Commercial Mortgage and Business Loan Lender Problems

Commercial mortgage borrowers should be prepared to avoid certain problematic commercial lenders unless alternative business loan options are impossible. One of the most serious commercial loan situations is a commercial lender that causes problems for their commercial borrowers on a repeating basis.

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 article will not name specific lenders to avoid, but specific examples will be provided to show why informed commercial borrowers should be ready to avoid a variety of business lenders in their search for viable commercial loan solutions. This business financing strategy article will illustrate the significant benefits of avoiding "problem lenders".

Worthless Business Loan and Commercial Mortgage Pre-approvals

An early commercial mortgage pre-approval is often sought by commercial borrowers. The expected advantage to this initial commercial loan approval is that the business borrower can make other business arrangements which are based on the business financing being completed.

Any form of commercial mortgage approval will be treated as a binding action by ethical lenders. Commercial borrowers should expect that a valid approval will not be regularly issued in a day or so.

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.

Why do some commercial lenders provide such meaningless pre-approvals for a commercial mortgage? There are two likely reasons. (1) To motivate the commercial borrower to stop considering other potential commercial lenders. (2) To provide a business loan pre-approval that is similar to a structure prevalent with residential loans.

Since many commercial mortgage loans are arranged by residential mortgage brokers who are frequently unfamiliar with common business 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.

Misleading Yes or No Business Loan Situations

I have previously published a report which describes the unfortunate practice of some regional and local banks to say "yes" when they mean "no". These banks will often impose excessive business loan requirements for commercial financing rather than reject the loan. Commercial borrowers should pursue other commercial loan choices rather than agreeing to business financing terms that are unacceptable.

Think Outside the Bank for a Commercial Mortgage

In smaller metropolitan markets, it is not unusual for a dominant commercial lender to impose harsher commercial loan terms than would typically be seen in a more competitive business financing market. Such commercial lenders routinely take advantage of a relative lack of other commercial lenders in their local market.

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 Property Commercial Loan Appraisals

For commercial mortgage loans, commercial appraisals are an unavoidable part of the commercial loan underwriting process. The commercial appraisal process is lengthy and expensive, so 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.

Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.

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S.A. Bush and AEX Commercial Financing publish the Business Loan - Commercial Mortgage Loan Guide and free Working Capital Loan - Business Financing Reports
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