The question may get asked, should you retain a commercial mortgage broker for your car wash loan? The question truly should be, should you utilize a competent commercial mortgage broker? Mortgage brokers, just like commercial bankers, come in all shapes and sizes. New ones, old ones, experienced ones, inexperienced ones, good ones and not so good ones. It is a mortgage bankers job to procure new business for the lender that he/she's employed with. It is a mortgage brokers job to get new business also. They both have competitive advantages and drawbacks.
A local lending institution can frequently give the better deal if you are only searching for the least expensive rate and points for origination. The local lending institution can also often approve a loan faster since they might be geographically close to the property and know of the neighborhood and any competitors. On the other side, the bank might demand a commercial banking relationship and a merchant account. In these examples, you could really feel you're in business with your local bank. Often if you're attempting with a local lending institution, you could have a short note, such as 5, 7 or 10 years. Think about it this way. In five years, you get to go through the whole process again of getting a mortgage!
If you're applying directly with an SBA lender, there are various types though they still are SBA lenders. An SBA lending institution is a bank or non-bank lending establishment that has been allowed by the SBA to loan money where the federal government will guarantee the loan in the case of default. An SBA bank with PLP status (Preferred Lender) is sometimes the simplest way to go because the loan usually doesn't have to be submitted through the SBA. The lender will guarantee the loan, approve it and obtain an SBA case number.
What people do not realize is some banks and lenders (be they SBA or conventional loans) are inclined to do loans whether there is either great cash flow or significant collateral. How would you know if a bank is a cashflow lender or a collateral lender.
Business owners also don't typically realize the greatest difference between a bank and a non-bank lender. Non-bank lenders almost always are more liberal because they are not typically subject to banking rules from the FDIC and OCC. This makes a significant difference.
The fact still is also that many banks and non-bank lending institutions don't like to do certain asset classes and that will change from more often than one would think. Special use properties (gas stations, hotels, restaurants, car washes) go in and out of favor with underwriters on a regular basis. Often they go out of favor because a lending institution has had too many losses in an asset class. Often they go out of favor because they have too many in their commercial loan portfolio. Occasionally they go out of favor because they have got a new chief credit officer that's got a personal bias towards a particular asset class. How would a business owner know any of these things?
A competent commercial loan broker will understand how to correctly package the loan and present it to a potential lender. Presentation is 1/2 of the battle. Many borrowers present a very poor package for a commercial mortgage. Again, a good competent mortgage broker will know how to put together a good outline of the transaction, the usage of proceeds for the loan, the financial strength of the borrower (s), the personal credit of the borrower (s), the strength and desirability of the proposed collateral, the cash flow of the current business or collateral and any pro forma projections for newer or start up businesses.
Competent mortgage brokers can make the process of getting financing significantly easier and expedite the loan. A good mortgage broker will know and will have made contacts with multiple lending sources. They'll also know when you should use a cash flow lender in contrast to a collateral lender. They'll also know when non-bank lenders will do transactions that banks might not consider.
A local lending institution can frequently give the better deal if you are only searching for the least expensive rate and points for origination. The local lending institution can also often approve a loan faster since they might be geographically close to the property and know of the neighborhood and any competitors. On the other side, the bank might demand a commercial banking relationship and a merchant account. In these examples, you could really feel you're in business with your local bank. Often if you're attempting with a local lending institution, you could have a short note, such as 5, 7 or 10 years. Think about it this way. In five years, you get to go through the whole process again of getting a mortgage!
If you're applying directly with an SBA lender, there are various types though they still are SBA lenders. An SBA lending institution is a bank or non-bank lending establishment that has been allowed by the SBA to loan money where the federal government will guarantee the loan in the case of default. An SBA bank with PLP status (Preferred Lender) is sometimes the simplest way to go because the loan usually doesn't have to be submitted through the SBA. The lender will guarantee the loan, approve it and obtain an SBA case number.
What people do not realize is some banks and lenders (be they SBA or conventional loans) are inclined to do loans whether there is either great cash flow or significant collateral. How would you know if a bank is a cashflow lender or a collateral lender.
Business owners also don't typically realize the greatest difference between a bank and a non-bank lender. Non-bank lenders almost always are more liberal because they are not typically subject to banking rules from the FDIC and OCC. This makes a significant difference.
The fact still is also that many banks and non-bank lending institutions don't like to do certain asset classes and that will change from more often than one would think. Special use properties (gas stations, hotels, restaurants, car washes) go in and out of favor with underwriters on a regular basis. Often they go out of favor because a lending institution has had too many losses in an asset class. Often they go out of favor because they have too many in their commercial loan portfolio. Occasionally they go out of favor because they have got a new chief credit officer that's got a personal bias towards a particular asset class. How would a business owner know any of these things?
A competent commercial loan broker will understand how to correctly package the loan and present it to a potential lender. Presentation is 1/2 of the battle. Many borrowers present a very poor package for a commercial mortgage. Again, a good competent mortgage broker will know how to put together a good outline of the transaction, the usage of proceeds for the loan, the financial strength of the borrower (s), the personal credit of the borrower (s), the strength and desirability of the proposed collateral, the cash flow of the current business or collateral and any pro forma projections for newer or start up businesses.
Competent mortgage brokers can make the process of getting financing significantly easier and expedite the loan. A good mortgage broker will know and will have made contacts with multiple lending sources. They'll also know when you should use a cash flow lender in contrast to a collateral lender. They'll also know when non-bank lenders will do transactions that banks might not consider.
About the Author:
Harold Jaynes has specizlied in doing gas station, convenience store and car wash financing since the late nineties. If you're interested in car wash loans, visit their website and learn about all your available options.
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