Few things have changed as quickly over the last several years as the landscape for commercial real estate and business loans, the traditional source for these loans being primarily commercial banks. Since long before Covid19, the lingering effects of the 2008 world financial crisis have continued to show themselves in the business and commercial lending marketplace with regulation driven bank lending contraction. The results have been that banks now limit commercial real estate and business lending to only a very small percentage of their largest and most credit worth customers. As many of you have no doubt discovered the hard way after much wasted time, commercial banks simply do not make these loans to the vast majority of small and medium sized business borrowers.
Because the demand for this type of business credit has remained high, a number of independent, private/direct and network lenders or loan consultants such as Commercial Capital Limited of Florida have started to service real estate and business borrowers. When the bank has declined or not acted on a loan, these types of organizations may be able to provide the commercial real estate or business loan for the current or next project.
There are a few things to keep in mind when you are ready to pursue this type of funding for your business:
1. Because some of these independent organizations may represent more than one lending source, there will likely be several options for the type and terms of loan available for your business or project. In the past there would have likely been a very limited number, if any options available from any particular bank so you want to be sure to investigate and inquire about all of the different types of loans. (commercial/SBA/private etc.), all of which will have different terms, some of which may suite your business better than others.
2. Although many of these loans may be available from non-traditional lenders, most all will have certain credit requirements, many similar to traditional banks. So, review your credit information, including credit scores ahead of time so that you can address any issues in advance. Sometimes small issues can make a large impact on credit scores but may only require a limited amount of attention to correct. In addition, independent lenders and consultants may have supplemental products and can remedy any larger issues.
As well, there may be an alternative way in which the loan is structured for your business that may require an adjustment in the way in which the business is structured or presented. Because independent loan organizations may be experienced with many different types of loans from different lenders, they may be able to assist companies that have been turned down by single source lenders.
3. Many of us may put this off until the last minute, but it is best to assemble your individual and company information ahead of time. You will generally need to provide routine financial information, including financial statement information with such things as a list of creditors, accounts payable and other obligations including personal obligations and business debt; a schedule of assets (personal and business) and their value; tax returns, personal and business and other obligations. Many of these of course are part of your routine business records. To the extent that you are able to assemble these documents in advance, the loan processing time should be substantially reduced.
Each lender will generally a list of loan criteria which may include requirements specific to that lender and will generally issue a continuing stream of requests for additional information depending on the type of loan. Remember that the longer it takes to respond to these requests, the longer the loan process will take.
As with any business, the experience levels and quality of personal differ from independent lender to independent lender. As a part of your search, look at the experience levels and the funding resources available to each of the independent lenders you are looking at.
Perry Douglas West, Esq.
www.perrydouglaswest.com
