Wise Money Tips

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Follow these tips to keep more in your wallet by avoiding overdraft fees.

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Improve your personal finances by avoiding these common mistakes.

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This business financing strategy article will describe the importance of avoiding “problem commercial lenders”. The article will NOT name specific lenders to avoid, but key examples will be provided to illustrate why prudent commercial borrowers should be prepared to avoid a wide variety of existing commercial lenders in their search for viable business financing strategies.

I have been advising business owners for over 25 years, and I have encountered many business financing situations which have involved commercial lenders that I would not recommend as a result. These problematic situations have especially involved commercial mortgage loans, business cash advance situations and unsecured working capital loans. As a direct result of these experiences and daily conversations with other commercial loan professionals, I do in fact believe that there are a number of commercial lenders that should be avoided. This conclusion is typically based on more than one negative experience or an obvious pattern of lending abuses.

I have published many commercial loan articles which are designed to assist commercial borrowers in avoiding business loan problems. One of the most serious business financing situations is a commercial lender that causes business loan problems for their commercial borrowers on a recurring basis. It is particularly this type of commercial lender which prudent commercial borrowers should be prepared to avoid unless viable alternative business financing options do not realistically exist.

Here are a few examples of why certain commercial lenders should be avoided.

BUSINESS FINANCING STRATEGIES AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 1 – Yes or No?

I have published an article which discusses the tendency of many banks to say “YES” when they mean “NO”. Such banks will typically attach onerous business financing conditions to commercial loans instead of simply declining the loan. Business owners should explore other commercial loan alternatives before accepting business financing terms that put them at a competitive disadvantage.

BUSINESS FINANCING STRATEGIES AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 2 – The Commercial Appraisal Process

For commercial real estate loans, commercial appraisals are an unavoidable part of the commercial loan underwriting process. The commercial appraisal process is lengthy and expensive, so avoiding commercial lenders which have displayed a pattern of problems and abuses in this area will benefit the commercial borrower by saving them both time and money.

BUSINESS FINANCING STRATEGIES AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 3 – Think Outside the Bank

In smaller metropolitan markets, it is not unusual for a dominant commercial lender to impose harsher commercial loan terms than would typically be seen in a more competitive commercial financing market. Such commercial lenders routinely take advantage of a relative lack of other commercial lenders in their local market. An appropriate response by commercial borrowers is to seek out non-bank business financing options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for working capital and business cash advance solutions. For most business financing situations, a non-local and non-bank commercial lender is likely to provide improved commercial financing terms because they are accustomed to competing aggressively with other commercial lenders.

BUSINESS FINANCING STRATEGIES AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 4 – Meaningless Pre-approvals

Commercial borrowers frequently want a commercial lender to approve their commercial loan at the earliest possible point. The assumed benefit to this early business loan approval is that it will enable the commercial borrower to make other business plans which depend on the business financing being finalized.

Because an ethical commercial lender will treat any form of an approval very seriously, commercial borrowers should expect that a meaningful version of such an approval will not be realistically possible in just two or three days. Nevertheless there are commercial lenders who provide their own special version of a pre-approval within just a few days of receiving preliminary application information. Because this abbreviated approach to pre-approvals almost always produces unexpected surprises for the commercial borrower as the business financing process goes forward, commercial borrowers need to be extremely wary of any commercial lenders that take this approach.

Why do some commercial lenders provide such meaningless pre-approvals? There are two likely reasons. (1) To motivate the commercial borrower to stop considering other potential commercial lenders. (2) To provide a pre-approval that is similar to a structure prevalent with residential mortgage loans. Since many business loans are arranged by residential mortgage brokers who are frequently unfamiliar with common business financing procedures, this reason will be especially applicable when dealing with commercial lenders that specialize in dealing with residential mortgage brokers.

Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved.

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Thousands Sucked Dry By Hard Money Parasites- How To Avoid The
Loan Leech! by The Hard Money Specialist

(c)2005 The Hard Money Specialist- All Rights reserved
www.hardmoneyspecialist.com

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There are creatures that prowl about the lush, green hard money
jungle that ignorantly kill 99 out of 100 deals…and the chances
of you ever finding a real lender with them are slim and none.

Now I’m not talking about respectable brokers, agents or
middlemen that have direct access to the money and treat their
clients with respect. I’m referring to the ignorant leech who
has absolutely no connection to a real investor at all, and
leads the innocent, sometimes desperate client into a black hole
of false hope.

They are despicable, not because they don’t want to secure
funding for their client, but because they don’t know the first
thing about the real world of private lending… They are in it
for the hope of big broker fees and don’t really care about the
myriad of candidates vying for funding!

They don’t give a flying squirrel about the client, their
particular circumstances or the massive amount of time that will
be wasted. They set their hook and then proceed to drag their
unsuspecting prey into a daisy-chain jungle, hoping that
someway, somehow, someone they find will fund the deal (throw
enough wet spaghetti against the wall and something eventually
has got to stick mentality).

This jungle leech calls every person he can find, other leeches,
quasi-brokers and the like, hoping that someone will know
someone who knows someone’s rich brother-in-law. This fishing
can take days and sometimes weeks, and, if they ever get lucky
enough to find an interested party, they simply sit back and
pacify the unsuspecting client as long as they can until they
find a way to the cash. Now, if the interested party is another
leech (and 99% of the time they are) you can see how this
daisy-chain can quickly grow into an anchor that drags the deal
into the shadows of the jungle.

Many deals never get funded because there are too many hands in
the cookie jar…”a plethora of parasites” if you will. If one
leech senses he won’t get his cut of the profits, he can and
usually does, kill the deal so NO ONE gets paid. And the sad
thing is, a real hard money lender doesn’t go near a deal that’s
been picked over. It doesn’t have to be this way. There are
simple indicators you can learn to help you deal directly with
the real private money lender. If you follow these basic rules,
you will save yourself considerable time, frustration and
heartache.

Rule No.1- If they ask for an upfront fee, laugh, scream “leech”
into the receiver and hang-up the phone! Who knows, maybe you’ll
freak one out and he’ll change professions.

Rule No. 2- Real hard money or private money lenders know
EXACTLY what they are looking for and will tell you (always
during the first phone call) if your deal fits their criteria.
If the agent or broker is not sure, staggers a bit and has to
check, again, hang-up the phone!

Rule No. 3- Don’t throw out your deal for everyone to look at.
Go at it one investor at a time. Remember, real lenders know
when a deal has been handed around…picked over deals are already
dead! They won’t even look at them.

Rule No. 4- Do a web search on the company, group or individual
to see if there is any derogatory information floating around
about them. If you don’t find anything at all that’s OK. There
are only a handful of real investors in every area and they
generally are very private individuals or small groups.

Rule No. 5- Try to deal with someone local if you can. It’s
easier to check them out and get a good read on them.

Rule No. 6- Most genuine private investors and their
representatives are pretty laid back. It’s the over exuberant or
hyper individual I would stay away from.

Rule No. 7- With bigger deals, like commercial developments,
know what documentation you need to get together for your
package by checking with your financial advisor or banker.

I sincerely hope this article helps you in your quest to find a
real lender who can fund your deal and avoid the hard money
jungle altogether! Why not just take the easy route and visit
me? That’s what I do!
===========================================================

The Hard Money Specialist has helped thousands of clients secure
financing. Need to get to the real investor? Click here now-
http://www.hardmoneyspecialist.com hardmoneyspecialist@cox.net
or call 949-305-1793– 6 FREE GIFTS just for visiting!

ATTENTION Ezine Editors/Site Owners Feel free to reprint this
article in it’s entirety in your ezine or on your site as long
as you leave all the links in place, do not modify the content
and include our resource box as listed above.

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By devoting extra caution and time, commercial borrowers can avoid serious business opportunity investment financing mistakes. The most obvious benefit will be to reduce the potential for critical commercial loan problems, both now and throughout the life of the business financing terms arranged.

A key factor that distinguishes business opportunity financing from other forms of business financing is the lack of commercial property ownership. Although the transaction will usually involve a long-term lease agreement, the buyer is acquiring a business that does not include real estate in the purchase price.

The two mistakes described in this article are more typical than expected by most commercial borrowers. While we will not be addressing all possible business opportunity financing problems in this article, we will include two of the most severe issues to anticipate and avoid.

Length of Business Financing -

A common mistake when acquiring a business opportunity is to finance the acquisition with business financing that expires within two to five years. One reason for this occurring is the failure to negotiate a longer-term lease, since it is typical for financing terms to expire with the lease.

A viable solution is to insist on a lease that is at least ten years long. This will facilitate business finance terms that can typically be for a ten-year period. One key factor that limits business opportunity financing to a ten-year period is due to the absence of commercial real estate collateral.

Use of Excessive Seller Financing -

Although nominal seller financing (such as 10-20%) can be helpful to a business financing transaction, attempts to finance either entirely or primarily with seller financing are generally inadvisable. There are several different issues which can result in this being a serious mistake.

If a seller is providing most or all of the business acquisition financing, a formal appraisal might not be obtained. While this appears to offer the advantage of saving the cost of such an appraisal, it also eliminates an important method of determining if the purchase price is appropriate. It is also not uncommon for a seller to have acquired a business appraisal that is used to substantiate the purchase price for the business they are selling. An appraisal financed by the seller is not likely to be an independent business value estimate.

An additional restriction when using excessive seller financing is that it typically will cover a period of three years or less. This will necessitate refinancing within a period that is not always practical to do so. A loan history up to 48 months will be required by some lenders prior to refinancing a business opportunity loan.

Solutions and Strategies for Avoiding Business Opportunity Investment Loan Mistakes -

Business borrowers should thoroughly discuss options with a business financing expert before proceeding with investing and financing programs. These efforts will be worthwhile since the potential business finance mistakes described above can be overcome successfully. Borrowers should seek out advisors capable of providing candid solutions in their efforts to obtain a better picture of complicated business opportunity financing possibilities.

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Buying a business investment without real estate requires specialized business opportunity financing. Although this kind of business financing is available, there are several potential problems which should be anticipated and avoided by prospective buyers.

In order to buy a business, a commercial borrower is likely to need business financing. If the business includes commercial real estate, the borrower will need a commercial mortgage. If the business purchase does not involve real estate, a business borrower must use a business opportunity loan.

When obtaining a business opportunity loan, borrowers will discover that many lenders simply do not provide business loans that do not include real estate as part of the business purchase. There are several other important business financing issues to analyze prior to buying a business without commercial property.

The level of interest for buying a business opportunity investment has increased due to the reduction of activity involving residential real estate investing. However, because there are so many critical differences between financing residential real estate and business financing, it is important for potential business owners to educate themselves before proceeding.

This summary is designed to address the unique business financing requirements involved when real estate is not involved. Our suggested approach to business opportunity financing is provided below.

Prospective business owners should begin business opportunity investment financing plans by formulating a realistic assessment of cash available for a down payment and desired maximum business purchase price. In most business financing scenarios, a total down payment approximating 25% of the purchase price is advisable. Usually seller financing is permissible for a portion of the down payment, but a potential buyer generally needs to plan on investing a minimum of 10% or more of the purchase price from their own funds even if the seller is providing 20% or more.

Purchasers should evaluate whether a Small Business Administration loan is relevant for their particular business financing and investing circumstances. This step is both important and somewhat complicated, and the involvement of an SBA loan expert is strongly advised. Among the issues to explore are whether collateral is available for SBA financing and how important refinancing is to your overall business opportunity financing process.

Buyers should make an early determination concerning the length of lease to be arranged in conjunction with buying the business. As noted previously, business opportunity financing and investing does not involve the purchase of commercial real estate, so arrangements must be made for a long-term lease. The length of the lease is important because the normal business finance terms will restrict the length of business financing to the period covered by the lease (although buyers should anticipate a ten-year maximum for investment business loans). For example, with a seven-year lease, the commercial loan is likely to be for seven years, and even with a fifteen-year lease, the commercial financing will probably expire in ten years.

Even though real estate is not included in a business opportunity transaction, buyers should nevertheless investigate whether including real estate is a viable option or not in order to buy a business. With the inclusion of commercial property, you can obtain a longer business loan and the interest rate will be lower. However, improved business financing terms should not be the sole factor you look at, since the absence of a commercial mortgage can prove to be a significant advantage in a declining real estate market that currently exists in many areas of the country.

Investors and buyers should discuss business finance options with a business opportunity loan expert before making any offers to buy a business investment. These discussions should include issues such as down payment possibilities, potential purchase price, seller financing, tax return requirements, buyer credit scores and collateral options.

As a final precautionary note, in most circumstances the availability of business opportunity financing is more restricted than commercial real estate financing. There are also some problems unique to business opportunity loans, and commercial borrowers should make every effort to avoid these potential business financing complications.

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