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Business Financing Challenges - Commercial Loan Solutions

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Commercial borrowers will frequently discover that lenders and business financing brokers are not adequately proactive about commercial loan obstacles. To address this, I have published a related business loan article about business lenders to circumvent. The central point of this article is about key commercial financing obstacles which business borrowers and lenders often fail to see in time.

Unanticipated circumstances can lead to unexpected problems with a commercial loan, and borrowers should be ready for these business financing scenarios. There are several critical commercial loan difficulties to be circumvented with business financing. Business loan problems are more serious and prevalent than many borrowers would imagine.

A few of these business financing problems will be unavoidable, but in most cases these commercial loan challenges can be met successfully. Business borrowers and their advisors will be better prepared to take appropriate and timely corrective action by properly anticipating these recurring commercial financing difficulties.

(1) Avoidable Commercial Mortgage Scenario Number 1: Asset sourcing/seasoning and ownership seasoning. This potential business financing obstacle will not apply to all commercial borrowers. If it is applicable, borrowers need a lender without sourcing-seasoning limitations.

For a purchase, some commercial lenders will want documentation about where the down payment is coming from (sourcing). Many commercial lenders will also require business borrowers to document commercial loan down payment funds over several months (seasoning). Seasoning of ownership involves the minimum time someone has owned a commercial property before they can refinance.

(2) Proactive Commercial Loan Example Number 2: A borrower wants to use a seller second or other secondary financing to decrease the down payment required to buy a business property.

Commercial mortgage lenders will often not permit subordinated debt. With a business loan from more flexible lenders, a business borrower will not encounter restrictions on the use of subordinate financing and will decrease the down payment required.

(3) Proactive Commercial Loan Example Number 3: Business financing that needs a long-term commercial loan. Is long-term financing really possible for a business loan? Some lenders will only offer 5 years before commercial real estate financing will expire with a balloon payment due.

If you think that describes short-term commercial loan terms rather than long-term, you will be pleased to discover the lenders that will provide 30-year business financing. A long-term business loan will frequently be the factor that creates a successful commercial investment scenario because a new commercial mortgage will not be needed for many years and monthly payments will be substantially decreased.

(4) Proactive Commercial Loan Example Number 4: Business financing recall terms. Business loan recall conditions will often allow the commercial lender to force the borrower to repay their loan before the normal loan expiration. This possibility is not relevant to business borrowers if their commercial loan does not contain such recall terms.

Many traditional commercial lenders routinely place recall clauses in their commercial loan conditions. The terms which can cause a recall will vary but will commonly include periodic lender review of financials and credit history. Under these circumstances if prescribed levels of income and credit standards do not occur, then the lender will typically notify the commercial borrower that they must pay off the loan within a 30-90 day period.

Business Financing Recall Contingency Plans: With a commercial loan recall, borrowers will need to refinance with a lender quickly. Prudent borrowers will exclude lenders that require recall agreements when evaluating business loan refinancing options.

To avoid this undesirable recall possibility, commercial borrowers would be wise to include only business financing without recall terms. For borrowers with recall terms in their current commercial loan, it will be equally wise to consider commercial mortgage refinancing prior to an unanticipated recall.

Article Source: http://www.article-exposure.com

Copyright 2005-2007 AEX Commercial Financing Group, LLC. All Rights Reserved. Steve Bush provides candid church financing and business loan advice. Sign up for a free series of AEX Commercial Loan reports

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