2010 has been quite an interesting year for most folks in the commercial arena and I suspect 2011 is going to be even more interesting. Many of us in the financial sector found ourselves heavily involved in the process of re-educating clients. And if you’re wondering why, here is the reason. During the past decade a plethora of commercial loan products have been available to investors. Credit was accessible by almost everyone, lending guidelines lenient with limited documentation, real estate values became artificially inflated, and interest rates driven to their lowest point in decades by the central bank. But nothing lasts forever and so is the case with the easy credit era. One of the differences between yesterday and today is that back then banks were competing for clients while today clients are competing for money.
I often hear the “But I didn’t have to do this when I last applied for a commercial loan” so I thought of writing down a few good ideas from the lender’s side of the fence. Therefore have patience and walk with me for a few minutes the path that could lead to a loan approval for you. Whether you’re ready to purchase a new commercial property or if you have a need to refinance your current loan the following ideas will come in handy for you. So let’s start with whom you’re going to approach and how selective you must be in your decision.
Idea #1 — Today there are still plenty of viable lenders that make loans via brokers. Brokers are seen as the gate keepers of the kingdom. A good broker knows if your transaction is feasible and he’ll know how to present a loan package worthy of the lender’s time. You can benefit from the experience of a seasoned broker because he knows what lender would have an appetite for your particular transaction need. I know bankers have been trying hard to blemish the brokers’ reputation but many honest and hard-working brokers are still willing to work after hours and week-ends to find a solution for you. How many bankers were you able to reach after 5:00 p.m.? Besides, bankers love their guaranteed salaries plus commission compensation while brokers don’t make a paycheck until their clients’ loans close. The bottom line is that you’d want to associate yourself with honest and experienced professionals. And don’t always assume that a friend’s referral would be your best option. I once used a contractor that was highly recommended by my dear neighbor. Well, let me just say that it was not a happy ending. » Read more: 8 Ideas to Get You Closer to a Commercial Loan Approval
