Steps that can help you work more effectively with general commercial lenders:
1. Don’t guess how large your loan should be. Determine the amount you need as precisely as possible before you start shopping for commercial loans.
2. Even seasoned business owners can get tripped up by unexpected commercial lending fees and other costly surprises. To accurately compare general lending costs, ask prospective lenders for a quote that includes your total monthly payments, not just interest rates and fees.
3. Pay close attention to the lender’s deadlines, such as the final day for closing the loan. Ignoring important commercial lending deadlines can not only force you to wait longer for the financing you need, it can increase your interest rate.
Contact general commercial lenders who provide the type of loan you needMost general commercial lenders specialize in certain types of commercial loans. Among the most common: A purchase loan, in which the purchase you finance, such as a fleet of company cars, serves as collateral for the loan. A refinancing loan involves taking out a secured loan to replace your current loan, usually with the goal of lowering monthly payments. A short term bridge loan is taken out for a relatively brief period while longer-term financing is being arranged. A commercial second mortgage gives you a second loan of $50,000-$500,000 on your property, with a term of five to 10 years.
The commercial lending firm GE Commercial Finance offers second lien loans that can be used for refinancing. Fort Ashford specializes in secured bridge loans for small and medium-sized businesses. CommercialDirect provides commercial second mortgages from $50,000-$500,000.
Double check general commercial lending loan term optionsTerms for commercial loans vary. Make sure you can meet the terms before you sign on the dotted line. General commercial lending terms can include requirements that borrowers be in business for a minimum number of years. Advantageous terms to look for in commercial loans include no balloon payment, no penalty for early repayment and no collateral required (also called an unsecured loan).
Offerings from Beehive Commercial Lending include 20- and 30-year loans with no balloon payment. Nationwide Unsecured features unsecured, “no-collateral” loans.
Too many general commercial lenders but too little time? A broker can helpCommercial lending brokers can help you find the lender for your needs. Brokers charge a fee, but it can pay off since many provide other services, such as advising you on how to increase your chances of getting a loan approved.
If you want to refinance a mortgage, get free quotes from The-Best-Mortgage-Rate.com. Principle Commercial Corporation handles a slate of commercial loans, including bridge loans and purchase loans. FundingUniverse operates more like an online matchmaking service than a traditional general lending broker. You get help honing your business plan, then your plan is made available to FundingUniverse’s “invite-only” network of lenders and investors.
- Don't let rising costs of commercial loans take you by surprise. Ask general commercial lenders to put a cap on legal fees and other expenses associated with the loan. Also, be sure to lock in your interest rate.
- Before signing on the dotted line with general commercial lenders or brokers, ask them to provide references, including companies that are in your industry, if possible.
- Be confident that you can repay the commercial loans you're considering. For example, the repayment rates for a commercial second mortgage will not only be higher than those for your first loan, but will be due on a shorter term.