Commercial Loan Advice - Commercial Lenders to Avoid

This commercial loan 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 commercial loan strategies.

I have been advising business owners for over 25 years, and I have encountered many commercial loan situations which have involved commercial lenders that I would not recommend as a result. These problematic situations have especially involved commercial mortgage loans, credit card factoring and unsecured commercial loans. As a direct result of these experiences and daily conversations with other commercial financing 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 articles which are designed to assist commercial borrowers in avoiding commercial loan problems. One of the most serious commercial loan situations is a commercial lender that causes 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 commercial loan options do not realistically exist.

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

COMMERCIAL LOAN 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 commercial financing conditions to commercial loans instead of simply declining the loan. Business owners should explore other commercial loan alternatives before accepting commercial financing terms that put them at a competitive disadvantage.

COMMERCIAL LOAN 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.

COMMERCIAL LOAN 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 commercial loan options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for commercial loan solutions. For most commercial loan 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.

COMMERCIAL LOAN 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 commercial loan approval is that it will enable the commercial borrower to make other business plans which depend on the business loan 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 loan 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 loans. Since many business loans are arranged by residential mortgage brokers who are frequently unfamiliar with common business loan procedures, this reason will be especially applicable when dealing with commercial lenders that specialize in dealing with residential mortgage brokers.

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