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February 17, 2014 | Author admin

http://www.lendinguniverse.com/ commercial lending mortgage On the other hand, if the amount of money decreases or if its rate of movement slows down, then p…

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Overcoming Business Loan and Commercial Mortgage Finance Problems

September 16, 2011 | Author admin

Overcoming Business Loan and Commercial Mortgage Finance Problems

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Home Page > Writing > Non-Fiction > Overcoming Business Loan and Commercial Mortgage Finance Problems

Overcoming Business Loan and Commercial Mortgage Finance Problems

Posted: Oct 30, 2007 |Comments: 0
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One of the most difficult business loan scenarios occurs when a commercial borrower is rejected for either a commercial mortgage or commercial loan. There are five specific reasons that account for a healthy majority of business finance rejections. These common business financing application problems are particularly applicable to commercial real estate investment property financing.

Commercial borrowers are likely to be confused when their commercial loan application is turned down and will probably be unsure as to why it happened and what to do next. For each of the five major reasons that a bank might decline a commercial mortgage, a practical strategy is provided for converting the declined commercial real estate loan into an approved business loan.

Two reasons (tax returns and business plan requirements) could impact virtually all businesses. Many business loan officers will begin their business loan and commercial mortgage review process by stating “We will need to see at least three years of tax returns” and “Can you show me your business plan?” before proceeding.

Commercial projects are frequently too unique for traditional commercial banks. In these situations (even if a commercial borrower has favorable tax returns and an adequate business plan), it is not unusual for the business owner to be declined for a commercial mortgage loan by a traditional commercial lender.

The reasons described do not involve unusual issues. It is likely that two or more of the reasons will be applicable for many commercial loan situations.

Commercial Mortgage Rejections: (1) Special Purpose Commercial Real Estate –

Reason Number One for commercial mortgage rejections: The bank does not generally make business loans for the type of business involved or imposes special requirements that make the commercial loan impractical for the commercial borrower. For example, fewer banks are making commercial mortgage loans for restaurants.

In a similar fashion, an auto service business is often given expensive and unnecessary environmental stipulations. There are many special purpose commercial properties such as golf courses, campgrounds, churches, funeral homes and gas stations that most traditional lenders have eliminated from their commercial lending program.

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Strategy Number One for converting the disapproved business loan into an approved commercial mortgage loan: For most business owners, there are reasonable commercial loan options beyond traditional commercial lenders.

There are action-oriented non-traditional commercial lenders that will offer commercial mortgage loans for most special purpose commercial property situations. The best business loan could be available only from a non-traditional lender when a traditional lender won’t provide the necessary commercial real estate loan.

Business Loan Disapprovals: (2) Tax Returns Required –

Reason Number Two for business loan rejections: A loan underwriter finds an issue on tax returns that disqualifies a business borrower under the bank’s lending standards. This “issue” will often be inadequate net income, but when commercial loan underwriters analyze income tax returns, there can be a wide variety of other possibilities which produce the same disapproval.

Strategy Number Two for converting the rejected commercial real estate loan into an approved business loan: Commercial borrowers will never have this reason to worry about if they have applied for a “Stated Income” commercial mortgage loan. Very few traditional lenders use a Stated Income process (no income verification, no tax returns, no IRS Form 4506) for a commercial loan.

Borrowers should search for commercial lenders using Stated Income commercial mortgage loans. Unfortunately, this suggested solution will not work for all commercial loans because of a normal maximum loan amount of about $2-3 million for a Stated Income business loan.

Commercial Loan Rejections: (3) Cash Out Limitations –

Reason Number Three for commercial mortgage loan and business loan disapprovals: When a business attempts to refinance their commercial property loan and wants to get significant cash out, it is normal for a traditional bank to restrict what the funds are used for and to severely limit the amount of cash received. Even though the bank is willing to make the commercial loan, if they won’t provide the cash required by the commercial borrower, this is similar to rejecting the loan.

Strategy Number Three for converting the declined commercial mortgage into an approved commercial real estate loan: As mentioned above, there are other commercial lending options available. The commercial borrower’s mission (and it is not impossible at all) is to use a commercial real estate lender that will allow them to get much larger amounts of cash out of a commercial refinancing without restrictions on what they do with it.

Commercial Real Estate Investment Property Loan Disapprovals: (4) Cross Collateral Requirements –

Reason Number Four for commercial mortgage loan and business loan disapprovals: The bank will not make a commercial loan without sufficient collateral such as a lien on personal assets.

Strategy Number Four for converting the disapproved business loan into an approved commercial mortgage loan: Business borrowers should seek out commercial lenders that will not “cross collateralize” assets as a stipulation for getting business financing. This will result in more flexibility for the commercial borrower and preclude unwise (and unnecessary) connections between business and personal assets.

Commercial Real Estate Loan Rejections: (5) Business Plan Requirements –

Reason Number Five for commercial mortgage loan and business loan disapprovals: A bank’s loan officer determines that the business plan does not support the needed commercial loan.

Strategy Number Five for converting the disapproved business loan into an approved commercial mortgage loan: Commercial borrowers should save money and avoid possible delays by working with a lender that does not require a business plan due to these primary advantages:

(A) Reduce commercial loan costs by thousands of dollars. A common range for an average business plan (prepared to typical bank specifications) is $5,000 to $10,000.

(B) Shorten the business financing closing period. Business plan preparation is likely to take 1-2 months or more.

(C) If the lender does not require a business plan, there is one less item standing between the commercial borrower and their approved commercial loan.

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Steve Bush –
About the Author:

Steve Bush and AEX Commercial Financing Group provide business opportunity loan – business finance help, commercial mortgage – business loan advice and publish AEX Commercial Real Estate Investment Property Financing Reports.

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Commercial Refinance Mortgage Commercial Loans: What You Should Know

July 23, 2011 | Author admin

Commercial Refinance Mortgage Commercial Loans: What You Should Know

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Home Page > Finance > Commercial Refinance Mortgage Commercial Loans: What You Should Know

Commercial Refinance Mortgage Commercial Loans: What You Should Know

Posted: Sep 23, 2010 |Comments: 0
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A loan is a kind of lending product that an individual requires from a fiscal organization in order to fulfill his / her economic needs. In return, the user is liable to pay interest along with the total amount that he / she obtained in the form of loan. There are various kinds of loans offered to people depending upon their needs. Commercial loans are one kind of these financial products.

A commercial loan, just like the name suggests, is given to a person to fulfill his / her commercial requirements. The commercial requirements may be to fulfill an order, send a consignment, purchasing raw material or new machinery and the like.

Therefore, the main reason for getting a business loan is very different from other financial products in the way that it is intended to generate income. The funds received through commercial loan can be used for manufacturing or producing or for any other business needs. The amount offered in this kind of loan is usually larger than any personal loan.

Features of Commercial Loans

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Just like it has been mentioned earlier, people take commercial loans to produce income Big business houses take commercial loans from banks to fulfill their production needs, or to complete a tender or for some other requirement of the company. The most common purposes of commercial loans include:

· Commercial loans are not considered for the purpose of domestic consumption.
· Banks offer commercial loans only to the business class men and women.
· Banks provide these loans for professional purposes at an interest rate that is lower in comparison to other types of loans.
· The time given to the borrower to repay the loan is usually lesser than other loans.
· The amount of money offered in commercial mortgages is always higher in comparison to other private loans.

Therefore, it can be said that commercial loans are the cheapest kind of lending product in the financial market as compared to any other borrowing product.

Requirements for Getting Commercial lending products

There are some specific requirements for getting a commercial loan approved from a financial institution. These are:

You have to clearly define your investment plans to the financial institution for which you are requesting the loan. You will have to get your material, goods or machinery insured by a reputed insurance company in order to ensure the repayment of loans amount to the lender in the event of an accident, fire or any other mishap. You will also have to present the details of the company you are dealing with, and the way in which you will use the loan amount, as well as any other information that the lending company might require.

Maintaining the accounts of the company is also essential, particular before and after having the loan sanctioned to you. Doing all the above mentioned steps is essential to have a commercial loan sanctioned.

To wrap up, draw the benefits of commercial loans in meeting your business needs and paying back in easy installments.

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To uncover additional advice or to book a free consultation please click this link: <br /><a rel=”nofollow” onclick=”javascript:_gaq.push([‘_trackPageview’, ‘/outgoing/article_exit_link/3326581′]);” href=”http://www.commercial-refinance.org/commercial-loan-workout.htm”>Commercial Loan Workout Specialist </a>

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Since I am not and have never been late on a payment, my mortgage holders will not discuss modifying my loans. My income will continue to decrease. How can I be procative about getting some releif?
Our loan was modified and it was only about $160 less than our mortgage and the term is extended to 40 yrs we took it anyways as we were desperate that time, but can we still apply for refinance this
I’m in the process of a foreclosure, and I have a 1st & 2nd loan with the same bank. I know the 1st loan qualifies for the mortgage forgiveness act? What about the 2nd loan? I live in California

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The Commercial Mortgage Market Will Remain 'Limited' in 2011

May 29, 2011 | Author admin

The Commercial Mortgage Market Will Remain ‘Limited’ in 2011

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Home Page > Finance > The Commercial Mortgage Market Will Remain ‘Limited’ in 2011

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The Commercial Mortgage Market Will Remain ‘Limited’ in 2011

By: Timothy Frodsham
Posted: Apr 11, 2011

There is still a lack of commercial mortgages and business finance in the property according to a new study from a leading UK property group. Jones Lang LaSalle’s 2011 Lenders’ Expectations Report has uncovered that lenders see a difficult twelve months ahead as the anticipate lending less in 2011 than they did in 2011.

The report surveys lenders’ commitments to commercial mortgages and property in the UK. Whilst more of those questioned were willing to lend between £50 and £100 million in 2011, fewer thought they would be willing to lend above £100 million.

So as you would expect the issues that have affected the global economy are having a significant impact on the UK commercial property market and the consequential knock on effects for business are impacting growth.

And this is all backed up by the statistics with borrowing on property falling by 7% in the last three month of last year and commercial lending falling to an all time low.

Is it time to jump of a bridge then, finish it now? Maybe it is time for some optimism, founded or unfounded! OK so it doesn’t look so good for this year but next year, 2012, the report suggest a recovery with commercial mortgages exceeding half a billion!

The vast majority of those interviewed for the survey cited a ceiling Loan to Value (LTV) ratio of between 60 per cent and 70 per cent in 2010, though several believe this figure will stay below 60 per cent over the next couple of years. Most lenders do not expect commercial lending to be on offer at rates over 70 per cent in the next decade owing to legislation, new regulations and a lack of available cash.

There was a degree of optimism from a minority of lenders on the issue of LTV; many lenders expect commercial mortgages to be available at higher LTVs from 2012. Just 37 per cent expect the maximum LTV to be above 70 per cent although none expect to see loan to values above 80% by 2013.

The growing office sector is by far the most popular area in commercial property in attracting new lending. The sector an average weighting of over 40 per cent for each of the last three years. Commercial lenders are confident that the commercial office market is the easiest to profit from and the most transparent which is why they are more likely to consider commercial lending in this area, especially in London.

Andrew Hawkins, a lead director in City Investment at Jones Lang LaSalle, said: “The lending markets are quick to change and fluctuate, and it has become clear throughout our interviews that credit conditions are shifting. A year ago we were predicting greater liquidity than we are now experiencing and the outlook is similarly challenged. There is without a doubt a polarising of debt provision with borrowers with strong existing relationships are well placed to access the lending markets, whilst although not impossible for new entrants, the challenges are still there.”

If you are thinking about building a portfolio of commercial property, it could still be a difficult couple of years ahead. You are going to have to put down a higher deposit than you normally would have to (around 30-40 per cent) and there is also likely to be some major restrictions on which lenders you can do business with, particularly if you are looking for a large loan.

Timothy Frodsham – About the Author:

Timothy Frodsham writes for Just Commercial Mortgages the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.

Source: http://www.articlesbase.com/finance-articles/the-commercial-mortgage-market-will-remain-limited-in-2011-4576765.html

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Commercial Mortgage Brokers

May 24, 2010 | Author admin

Commercial mortgage brokers, focus their practice on commercial properties. There is little differences between commercial mortgage brokers and residential mortgage brokers. The main difference obviously is that one broker focuses on commercial lending and the other focuses on residential lending.

A Commercial mortgage broker is a middle man of sorts. He works for businesses to secure lending for property that will be used for business purposes. There is a commission for this service that the broker provides. Typically the commission is a percentage of the overall loan. This fee is usually rolled into the loan. The idea behind the practice is that a broker can “shop” the loan for the best rates and overall best deal.

Typically a commercial mortgage broker will have relationships in place with lenders and can easily view a loan application and know where to apply, this cuts back on the time it would take for a business to shop their own loan application. The broker acts as a go between the lender and the business and will advise the business of an special requirements that the lender will have to secure the funding.

Commercial lending is a lot more complex than residential lending. There is more paperwork to fill out, and most commercial loans start at a minimum loan amount. In addition there are more lending options available for commercial funding then there are for residential funding.

Commercial mortgage brokers are a good option for businesses because they take the responsibility off the shoulders of the business to secure financing to build the business or to expand an existing business.

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Seven Commercial Triggers – Beating the Odds – Getting Your Commercial Mortgage Closed

March 24, 2010 | Author admin

Are you unrealistic in your expectations? If you have been on a deserted island, just landed on this planet or been living in a cave somewhere for the last couple years, you may have some notions that anything goes and you get a commercial loan approved and funded. This is what is known as unrealistic expectations.

If you think that statement has some humor in it, I have to tell, that everyday I am dealing with brokers and borrowers who fit that description. Worse yet, they are failing to recognize the gravity of the economic situation and how that affects underwriting and credit risk assessment or credit risk management.

You want a commercial loan for your client or yourself, now what? The first and foremost idea that you need to get in your head is that you have no control over the process or terms. This is not a borrower’s market–it is a lender’s market. In simple terms, you don’t have much ability to negotiate terms and/or conditions with a lender because the lender can afford to be very choosy it what they will approve and fund.

What do you need to know about lending today?You may have read news articles or heard stories on the TV and radio news programs on how the residential real estate values have nose-dived across the nation. Being a homeowner myself is not the greatest news to be constantly reminded of. But how does this affect commercial lending? In a word: Directly. As house values drop so do commercial values. This means that lenders are going to consider that dropping values is going to be a continuing trend and lending maximums are going to be reduced to off-set the risk of devaluation of property.

Translated, this means that the maximum LTV (Loan-to-value. The ratio of value to equity to what you owe on the property) is going to be scaled back to anticipate dropping values. In addition to that adjustments, lenders will also reduce the maximum loan amount you can obtain. Finally, the lender will limit certain types of transactions to even more restrictions to protect against anticipated losses.

Note the word anticipated. In this type of economy, anticipated can be better associated with ‘fear of’ rather than anything positive

What are the SEVEN triggers lenders are looking at in approving your commercial loan?

1) CASH: They want to see that you have ‘skin’ in the game. The lenders are typically looking at you have at minimum of 25% equity position into the transaction. Exceptions to this would be under SBA, which has a minimum cash position of 10% into a transaction.

2) CREDIT: They want to see strong credit for all of the principals (those who own 20%+ of the company). This means no mortgage late payments of any type. No prior foreclosures, short sales, settled, collection, charge off or other negative items. They do not want to see the personal credit maxed out either or a lot inquires into credit over the past 12 months.

3) RESERVES: They want to see strong net worth with at least 10-20% of the proposed loan amount in liquid assets.

4) CASH FLOW: The property must cash-flow at above minimum DSCR requirements, especially if the mortgage applied for is a variable rate. If the DSCR required is 1.20, expect the credit officer to look at ability of the property to handle rate increases at least 2% above the start rate in relationship to the DSCR. If the DSCR at start rate is meeting the minimum, the credit officer will easily determine that if the rate goes up 2%, the property will no longer meet the minimum DSCR and therefore decline the loan.

5) STABILIZATION: Business must have stabilized or increasing income/profits. A transaction showing declining income or increasing vacancy will be a big trouble sign and will more likely than not lead to a decline–even if all of the the other components are stellar.

6) PROPERTY/BUSINESS TYPES: The more general the property type, the more likely it is it will be approved. Single tenants, single use or special use property types and properties/business types that suffer more dramatically in tough times are harder to close to impossible. Examples of difficult properties would be; auto dealerships, hotel/motel, restaurant/bar, land/lot loans, construction projects of any type, properties where owners/tenants are real estate/mortgage and or finance companies or rehabilitation projects.

7) CASH-OUT REFINANCE: Cash our mortgage are another sore subject for lenders today. In most cases cash out is going to a cause for decline, especially if the reason is for ‘working capital’ (again SBA 7(a) line of credit maybe the best option here). However, if the cash out is reasonable (10-20% of the total loan amount) and the reasons make sense (buying out partners, consolidation of business debt, acquisition of additional property), then cash out is still available.

What if you get a LOI or Conditional Approval and you don’t like it?I suggest you take the deal and don’t look a gift horse in the mouth. The financing you are taking today isn’t forever. You may have to take it (like it or not) because that may be the only offer you are going to get. I have seen too many people blow off an offer only to circle back around later to see if the offer is still available, only to find out it was a one-time deal.

Case study:We had issued a Conditional Approval on a deal where the borrower’s bank had refused to extend the balance of their loan to complete the renovations to their property. Our Conditional Approval allowed up to $725,000 in cash out to complete the work and up to 80% LTV with a rate of Prime plus 4.5% to be fixed for 5-yrs with a 5-yrs step down prepayment penalty. The borrower rejected the terms citing rate too high and terms to stringent. 45-days late the borrower requests that we re-instate the CA because they can not find financing and their current lender has called the loan due. We told the client that a new CA could be issued, however the rate would now go to Prime + 5.45% and the maximum LTV has been reduced to 70% LTV which meant that they would only be receiving $510,000 in cash proceeds to complete their project. Borrower rejected the second CA. The last we heard is that the borrower is now being foreclosed on by their current lender.

Although this case study may seem extreme and is unfortunate however, I am afraid that it will become a more common story line as this economic crisis continues.

Visit our web portal for more on the commercail financing that we currently offer. www.mycommerciallendingpro.com

Gregg Cochran is the SVP Wholesale Commercial Lending Unit of CFR Mortgage Group, Inc. in Southern California. CFR Lends in 44 states and has been in business since 1979. Mr. Cochran has been with the company since 1992. Mr. Cochran can be reached at 714-731-5282 or via email at cfrgroup@att.net

Posted in Commercial Real Estate Misc. | Tags: Beating, Closed, commercial, Getting, Mortgage, Odds, Seven, Triggers | No Comments »