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Commercial Financing - Tips and Advice

Many people assume that the world of commercial lending is akin to what they find in residential and personal lending. Unfortunately, it is not. While it seems the same upfront, it is really like the difference between speaking Chinese and English.

One of the keys to successfully obtaining commercial financing is knowledge. The more you have, the more likely you are to get the money you desire. Here are some tips that can get you over the hump.

Get your documents together. Commercial loans are much more documented oriented than personal loans. Make sure you know what you need before applying and have it in triplicates. Don't assume you can pick something up at the last moment.

Toxic properties are a nightmare for lenders. Specifically, properties with toxic contamination. If a lender provides financing for the purchase of such a property, it becomes liable for the clean up costs with you. Toxic reports are mandatory.

If you are refinancing a property loan, make sure you have the critical documents the lender is going to want to see - the payoff amount, the survey and title. Ask to see if the lender will require the original appraisal as well.

When applying for a new loan, the sales contract for the property must be complete. You cannot get "pre-approved" when it comes to most lenders. This means you need to be as prepared as possible before submitting your docs.

Understand prospective cash flow positions. Many borrowers make the mistake of squeezing into a loan only to realize the property doesn't really support the financing. This is a quick trip to bankruptcy and financial ruin.

Lots of cash flow is tempting to certain lenders. If you have a lot of transactions leading to big cash flow, commercial retail banks will bend over backwards to get the account. This includes financing your commercial loans.

If this is your first financial loan, a trip to SCORE is also a vital step you should consider. Why? SCORE is made up of retired business executives that are giving back to the business world. Guess who knows the ins and outs of commercial lending? They do.

Commercial bridge loans typically have a term of six months to a year. The interest rate can be outrageous, but is highly negotiable. Don't hold back. Play just as rough as the lender on the term. Try to find two lenders and pit them against each other.

Get your business plan in order. Commercial loans usually involve a lot of money and lenders want to see borrowers that have both a plan and are organized. Give them what they want and they will give you what you want.

Be very conservative on the value of any commercial property you are buying. The negotiated price is not the value as far as the lender is concerned. Make sure you don't buy a property that you can't get sufficient financing for.

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Find commercial loan information at CommercialLoanStop.com.

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