By Daljeet S. Sidhu
Getting the right business funding is critical for business
owners to establish, renovate or expand their business. One can
have an array of choices for raising the capital necessary for
running and growing a business. However not all loans are
suitable for every business owner. The key then is to evaluate
your business situation and then approach suitable lenders. If
they are satisfied with your capability to pay back the loan,
they would be willing to lend with a set of terms and conditions
that should be acceptable to you as well.
However, you must pay attention to detail, as there are few
options at your disposal when it comes to getting a loan. The
foremost step is to take stock of your current financial
position and ask yourself few important questions before
approaching a lender.
1. You need to be sure about the amount you want for your
business. Having a business plan with the financial model will
be helpful in estimating the amount. If you are a business
start-up then it is prudent to list all expenses you think you
would incur in the initial months of your business operation.
2. Once you know the amount you actually need for your
business, outline your spending plan for the lenders. Typical
small business will use the money to hire employees, advertise,
buy equipment, buy real estate, or to pay off an outstanding
debt.
3. You also need to lay out a repayment plan. Your financial
statements and cash flow projections will come in handy to prove
that yours is a profitable business and you would be able to pay
back the loan in a timely fashion.
4. There is a possibility that you will be denied the loan.
What would you do then? You will have to accept rejection
gracefully so that you come across as a determined personality
and not be easily discouraged.
There are many avenues to get a loan. Some of them are as
follows:
Small business loans: This remains the most common way to get
funding for your business. You can get such a loan from various
sources, such as, credit unions, banks, small business
associations or even from an angel investor. To get a small
business loan you will have to furnish the business plan, your
credit history and other relevant information.
Business or Merchant cash advance: This loan is sanctioned
based on potential credit card sales and is perfect for the
small and midsized business who find it difficult to get a loan
approved from leasing companies or banks. The requirement for
this loan is a credit card processing agreement with the funding
merchant.
Unsecured business loans: Financial institutions offer such
loans without securing the borrowers asset and are provided in
many packages such as credit card debt, personal loans, credit
facilities, overdraft facilities, lines of credit and corporate
bonds. Interest rates on such loans can be in double digits if
your credit score is less than perfect.
ource: http://www.isnare.com
Friday, March 26, 2010
Business Loans Without Banks: 14 Reasons A Business Owner Might Not Go To A Bank For A Commercial Mortgage
By Stephen Bush
Traditional banks serve a very important role in the North
American economy. Nevertheless, when it comes to a business
loan, there are many reasons that small business owners should
not always use a traditional bank. There are not just one or two
major reasons to obtain a small business loan from another
source. As you will see below, there are over a dozen compelling
reasons to consider a source other than a traditional bank for a
small business loan. For most small business owners, five to ten
of these reasons are likely to be applicable to them.
With many small business loan borrowers, banks have already
declined their loan application. That particular compelling
reason to use a source other than a traditional bank (being
declined by a traditional bank) does not even appear on the list
below.
Here are 14 compelling reasons a small business owner might not
go to a traditional bank for a commercial real estate loan. The
compelling reasons shown below also indicate that for business
borrowers that can get approved at a traditional bank, there
might be better options available elsewhere.
Reason # 1:
Minimum commercial real estate loan for many banks is $250,000
or more. With non-bank small business lenders, the typical
minimum commercial loan amount is $100,000.
Reason # 2:
Most banks charge an up-front commitment fee. Most non-bank
small business lenders do not charge an up-front commitment fee
for a commercial mortgage.
Reason # 3:
Most banks will severely limit the amount of cash a business
borrower can get when refinancing a commercial mortgage. When a
borrower is refinancing their business property with non-bank
small business lenders, they can typically get up to $1,000,000
in cash.
Reason # 4:
Most banks are reducing their commercial real estate loan
interest in properties such as bars/restaurants, auto service
businesses and funeral homes. Non-bank small business lenders
are very interested in these business categories (and many other
special purpose properties) for a commercial mortgage.
Reason # 5:
Most banks will require business plans for a commercial
mortgage. The cost to provide this is usually several thousand
dollars. Non-bank small business lenders typically do not
require business plans as part of their underwriting process for
a commercial real estate loan.
Reason # 6:
Most banks will require tax returns for a commercial mortgage.
Non-bank small business lenders do not require tax returns or
any income verification for a Stated Income commercial real
estate loan. Many banks not requesting tax returns will ask
borrowers to sign IRS Form 4506 (which authorizes the lender to
obtain tax returns directly from the IRS). Non-bank small
business lenders typically do not request borrowers to sign this
form.
Reason # 7:
Most banks will require cross collateralization of personal
property for a commercial real estate loan. Most non-bank small
business lenders do not require cross collateralization of
personal property for a commercial mortgage.
Reason # 8:
Most banks will require balloon payments or the loan will be
subject to recall after periods as short as 3-5 years for a
commercial mortgage. With a commercial real estate loan via
typical non-bank small business lenders, all properties are
eligible for 25-year loans and some up to 40 years.
Reason # 9:
Most banks will not permit seller seconds or secondary
financing for a commercial real estate loan. With many non-bank
small business lenders, if the business borrower uses a seller
second or other secondary financing for a commercial mortgage,
the business borrower can obtain a loan with a CLTV up to 95% of
the property value.
Reason # 10:
Most banks require income verification or audits even after the
commercial real estate loan closes. Non-bank small business
lenders do not verify income either before or after a commercial
loan closes with a Stated Income Business Loan Program.
Reason # 11:
Most banks have strict guidelines for "sourcing" or "seasoning"
of assets or ownership to qualify for a commercial mortgage.
Most non-bank small business lenders do not have any
requirements or limitations involving sourcing/seasoning of
funds or seasoning of ownership.
Reason # 12:
Very few banks offer an assumable commercial real estate loan.
Typical non-bank small business lenders have an Assumable
Commercial Loan Program which includes loan amounts up to $1
million.
Reason # 13:
With most banks, a typical commercial real estate loan will
require 3 to 9 months to close. At typical non-bank small
business lenders, most commercial mortgage loans close in 45 to
55 days.
Reason # 14:
Very few banks use Stated Income (no tax returns, no income
verification) for a commercial real estate loan. Non-bank small
business lenders use the Stated Income Approach for commercial
mortgage loans in their Stated Income Business Loan Programs
(most commercial mortgages up to $2 million qualify for these
programs). This especially benefits self-employed small business
borrowers who frequently have income that is erratic and
difficult to document properly.
As noted above, there are many reasons that small business
owners should not always use a traditional bank. A recommended
follow-up to this article provides a review of the Top 12
commercial mortgage loan problems that small business borrowers
should avoid ( http://steve.bush.googlepages.com/home ).
© © 2005-2006 AEX Commercial Financing Group, LLC © All Rights
Reserved ©
About the Author: Steve Bush provides commercial financing
assistance throughout the United States and is the publisher of
The Commercial Real Estate Loans and Commercial Mortgages Guide
( http://aexcfgllc.com ) and The Credit Card Receivables Guide (
http://aexcfg.com ).
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=73804&ca=Finances
Traditional banks serve a very important role in the North
American economy. Nevertheless, when it comes to a business
loan, there are many reasons that small business owners should
not always use a traditional bank. There are not just one or two
major reasons to obtain a small business loan from another
source. As you will see below, there are over a dozen compelling
reasons to consider a source other than a traditional bank for a
small business loan. For most small business owners, five to ten
of these reasons are likely to be applicable to them.
With many small business loan borrowers, banks have already
declined their loan application. That particular compelling
reason to use a source other than a traditional bank (being
declined by a traditional bank) does not even appear on the list
below.
Here are 14 compelling reasons a small business owner might not
go to a traditional bank for a commercial real estate loan. The
compelling reasons shown below also indicate that for business
borrowers that can get approved at a traditional bank, there
might be better options available elsewhere.
Reason # 1:
Minimum commercial real estate loan for many banks is $250,000
or more. With non-bank small business lenders, the typical
minimum commercial loan amount is $100,000.
Reason # 2:
Most banks charge an up-front commitment fee. Most non-bank
small business lenders do not charge an up-front commitment fee
for a commercial mortgage.
Reason # 3:
Most banks will severely limit the amount of cash a business
borrower can get when refinancing a commercial mortgage. When a
borrower is refinancing their business property with non-bank
small business lenders, they can typically get up to $1,000,000
in cash.
Reason # 4:
Most banks are reducing their commercial real estate loan
interest in properties such as bars/restaurants, auto service
businesses and funeral homes. Non-bank small business lenders
are very interested in these business categories (and many other
special purpose properties) for a commercial mortgage.
Reason # 5:
Most banks will require business plans for a commercial
mortgage. The cost to provide this is usually several thousand
dollars. Non-bank small business lenders typically do not
require business plans as part of their underwriting process for
a commercial real estate loan.
Reason # 6:
Most banks will require tax returns for a commercial mortgage.
Non-bank small business lenders do not require tax returns or
any income verification for a Stated Income commercial real
estate loan. Many banks not requesting tax returns will ask
borrowers to sign IRS Form 4506 (which authorizes the lender to
obtain tax returns directly from the IRS). Non-bank small
business lenders typically do not request borrowers to sign this
form.
Reason # 7:
Most banks will require cross collateralization of personal
property for a commercial real estate loan. Most non-bank small
business lenders do not require cross collateralization of
personal property for a commercial mortgage.
Reason # 8:
Most banks will require balloon payments or the loan will be
subject to recall after periods as short as 3-5 years for a
commercial mortgage. With a commercial real estate loan via
typical non-bank small business lenders, all properties are
eligible for 25-year loans and some up to 40 years.
Reason # 9:
Most banks will not permit seller seconds or secondary
financing for a commercial real estate loan. With many non-bank
small business lenders, if the business borrower uses a seller
second or other secondary financing for a commercial mortgage,
the business borrower can obtain a loan with a CLTV up to 95% of
the property value.
Reason # 10:
Most banks require income verification or audits even after the
commercial real estate loan closes. Non-bank small business
lenders do not verify income either before or after a commercial
loan closes with a Stated Income Business Loan Program.
Reason # 11:
Most banks have strict guidelines for "sourcing" or "seasoning"
of assets or ownership to qualify for a commercial mortgage.
Most non-bank small business lenders do not have any
requirements or limitations involving sourcing/seasoning of
funds or seasoning of ownership.
Reason # 12:
Very few banks offer an assumable commercial real estate loan.
Typical non-bank small business lenders have an Assumable
Commercial Loan Program which includes loan amounts up to $1
million.
Reason # 13:
With most banks, a typical commercial real estate loan will
require 3 to 9 months to close. At typical non-bank small
business lenders, most commercial mortgage loans close in 45 to
55 days.
Reason # 14:
Very few banks use Stated Income (no tax returns, no income
verification) for a commercial real estate loan. Non-bank small
business lenders use the Stated Income Approach for commercial
mortgage loans in their Stated Income Business Loan Programs
(most commercial mortgages up to $2 million qualify for these
programs). This especially benefits self-employed small business
borrowers who frequently have income that is erratic and
difficult to document properly.
As noted above, there are many reasons that small business
owners should not always use a traditional bank. A recommended
follow-up to this article provides a review of the Top 12
commercial mortgage loan problems that small business borrowers
should avoid ( http://steve.bush.googlepages.com/home ).
© © 2005-2006 AEX Commercial Financing Group, LLC © All Rights
Reserved ©
About the Author: Steve Bush provides commercial financing
assistance throughout the United States and is the publisher of
The Commercial Real Estate Loans and Commercial Mortgages Guide
( http://aexcfgllc.com ) and The Credit Card Receivables Guide (
http://aexcfg.com ).
Source: http://www.isnare.com
Permanent Link: http://www.isnare.com/?aid=73804&ca=Finances
Subscribe to:
Posts (Atom)