will not be legally binding.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Featured Post

Thursday, November 2, 2017

So you have decided that obtaining a loan from the Small Business Administration is a route that you would like to take. And you have also determined that your small business is eligible, according to their guidelines. Here is what you need to do to prepare for an SBA commercial loan in Texas.

What strategies can I use to ensure the highest degree of success with my commercial loan in Texas?

Because of this, however, lenders are the ones to set the interest rate and it might vary from lender to lender. While this can be confusing, if a borrower is organized and detailed oriented, this will not be a problem.

What if I still don’t know if I am eligible to receive a commercial loan from the SBA for my business ventures in Texas?

Monday, October 30, 2017

While there are many sources of commercial loans in booming economies, like that of Texas, many small business owners often turn to the Small Business Administration (SBA) for their lending needs. Even though many small business owners find lots of helps with the SBA, there is a lot to the process.

How can I use the benefits to my advantage if I am looking for a commercial loan to expand my business in Texas?

Sunday, October 15, 2017

When you determine that you are ready to obtain a loan for your company, it’s important that you do your research in all areas. One of the most important things to do it find a commercial lender that you feel confident will get the best loan terms for you.

Pretend you are interviewing an employee when you meet with a lender

Take heed: not every commercial lender will handle your loan application in the same way.

Monday, October 9, 2017

In order to get the best rates and terms for your commercial loan, you are going to have to negotiate with commercial lenders. However, there are strategies that you can use to enhance your chances of successfully getting the terms that you want.

These sound like great strategies for negotiating with commercial lenders, so what could possibly go wrong?

There are a variety of reasons why commercial mortgages fail throughout the process. It is the job of both the lender and the borrower to ensure that the loan process goes smoothly and does not fall apart at the last minute, but how can you make sure that your loan does not fail?

As a potential borrower, looking at various commercial mortgages, how do I get the answers to these questions?

Sunday, October 8, 2017

When you venture out to seek funding for a commercial real estate project, the number of options can appear to be daunting. But which one is best for you? And is there really any difference between one commercial lender and any other?

With all of the different types of loan and qualifications, how do I know which type of commercial lender is best for me?

Sunday, October 1, 2017

Purchasing a commercial property can be complicated. But what does it mean for your commercial mortgage Texas when you find the perfect property is an REO?

Know the Market

Understand the Process

Conventional commercial loans Texas can be hard to qualify for. But a hard money lender offers a much more stream lined and speedy loan process.

What Makes Hard Money Lending Different

It is a Viable Option