Showing posts with label texas commercial loan. Show all posts

Sunday, September 24, 2017

Understanding the Cost of Commercial Loans

Getting approved for commercial loans is great but you need to know what that loan is costing you. Having a grasp on the full cost of the loan is critical to selecting the best loan and lender.
Understanding that commercial loans are not only larger than personal loans but that the terms and costs are different is critical to making a smart choice for your business. Commercial loans are not as simple as consumer loans and you are not evaluated in the same method either. A business is much more dependent on economic conditions than a consumer is when it comes to financial stability. When times are tough economically, most people can keep within their household budget with a few minor changes but a business can be crippled by an economic turn of events. This makes business’s a higher risk when it comes to borrowing money.
As a result of the higher risk of commercial loans, lenders charge a higher interest rate to businesses. And that rate can be much higher for a new business or one that does not have a proven financial history. The lender will also look at the financial health of the company and its creditworthiness to determine the interest rate that it is willing to offer. Another factor is the loan to value ratio. This is basically a way of looking at how much you are asking to borrow as it compares to the value of the property that you are buying. This is because the property is the collateral for the loan and the lender wants to be sure that the property holds enough value to cover the balance of the loan if you default. Commercial property values tend to fluctuate more than residential properties so there is a better chance of the value dropping and the lender foreclosing on a property that does not have a market value large enough to pay off your loan. So unless you are making a substantial down payment then your loan rate will be a few points higher. This is just a little more security for the lender that they will get paid in full, one way or another.
Fees Can Quickly Add Up
In addition to the interest you are going to be paying some fees to your lender and in most cases they are paid up front. You will need to pay for a property appraisal, survey fees and any legal fees that are associated with the drawing up the contract. Sometimes these fees are call loan origination fees or loan application fees but they are basically to cover the administrative costs of the lender. You should also understand that these are nonrefundable fees and that they are simply gone if you are not approved for the loan. For this reason, you want to have your financial documentation in order before you begin the application process.
Confirm the Cost Upfront
Before you begin the application process, it is not unreasonable for you to as the lender for a detailed accounting of their fee structure. This should tell you about any fees or costs that you are required to pay upfront and also any fees that will be reoccurring annually. You will likely not get quoted an interest rate at that time as the lender needs to review your financials before determining the rate but it will give you a good idea of the fees and then you can plug in a general estimate for interest to know the total cost of the money that you are potentially borrowing.

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

Saturday, September 23, 2017

Buyers could get a break under revised appraisal regulations

Regulators recently proposed raising the threshold on real estate transactions needing an appraisal. The new requirements could save borrowers both time and money.
Federal regulatory agencies, such as the OCC and the FDIC, are proposing raising the value threshold at which commercial properties be must appraised. Currently any commercial property valued above 250,000 must get a detailed appraisal before any mortgage can be approved. The new threshold would require commercial properties valued above 400,000 dollars to get an appraisal. The revision was spurred by EGPRA (Economic Growth and Paperwork Reduction Act), an act that requires financial regulators to reconsider existing regulations every decade..The American Bankers Association in particular advocated for this change. The new appraisal standard is meant to reflect both inflation and the increased price of Texas Commercial Real Estate since the threshold was last revised over two decades ago.
According to the FDIC the new guidelines will ensure that roughly 28 percent of Texas Commercial Real Estate transactions won't require an appraisal. Under the new guidelines properties like farms, warehouses and small storefronts valued under 400,000 dollars would only be required to get an evaluation. This process is less detailed and doesn't require a certified appraiser. The change will certainly make things easier for buyers and banks in rural areas where certified appraisers are hard to come by. According to FDIC Chairman Martin Gruenburg, “(This) will be a meaningful reduction in regulatory burden, particularly for rural banks who would be expected to originate many of these smaller transactions.”
The revised appraisal threshold could benefit both banks and
borrowers involved in Texas Commercial Real Estate
An appraisal on a commercial property is both expensive and time consuming. A thorough appraisal can cost upwards of 25,000 dollars depending on the property. Appraisers are certainly against the proposed change claiming it could undermine the soundness of the market. Jim Amorin head of the Appraisal Institute claims “The agencies’ proposal contradicts federal bank regulators’ concerns regarding the state of the Texas Commercial Real Estate market and the quality of evaluation reports.” However raising the threshold will likely only smooth out Texas Commercial Real Estate transactions in the future. Potentially making the Texas Commercial Mortgage process faster and less expensive. Considering how the market has changed since the threshold was last raised, It is unlikely the change will threaten the soundness of the real estate market.
It is important that regulations adapt to the market, revising the appraisal threshold does just that.
Whether or not the proposed change goes into effect it seems necessary that regulations reflect the dynamic and continuously changing Texas Commercial Real Estate market. In spite of the firm objections of appraisers who claim a thorough appraisal is necessary to establish the value of a property, the soundness of the real estate market will likely only be minimally impacted by the proposed change. Factors like inflation have raised the value of Texas Commercial Real Estate transactions since the guidelines were last revised. Eliminating the need for an appraisal in transactions of less than 400,000 dollars may be a small step but it will undoubtedly save banks and borrowers both time and money.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, September 20, 2017

Is there a gap in commercial lending to small businesses?

Data indicates a decline in the smaller loans many small businesses need. Even with the economy in recovery after the Great Recession barriers to credit still persist for many small businesses.
There is a persistent gap in small business lending, particularly when it comes to traditional banks and to smaller loans. According the 2016 Federal Reserves Small Business Credit Survey, the top challenge small businesses faced was a lack of access to financing. Fifty five percent of these businesses sought less than 50,000 dollars in funds with 60 percent getting less money than they requested. All too often small businesses seek financing from traditional banks, the least likely institutions to approve small dollar loans. Traditional banks only meet 52 of the 80 billion dollar demand for small business financing and that number seems to be declining. Clearly smaller businesses requiring smaller loans are finding it difficult to get the money they need.
Small businesses, defined as any business making less than a million dollars in annual revenue, seek financing most often to fund new growth opportunities. 64 percent of small business owners sought loans to expand their businesses in 2016. Additionally many small businesses need financing to smooth out uneven cash flow. The median small business owner keeps just 27 days worth of cash in reserve. The gap in lending to small businesses not only hinders their ability to grow it also makes their day to day financial situation more uncertain.
This persistent decline in small business lending could be down to the impact of regulations on smaller community banks. These community banks are the preferred source of small business financing. The Federal Reserve in Minneapolis estimated that regulations made lending 30 basis points (one hundredth of one percent) more expensive for smaller banks holding less than 50 million dollars in assets. Whatever the impact of new regulations may be, community banks are being consistently consolidated by larger ones. There were just 5,170 banks in the US last year. This number is in stark contrast to the 11,463 banks that existed in 1992. Regulations and the resulting consolidation of community banks may be having an impact on the ability of small businesses to access credit.
The main problem is big banks are less likely to make the small dollar loans and consider small business lending risky.
Small business Texas Commercial Loans are inherently risky and considerably less profitable for big banks. Small business often don't have the detailed financial information traditional lenders require. Big banks often use a slew of statistics to determine whether or not a borrower is qualified. Many small businesses simply don't have the time or resources to gather this information. Without this information traditional banks consider small businesses risker to lend to than their larger counterparts. A million dollar Texas Commercial Loans takes an equal amount of resources to process as a small one. No matter the size of the loan the expense of underwriting is the same. Therefore big banks consistently issue larger loans because these loans are inherently more profitable.
The impact of regulations following the great recession and the consolidation of community banks means small business are finding it increasingly difficult to access financing.
The pressures of the recession may have abated in the banking industry, but the number of small dollar loans issued continues to decline. Community banks, which in the past, served the financial needs of small businesses are disappearing. In place of smaller banks, larger ones are emerging, which see small business lending as risky and expensive. Regulation, consolidation, a lack of information on the part of small business owners and the costs of underwriting are all likely factors to explain the decline in small business lending.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How to Evade Texas Commercial Mortgage Pitfalls

There are a number of common mistakes that many people make when it comes to a Texas Commercial Mortgage. But with some advice, there are ways you can avoid making these mistakes.
First and most importantly, don’t always focus just on the interest rate! The lowest interest rate doesn’t always mean it is the best option. Amortization is also very important. Always keep in mind that the longer the amortization, the lower the payment. This will help give you more time to pay off the Texas Commercial Mortgage. Not only should you compare the interest rate and amortization terms, you should also compare all of the terms and any extra fees.
It is beneficial to be prepared and have a plan. Lacking a clear goal for the property could really hurt you in the end. It is better to already have a plan in place before accepting any opportunities that come your way. Just because it is a good opportunity, doesn’t mean you should automatically take it. Looking ahead to the future and using forecasts, figure out if there is going to be a profit and increase to your revenue in the end. It is a smart idea to consult a professional if you are unsure or have any questions. This will help prevent any misunderstandings before advancing on.
But don’t just speak to an expert, really put some serious thought and time into considering any type of agreement. A Texas Commercial Mortgage needs to make sense on all grounds and be something that is going to be beneficial to your business. Make sure that your investment is going to supply a profit. Sometimes what you think is a good idea, might turn out to not be the case. If you keep getting denied, you need to listen to why and maybe reconsider some things. There is obviously a reason you keep getting denied, so take the time and effort to reevaluate your plan. Also, keep in mind that if the only approval offers that you are getting are coming with high numbers, then the investment might not be in your best interest.
How to Compare Texas Commercial Mortgages
With so many different opportunities out there, it is important to take the time to do plenty of research to compare all of your different options. Shop around for the best deal and compare all of the terms and fees along with the interest rate and other factors. There are many parts to a Texas Commercial Mortgage and you want to make sure you are taking into consideration all of them. And remember to not jump into anything and make a decision right away.
Look for the real deal, but when the right Texas Commercial Mortgage option comes around, go for it!
While conducting your research, you might come across a Texas Commercial Mortgage agreement that you simply cannot pass up. If it comes with everything you are looking for, and you have spent the time to look at your other options, then go for it! Be happy and satisfied with your decision and take it before you lose the opportunity.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, September 19, 2017

The Best Ways to Qualify for Texas Commercial Loans

It can sometimes be tough to qualify for Texas Commercial Loans. There are many things that be held against you and we have gone over the things that penalize your chances of approval. But what are some things you can do to help increase your eligibility?

Credit obviously plays a huge role in qualifying for any loan. You must show that you have excellent credit to even be considered in the running for most Texas Commercial Loans. Having a credit score of at least 680 will almost always guarantee approval. But it is ideal to aim having a credit score of around 700 for any chances of not being denied for extra funding. Having great credit shows that you can responsibly manage your finances. This isn’t the only factor when it comes to getting approved, but having a credit score of around 700 gives you the biggest chance of approval. As mentioned before, if you are struggling with reaching a decent credit score, you can start out with a small loan to help build your credit. Getting approved for smaller loans and making regular, on-time payments will help build your credit effectively for future loans.

Another qualifying factor is keeping a good record of your cash flow. You need to prove to the lender that you are making enough revenue to pay back the loan. If the lender can see that you can afford the loan and trusts you, then you will have a better chance of qualifying. A good way to successfully do this is by having consistent sales along with great bookkeeping.

Even though many lenders have loosened up when it comes to collateral, it still something that is highly considered when getting approved for loans. These certain assets that a business owner pledges to the lender if they cannot make the repayment can add value to your loan since failure to make payments could lead to the right of lenders to seize these assets.

Avoid Pitfalls by Applying for Various Texas Commercial Loans

One important thing to remember is to not get discouraged right away if you don’t have all of these things under your belt. You still have the chance of getting approved for some type of loan, you just need to do research and find out which places do not have such strict requirements. There are various places that may reject you, but with so many options out there for Texas Commercial Loans, there are also a number of places that will approve your application. Just remember to keep your options open and to shop around for the best loan for your business.

The key to Texas Commercial Loans eligibility is stability!

If you can prove that your business is stable and show increasing sales, then you shouldn’t be worried about not getting approved. Managing your money, sales and overall company says a lot to the lender. Try to think of it like selling yourself to the bank to show that you are worthy of getting approved for Texas Commercial Loans.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

5 Smart Questions When You First Time You Speak With A Texas Commercial Lending Professional

Asking informed questions ensures you get the details you need to make strategic real estate investments. These questions also help establish a healthy report with your Texas Commercial Lending professional.

A bit of preparation is key to making any face-to-face business conversation more valuable for both parties involved. Be sure to take this approach when meeting with a Texas Commercial Lending professional. Financing a major investment in a commercial real estate asset is a major undertaking, and your company will want a firm understanding of the type of person they are trusting with their financing needs. Likewise, it helps lenders to locate ideal financing opportunities when the better understand the needs and goals of your company.
That’s why it’s valuable for your company to prepare a few questions before meeting with commercial lenders for the first time. This attention to detail will help get both parties on the same page and set the expectation that your company expects a high level of professionalism from its partners. The following examples provide a simple model for your own list of questions..

Do you have recent experience with similar projects? Ideally, you selected your potential lenders based on the fact that their portfolio included projects that seemed similar in nature to your own. It still bears repeating the question. You’ll want to hear the lender explain in his or her own words how closely these portfolio items resembles your own project.
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If not, what types of projects do you specialize in? Just because your lender doesn’t specialize in your project time does not mean that their financial expertise can’t be put to good use for your company. Ask more about their experience in other industry, then ask about their average loan size. This line of questioning can also help you determine if lender is experienced enough to serve your company’s needs.
What additional costs and fees are associated with the loan? Fees and other closing costs are par for the course when taking out a Texas Commercial Mortgage. That being said, your lender should be as upfront as possible about what these fees are. It never hurts to pressure them about conditional costs that may come up down the road as well.
When can I expect my project to close? A few factors will determine how long this process will take. If your company and its legal team are slow to respond, for example, then the close time could be extended. However, the lender should provide assurances and a timeline of responsive service.
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How long can I lock in a rate? Once you discuss terms with a lender, you’ll want a guarantee the rate you discuss is the rate that gets put down on the paperwork. Be sure to ask about the conditions that must be met before a discussed rate is locked, as well as how before the rate lock expires.

Don’t Depend On Traditional Lenders To Provide The Best Terms

Remember that traditional financial institutions like banks and mortgage lenders are bound by numerous rules and regulations. Often the Texas Commercial Lending terms they offer to businesses are relatively inflexible. Thankfully, an increasing number of private lenders are offering more specialized loan terms.

A knowledgeable, experienced private lender will be happy to answer all of your questions and address each of your concerns.

Use the same strategies mentioned above to get to learn more about a private lender and how they can best support your company’s commercial real estate goals.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Lending Texas: Will past complaints continue to haunt the SBA in the aftermath of Hurricane Harvey?

The Small Business Administration is moving with unprecedented speed to issue emergency loans to the victims of Hurricane Harvey. The question lingers, can the agency move fast enough to give emergency commercial loans to Texas small businesses in need?

The SBA’s past inefficiency in distributing disaster loans has raised the question as to whether the SBA is an effective resource for small businesses in the wake of Hurricane Harvey. The SBA appears to be moving faster than it did in the past. As of September 10^th the agency has approved 100 million dollars in emergency loans. Even with the SBA moving at an unprecedented speed, some question whether local banks are in a better position to issue emergency loans to the victims of Hurricane Harvey. A Law passed by Congress in 2008 enabled the SBA to back privately issued disaster loans, the agency has so far resisted these reforms.

In past disasters on the scale of Hurricane Harvey, like Katrina and Sandy, the SBA failed to approve emergency loans at an efficient rate. The SBA issued 11 billion dollars in disaster loans after Hurricane Katrina. But the approval process took 65 days on average. It was a similar case after Superstorm Sandy. The agency issued 2 billion in loans, but it took on average 40 days for the agency to process each one. In the end the loans approved by the SBA may sufficiently covered the damage caused by Katrina and Sandy. The delayed approval process on the part of the SBA however, left many small businesses unable to cover their immediate financial obligations. Some simply went bust as a result.

In 2008 Congress passed the Small Business Disaster Response and Loan Improvements Act, to speed up the process of approving disaster loans. The law enabled the SBA to partner with private lenders and back privately issued emergency loans. The SBA would guarantee 85 percent of these private loans. In exchange the private lenders would be obligated to approve such loans in as little as 36 hours. The SBA has only implemented one aspect of the law. A program to offer private, small dollars loans of up to 25,000. According to American Banker, no such loans have ever been issued.

A key issue in the aftermath of Hurricane Harvey is whether the SBA has overcome its past inefficiencies. The agency claims it has made improvements since Katrina and Sandy. At a congressional hearing this April, agency spokesman James Rivera cited the flooding in Baton Rouge last August, claiming that it took just 12 days to approve small business loans. Agency spokeswoman, Carol Chastang, says that the reforms of 2008 do not need to be implemented, claiming that the agency can quickly approve unsecured small dollar loans of 25,000.

Even with the SBA’s new found efficiency, the scale of Hurricane Harvey will likely push the SBA to its limits. Private commercial lenders in Texas may need to step in to help small businesses.

The flooding in Baton Rouge, resulted in only 66,000 disaster loan applications whereas Hurricane Katrina resulted in 385,000. By all accounts Harvey’s damages are on par with Hurricane Katrina's. The storm is likely to result in a greater volume of applications for aid from the SBA. Harvey will certainly test the SBA’s capabilities.

In the aftermath of Harvey, banks and Texas commercial lenders, seem more willing to participate with the SBA.

The reforms passed by congress stalled in part because few private lenders were willing to participate in the program. Private lenders reservations seem to be declining, a recent poll by the Coleman Report, a newsletter for small business lenders, revealed that 77 percent of those polled would be willing to partner with the SBA to help provide disaster relief. The agency has for the moment dismissed any such partnership. However considering the agencies inefficiencies in the past a key question remains. Should the SBA remain the only group issuing emergency loans in the wake of natural disasters?

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

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

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Sunday, September 24, 2017

Understanding the Cost of Commercial Loans

Getting approved for commercial loans is great but you need to know what that loan is costing you. Having a grasp on the full cost of the loan is critical to selecting the best loan and lender.

Fees Can Quickly Add Up

Confirm the Cost Upfront

Saturday, September 23, 2017

Buyers could get a break under revised appraisal regulations

Regulators recently proposed raising the threshold on real estate transactions needing an appraisal. The new requirements could save borrowers both time and money.

The revised appraisal threshold could benefit both banks and

borrowers involved in Texas Commercial Real Estate

It is important that regulations adapt to the market, revising the appraisal threshold does just that.

Wednesday, September 20, 2017

Is there a gap in commercial lending to small businesses?

Data indicates a decline in the smaller loans many small businesses need. Even with the economy in recovery after the Great Recession barriers to credit still persist for many small businesses.

The main problem is big banks are less likely to make the small dollar loans and consider small business lending risky.

The impact of regulations following the great recession and the consolidation of community banks means small business are finding it increasingly difficult to access financing.

How to Evade Texas Commercial Mortgage Pitfalls

There are a number of common mistakes that many people make when it comes to a Texas Commercial Mortgage. But with some advice, there are ways you can avoid making these mistakes.

How to Compare Texas Commercial Mortgages

Look for the real deal, but when the right Texas Commercial Mortgage option comes around, go for it!

Tuesday, September 19, 2017

The Best Ways to Qualify for Texas Commercial Loans

It can sometimes be tough to qualify for Texas Commercial Loans. There are many things that be held against you and we have gone over the things that penalize your chances of approval. But what are some things you can do to help increase your eligibility?

Avoid Pitfalls by Applying for Various Texas Commercial Loans

The key to Texas Commercial Loans eligibility is stability!

5 Smart Questions When You First Time You Speak With A Texas Commercial Lending Professional

Asking informed questions ensures you get the details you need to make strategic real estate investments. These questions also help establish a healthy report with your Texas Commercial Lending professional.

Don’t Depend On Traditional Lenders To Provide The Best Terms

A knowledgeable, experienced private lender will be happy to answer all of your questions and address each of your concerns.

Commercial Lending Texas: Will past complaints continue to haunt the SBA in the aftermath of Hurricane Harvey?

The Small Business Administration is moving with unprecedented speed to issue emergency loans to the victims of Hurricane Harvey. The question lingers, can the agency move fast enough to give emergency commercial loans to Texas small businesses in need?

Even with the SBA’s new found efficiency, the scale of Hurricane Harvey will likely push the SBA to its limits. Private commercial lenders in Texas may need to step in to help small businesses.

In the aftermath of Harvey, banks and Texas commercial lenders, seem more willing to participate with the SBA.

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