Monday, March 19, 2007

Business Loans - 7 Reasons Not to Use a Bank

So you're a small business proprietor and you need a business loan to additional the aims of your company. Where make you turn?

When it come ups to a business loan or commercial existent estate loan, there are many good grounds NOT to turn to a traditional bank. Here are some of the most important. Many small business owners, will happen most of these points directly applicable to them.

"The bank turned me down"

Of course of study the biggest ground most small businesses travel looking for option beginnings of commercial existent estate loans is because they have got been declined by the banks. Small businesses are often forced to look for other beginnings of support because the banks will not supply it. This is not even listed below, since there are many positive grounds to prefer non-bank funding, even if you can get approval from a bank.

Reason 1 - The minimum loan amount available from banks is too high

In many cases banks will not offer a commercial existent estate loan for less than $250,000. So if you only need $100,000 you will be pushed to borrow more than than you actually need. Or if your property will not back up a $250,000 loan you are out of fortune with the banks.

The solution is to look for an option support beginning that tin supply a lower minimum amount. Some commercial funding services will travel as low as $100,000, and will often give you better terms and much better service than the traditional banks.

Reason 2 - Many traditional banks will charge you an up-front "commitment fee" just to analyze and procedure your application

Banks usually believe they are doing you a favour by processing your application, so they will often do you pay for their attempts to
win your business.

The solution is to happen other constituted and believable lenders who are eager to offer you better service without charging you a fee for processing your application.

Reason 3 - Most traditional banks will severely restrict the amount of cash you can get from a commercial existent estate loan.

Banks usually have got very narrow regulations about where you can utilize the cash derived from a commercial existent estate loan. If you need a cash injection for your business, or desire to utilize the return from a commercial mortgage as a down payment for another property, most banks will not be interested in that type of loan.

Look for a lender who makes not curtail your usage of the cash derived from commercial existent estate loans. Some services, such as as AEX Commercial Financing Group, LLC can supply commercial loans that give you up to $1 million in cash to utilize however you want.

Reason 4 - Most traditional banks necessitate elaborate business programs before approving a commercial existent estate loan

Many small businesses have got business plans, but they are usually not sufficiently detailed to fulfill the banks. As a result, applying for a commercial existent estate loan from a bank can turn into a very clip consuming and expensive process. Creating the type of business program that is adequate for the banks will usually cost thousands of dollars.

Find a lender who makes not necessitate business programs as portion of their underwriting procedure for a commercial loan.

Reason 5 - Many traditional banks necessitate tax tax tax returns for a commercial existent estate loan

If you are either not able or unwilling to supply tax returns for your business, many banks will not give you a commercial existent estate loan. Even some of those banks that make not petition tax tax tax tax returns will inquire borrowers to subscribe Internal Revenue Service Form 4506, which authorises the lender to obtain tax returns directly from the IRS.

When looking for option beginnings of support make certain they do not necessitate either of these statuses (tax returns or access to your Internal Revenue Service records).

Reason 6 - Most banks will necessitate cross collateralization of personal property

Even though there is sufficient collateral in your business property to secure a commercial existent estate loan, many banks will necessitate you to supply further security by putting up personal assets. Business people have got go so used to banks doing this that they just assume it is a necessity.

But the truth is, over-collateralization like this tin curtail your personal freedom to dispose of your personal assets as you see fit. And fortunately, there are non-traditional lenders who make not necessitate cross collateralization at all.

Reason 7 - Most banks necessitate income verification

Many small business people and self-employed borrowers have got incomes that are planetary and hard to document. There are many legitimate grounds for this, but traditional banks generally make not care. Very few of them will supply commercial existent estate loans without complete income verification.

An option used by some non-traditional lending beginnings is to utilize the "Stated Income" approach. Look for a lender who utilizes the Declared Income attack and makes not necessitate income verification.


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