their score is erroneously brought down even though they have never been late on a single payment.We see it all the time.Borrowers that own other commercial property should look into using equity from other property, via the new Commercial Second Mortgage, to potentially finance the rehabilitation costs. SBA commercial loans carry a lot of misperception by borrowers. The cream of the crop. For example we work with a bank out of New Jersey that will often fund SBA commercial loans with borrowers credit score in the low 500’s. The expense is the downside.

But for solid project, in good markets with good borrower experience. However, commercial construction borrowers “pay” for these loans with their time and intense documentation/reporting requirements – brain damage. What sets you apart from other agents/Hard Money Mortgage officers? Therefore, commercial loans are not personal loans and it is the business or the business project that needs to qualify and prove reliability and feasibility in order to be eligible for commercial financing.It was a “given” just 6 months ago that real estate was a sure thing. There is some documentation required that does not vary that much between lenders.Now, many without the stomach for risk or the ups and downs of this investment class have switched their attitude to the opposite perspective and have gone back to renting.

That way, you will save yourself a lot of time. You need to have in hand as much information about your business as possible so when you contact the lenders, they can analyze your situation and come up with a financial solution that suits your commercial needs. Is it harder to Get Small Amount Commercial Loans? No. Are they? Indeed, there are all kinds of commercial loans available like guaranteed loans, loans for veterans, handicapped and all kind of assistance loans for those in need or underprivileged.

For example, if the borrower is attempting a cash out refinance at 75% loan to value, there are simply no hard money lenders that will fund that deal. However, many hard money lenders would still fund that deal if the rest of the details fall into line. On the other hand the points and rate are lower with stated income but the prepayment penalties can be very expensive. Both options have their pros and cons though.

From a traditional banks perspective rehab loans are essentially the same as construction loans.People need to live somewhere and rental housing is normally much easier to qualify for and get done. Currently, borrowers that want to go the traditional bank route for their rehab financing should think SBA (assuming the borrower will occupy their business out of the subject property).We are also seeing an interesting dynamic right now as many people re contemplate the benefits and potential appreciation of real estate ownership. There are exceptions to this of course for strong borrowers, but for the average business the SBA will probably be the most viable option (and it can be a great option as well). Following are some facts about commercial loans that need to be taken into account and that though they should be common knowledge, people usually ignore them.

The negatives with hard money are obvious; they are expensive and often carry harsh terms.For example, other building types like office, retail, etc that do not get the benefit from Uncle Sam are down to portfolio lenders and underwriting guidelines like 60% loan to value – max. Traditional commercial construction loan also carry negatives.

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