The Commercial Lending Market Environment

download (72)the National Association of Realtors (NAR) randomly surveyed 49,485 realtors asking them about the housing market conditions in their particular state during that past year. 791 individuals – 1.61 percent – responded. As realtor who works in California, I found it informative to work through the different reports, categorize them according to challenging and easy conditions, and wrap up by comparison to real estate conditions in California during 2015.

Commercial lenders, investors, or anyone interested in buying or selling property may find this analysis informative and interesting. Here it is.

Some states found the market environment to be feasible.

Some states such as Illinois found 2015 to be a booming time for real estate. Agents in Chicago revelled in opportunities.

This broker had this to say:

[… ] Best market in my 40 year history. These are the “good ole days”! – Tennessee The property taxes are out of control, especially for commercial properties.

But another added

The property taxes are out of control, especially for commercial properties.

Other states suffered from their market environment

There were the common gripes: Recession, economic uncertainty, spiking prices, topping default, languishing homes because of unaffordable

The Good and Bad for Equipment Financing

images (41)“I pay for everything in cash, I never finance anything” or “I’ve never had to take out a loan, I don’t believe in it”. Every so often, I encounter this type of feedback from a business owner. The attitude usually goes along with a strong, hands-on work ethic for an owner which has built their business from the ground up. They have worked long hours, suffered through the ups and downs and sacrificed family time and vacations to make their business survive. Their belief is, if they cannot pay for something with cash then they do not need it.

I respect the energy and devotion but I also take note that the strategy seems to apply to small, family owned businesses with a small number of employees which have remained flat in their growth and have stopped expanding years ago. Expansion and reaching new markets are not typically part of their business plan and they are happy with a fixed income often servicing the same clientele they have for years.

The downside of never financing anything is the limited amount of expansion which can occur.

Uber, the Dragon and the Banking Sector

download (77)Banks lend money. Taxis transport people from one pace to another. You may not think there is much similarity between the two. But both are based on a simple enough premise. Both have managed to build an uncontested and reliable status quo. Both are also facing a challenge to their dominance and both are resisting or (at best) slowly adapting to changing times.

As Albert Einstein said, ‘Everything should be made as simple as possible, but not simpler.’ But what is 21st century simple? In the world of people transport Uber has come up with an answer. It has tapped into the modern world and understood the psyche of the modern person and in the process shaken the status quo. But what about the banking sector and specifically bank lending? Over several hundred years of trade surely the banks have had time to develop a product that is as simple as can be? But is it 21st century simple and if not where does this leave the banking sector and traditional lending?

Everyone is familiar with the likes of Barclays, HSBC, Lloyds or Santander and

Commercial Real Estate Lending Trends With Comparison to California

download (76)the National Association of Realtors (NAR) invited a random sample of 49,485 realtors who worked in commercial real estate to fill out an online survey. A total of 791 responses were received for an overall response rate of 1.6 percent. The survey queried realtors’ opinion of how they found their lending environment to be during that past year. Living and working in California, I find it interesting and informative to compare general results to survey opinions in our state. I think you will find it instructive, too. Without further ado, here are the opinions of the brokers and private lenders as mentioned state by state:

States that provided difficult lending situations

The National Association of Realtors (NAR) found that 58% of investors preferred approaching banks but not all banks were ready to lend. Of those that did, these traditional lending institutions aggravated the situation with clumsy procedures, irksome schedules and terms, and long drawn out processes. Few banks,too, exerted themselves to please their clients or to make the situation more comfortable for them.

Said a private lender in New York

Banks have been very aggressive to get

The Commercial Lending Market Environment in 2015: California and Comparison to Key Cities

download (75)The National Association of Realtors (NAR) randomly surveyed 49,485 realtors asking them about the housing market conditions in their particular state during that past year. 791 individuals – 1.61 percent – responded. As realtor who works in California, I found it informative to work through the different reports, categorize them according to challenging and easy conditions, and wrap up by comparison to real estate conditions in California during 2015.

Commercial lenders, investors, or anyone interested in buying or selling property may find this analysis informative and interesting. Here it is.

Some states found the market environment to be feasible.

Some states such as Illinois found 2015 to be a booming time for real estate. Agents in Chicago revelled in opportunities.

This broker had this to say:

[… ] Best market in my 40 year history. These are the “good ole days”! – Tennessee The property taxes are out of control, especially for commercial properties.

But another added

The property taxes are out of control, especially for commercial properties.

Other states suffered from their market environment

There were the common gripes: Recession, economic uncertainty, spiking prices, topping default, languishing homes because of unaffordable

The Good and Bad for Equipment Financing

download (74)“I pay for everything in cash, I never finance anything” or “I’ve never had to take out a loan, I don’t believe in it”. Every so often, I encounter this type of feedback from a business owner. The attitude usually goes along with a strong, hands-on work ethic for an owner which has built their business from the ground up. They have worked long hours, suffered through the ups and downs and sacrificed family time and vacations to make their business survive. Their belief is, if they cannot pay for something with cash then they do not need it.

I respect the energy and devotion but I also take note that the strategy seems to apply to small, family owned businesses with a small number of employees which have remained flat in their growth and have stopped expanding years ago. Expansion and reaching new markets are not typically part of their business plan and they are happy with a fixed income often servicing the same clientele they have for years.

The downside of never financing anything is the limited amount of expansion which can occur.

Uber, the Dragon and the Banking Sector

download (73)Banks lend money. Taxis transport people from one pace to another. You may not think there is much similarity between the two. But both are based on a simple enough premise. Both have managed to build an uncontested and reliable status quo. Both are also facing a challenge to their dominance and both are resisting or (at best) slowly adapting to changing times.

As Albert Einstein said, ‘Everything should be made as simple as possible, but not simpler.’ But what is 21st century simple? In the world of people transport Uber has come up with an answer. It has tapped into the modern world and understood the psyche of the modern person and in the process shaken the status quo. But what about the banking sector and specifically bank lending? Over several hundred years of trade surely the banks have had time to develop a product that is as simple as can be? But is it 21st century simple and if not where does this leave the banking sector and traditional lending?

Everyone is familiar with the likes of Barclays, HSBC, Lloyds or Santander and

Acquiring Secured Business Loans

images (40)Utilizing a secured business loan is a great way to ensure a lower interest rate, a longer repayment period, and the opportunity to build credit and forge a relationship between business and credit provider.

A secured business loan, also called as collateralization arrangements, is a type of loan where by the borrower pledges some asset as collateral for the loan. These collateral can be anything of value such as car or property, which then becomes a secured debt owed to the creditor who gives the loan.

The collateral is a borrower’s pledge of specific property to a lender, to secure repayment of a loan. The collateral serves as protection for a lender against a borrower’s default-that is, it can be used to offset the loan to any borrower failing to pay the principal and interest under the terms of a loan obligation. Pawnbrokers would be an easy and common example of a business that may accept a wide range of items as collateral rather than accepting only cash.

In cases when the borrower may default on a secured loan, for example, due to insolvency, bankruptcy or

3 Reasons Why Business Credit Is For You

download (69)Whether you’re an enterprising entrepreneur or a resourceful investor, funding for your business or investment needs can be elusive.

There is no shortage of methods that can be used for business funding:

  • personal savings
  • retirement savings
  • personal credit cards
  • lines of credit on personal assets
  • private money or partners
  • business/personal loans

However, these methods may be limited in amount and/or require demanding qualifications. Even worse, some methods require use of YOUR money.

Personal capital should be the last resort of any entrepreneur or investor.

Here’s a smarter option: business credit w/ a personal guarantee. This is the route of least resistance.

3 Reasons Why You Should Choose Business Credit w/ a Personal Guarantee:

1. Minimum Qualifications

  • Qualifying w/ a personal guarantee is straight-forward. There are only 2 requirements: good personal credit and healthy projected income. Lenders want to know how well an applicant has managed their personal funds, and if the applicant is able to project substantial earnings from their business’s products or services.

2. Quick Transfer of Funds

  • Business credit refers to the securing of credit cards under your business entity. Typically, funding w/ a personal guarantee is swift and seamless. There are no long waits or

How to Get a Business Loan

download (70)Money makes the business world go round. Obtaining a stable and flowing financial source is a major factor whether you are planning on a new business or growing an existing one. There are a lot of new entrepreneurs who are daunted by the task of getting a loan and don’t even know where to begin.
Here is a practical guide on how to prepare yourself and your business idea as you apply and successfully get a business loan.

1. Know the criteria that banks look for in making small loans. Different banks and lending institutions may have different standards, but in general, when you are applying for a business loan, you should have been able to meet the following criteria so they can consider you:
• Your loan is for a sound business purpose. For example, the business must be eligible based on size, use of loan proceeds and the nature of the business (no lending, speculating, passive investment, pyramid sales, gambling, etc.)
• You and your partner(s) are of good character, have experience and good personal and/or business credit history
• You have

The Right Way To Question An Underwriting Condition

download (68)You are seeking some type of commercial or business financing. You may be purchasing a building, in need of additional capital, or replacing outdated equipment all of which will improve the running of your commercial enterprise, your overall profits and your life.

Of course there’s an underwriting process to go through and you’ve gleefully given the lender every piece of documentation they have requested with your application. The lender tells you they like the deal and everything looks good, except about the time you think you are home free, a request for something new pops up that you are simply not able to provide.

Perhaps it doesn’t exist or providing it would infringe on your clients/customers right to privacy. You are told that without this further information your request is denied. Waves of disappointment float over you because you felt confident you fit the parameters when you made your initial inquiry. If you have reached this point, consider refraining from hastily looking into other solutions or starting the process all over again with a different Bank until you have more information.

When an underwriter asks for

Factoring in the 21st Century

download (66)Invoice Factoring allows a business to sell its accounts receivable to a third party at a discount of usually 1 – 2%, for generating immediate cash flow for the business. The question that comes up is whether such invoice loans are practically feasible in today’s business scenario, when the options for funding and borrowing are vast. The reasons for entrepreneurs preferring business receivable factoring to traditional financing are many. We have discussed a few hereunder, in light of the business environment in the 21st century.

Today, the word ‘monopoly’ is virtually erased from the dictionary of global economics. Every single product or service has a rival waiting in the market. In such a scenario, the last thing an entrepreneur wants is for his business to struggle for cash flow. Invoice factoring lets a business generate immediate cash, albeit at a greater interest rate. But, any businessman worth his salt will tell you that it is always better to lose a few bucks, than to lose a customer.

One of the concerns, which we have heard quite often, is whether the customers will lose faith

Top 2 Reasons For Business Loan Denials

download (71)For the previous five years, there has been an increase in commercial financing sources in the US. Specifically, there has been a proliferation in the alternative lending market that fills the need of business owners that do not have the credit (personal or business) or operating capacity to gain approval for traditional bank financing. Although helpful for the short-term, many of these alternative lending sources “trap”business owners into loan structures with high payoffs and abnormally high interest rates. These two factors often cause the firm more harm than anticipated by restricting and sometimes significantly decreasing free cash flow. Traditional bank financing is still the best option for business owners due to the low-cost of the money and the flexibility for mitigating issues with repayment and payoff. In this article, we will focus on the Top 2 Reasons for Business Loan Denials in order to equip business owners with the information to produce and present business loan proposals that are concise, relevant, and factual.

(1) Unresolved Personal and Business Credit Profile (High Credit Risk)

Most business owners and individuals do not have a solid understanding

Using Non-Bank Lenders to Fund Short-Term or Transitional Business Financing Needs

download (65)The Challenge: Traditional Bank Lenders usually don’t like funding businesses during periods of variable cash flow or unpredictable collateral – e.g., periods of very high business growth, or on the flip side, reduced operating performance.

The Solution: Non-Bank (Alternative) Lenders specializing in asset based lending or those that provide short term bridge loans can often look beyond the turbulence of a transitional period to fill a company’s funding needs until the business is able to return to a traditional lending relationship.

Key Considerations for Borrowers:

  • Cash is King: Focus on the cash availability and debt service of the alternative loan, not the interest rate
  • Do the Rewards Outweigh the Cost of Capital?: If the benefit of the taking on the new business is greater than the cost of the capital, high interest rates may be well worth it
  • Plan Your Exit: Develop a clear plan at the outset to move back to a bank from an alternative capital source

Bank Lenders don’t like lending money to businesses when cash flow and/or collateral is in flux, for example:

  • Example A: A business goes through a heavy growth spurt causing either a

How To Write A Business Plan That Will Get You The Funding You Need!

download (67)Whether you are starting a new business or have an existing business seeking a capital infusion it’s a good idea to develop a fluid business plan that provides a roadmap for your company’s direction and intended success. Your plan should project out for the next three to five years and include the following eight categories:

1. An Executive Summary: This is the most important part because it provides the reader with a quick snapshot of your business. I recommend you complete the following sections first as they will shape and add a richer dimension to your summary.

2. Company Description: Describe your company, what you do, how you do it and the needs your company fills. It is your marketing script that can quickly help a lender or investor understand what you are uniquely bringing to the market place.

3. Market Analysis: Obviously it is fiscally responsible to research your target market but this step is often neglected with the excitement of what appears to be a “good idea”. Who is your target market and why is your product or service relevant to them. What need

Demand for Liquor & Procedure for Obtaining Business Loans for Liquor Stores

download (63)Liquor retailing is a business that has a steady demand throughout the year. If your store is in a good location, you will have a constant stream of customers. You are sure to do brisk business if you stock a wide range of products and build a reputation in the area where you operate.

Unless you plan to put your own money into the business, you will have to apply for liquor store financing for purchasing a suitable store as well as for stocking it with an adequate volume of inventory.

SBA financing – The U.S. Small Business Administration (SBA) is possibly the best source for meeting the entire range of requirements for liquor store financing.

The flagship 7(a) loan program can be used for several purposes, including purchasing real estate, furniture and fixtures, and even for establishing a new business. Money sourced through this program can also be utilized to buy inventory.

The other major SBA loan program is the CDC/504. Its use is restricted to purchasing real estate and equipment.

Whichever SBA loan you opt for, you can be assured that you will pay the lowest

Project Funding Fees and Costs

download (62)Project Funding Payments.

In the project funding world many entrepreneurs refuse to pay “upfront fees” towards their project. When you apply for debt funding, the funder may have to implement a financial structure to enable you to kick-start a project and as well to determine your ability to pay back the loan. Whilst it’s true that you may not have to pay an upfront fees, there are often associated costs involved.

Fees V’s Cost:

A fee is when you are asked to pay for the services of providers whether it be for the arrangement of the funding package via the intermediary or a fee levied by the funder themselves. This fee is normally levied at the end of the funding procedure.

A cost is something that can not be avoided. The money goes towards actual events such as purchasing a bank instrument on your behalf, blocking funds within a hedge fund, securing private equity money. All these incur costs.

What Is Included In The Cost?

Costs can include an array of things such as securing collateral. Let’s say you have a project which has NO collateral and is not

Let Technology Help In Getting Your Commercial Loan Application Approved

download (64)Every loan rep or a broker must know the significance of timing. The timing must be opportune; because if that is not the case, the deal will never float to completion. So we can say that timing is closely associated to getting the loan approval letter issued in no time.

However, what must be done when the borrower is not at all able to get the needed docs on time? Does that mean a long wait until everything gets approved? No. However, it will always involve a little hard work on your, the borrower’s, part.

Today, in the age of the Internet, information can be accessed in no time; so you will have to leverage this specific piece of information technology to get your bridge loan or any other commercial property funding approved. However, many know little when it comes to leveraging the Internet in such a way that will expedite the loan-approval process.

Property pictures

One of the key items that every underwriter will need is the pictures of a property. There is no reason at all to wait for a borrower to give you property

Some Important Facts About First Position Commercial Mortgage Notes

download (61)Creating attractive interest is a challenge in today’s low interest rate environment. The attractiveness of First Position Mortgage Notes is in the fact that investors (lenders) are held in the first position as a lien holder of the property – so there is a hard asset (real estate) providing the security of their investment.

The 50-year average for homeownership in the United States is about 65%. Most experts see that number reducing as the move to rental communities continue to rise along with the challenges that younger consumers are finding in securing sustainable employment which is directly correlated to one’s ability (and desire) to own a home. The marketing for traditional residential mortgage financing in today’s marketplace has created a higher understanding of how these loans work for consumers. Couple that with the competition in the residential financing market and it is understandable why most adults understand residential financing. But what about Commercial Real Estate?

Each and everyday consumers leave their homes and visit multiple commercial properties – for work – for dining – for shopping – for entertainment – but few understand that differences

Understanding the Difference Between Home Equity Loans and Home Equity Line of Credit

download (60)Property owners often wonder how they can use the value of their house to access low-interest financing. A loan or a home equity line of credit are two options available to you. To figure out which will better suit your needs, see some of the differences below.

Home Equity Loan (HEL)

A loan tapping into the value of your house is a good way to borrow money. This option allows you to get a fixed amount and receive it in one lump sum. The amount you receive is based on your home’s value, payment terms, verifiable income, and credit history. You can get it with a fixed rate, fixed term, and even a fixed monthly installment. In addition, interest payments are 100 percent tax deductible.

Home Equity Line of Credit (HELOC)

With a home equity line of credit, you do not get your money all at once. Instead, you open a revolving credit, which allows you to receive money as you need. Your house is used as collateral to open the credit account. Companies approve this type of account based on the appraised value of the property