Podcast: Download (Duration: 5:57 — 8.3MB)
If you've recently purchased an office condominium, poured your hard-earned dollars into improvements, and are now facing roadblocks in securing financing, you're not alone. Many small business owners find themselves in a similar predicament, dealing with the complexities of commercial loans. In this blog post, we'll explore the challenges you might be facing and offer guidance on how to navigate the process successfully.
Understanding the Landscape
Small Commercial Loans: A Tedious Journey
The purchase of an office condominium often falls under the category of small commercial loans, typically anything under a million dollars. When dealing with such transactions, your primary options are credit unions, community banks, or regional banks. In some cases, an SBA refinance might be an option, provided it meets the eligibility criteria.
Loan to Cost and Other Considerations
If you've owned the property for less than a year, lenders might use the loan-to-cost ratio based on your initial investment. This involves considering both the purchase price and the money invested in improvements. Lending percentages usually range from 70 to 75 percent. However, as time passes, some lenders may opt to use the new appraised value of the property.
Navigating the Loan Placement Process
Working with Experienced Professionals
To tackle the frustrating commercial loan process, consider seeking assistance from experienced professionals. The speaker in the video emphasizes their expertise in dealing with small commercial loans. They outline a systematic approach involving a matching program and personal database contacts with banks across the United States.
Finding the Right Fit
While some deals can be matched internally through platforms, the speaker often relies on personal connections to find the right fit. They stress the importance of understanding each bank's lending territory and footprint, ensuring a smoother lending process.
Alternative Funding Sources
If traditional lenders prove unyielding, the speaker mentions alternative funding sources. These non-bank options, known as debt funds, offer different solutions, including no-doc loans with five-year fixed options amortized over 25 years.
Overcoming Frustration: A Proven Process
Realistic Expectations
The key to successful commercial loan placement is presenting a realistic deal. Avoid pushing for overly ambitious loan values and ensure your financial documents, including tax returns and financial statements, are robust. Realistic expectations increase your chances of becoming an attractive candidate for lenders.
Embracing Technology for a Seamless Future
The speaker acknowledges the frustration in the lending business but expresses optimism about the future. With advancing technology, the lending process should become more straightforward, focusing on fundamental factors like property value, revenue, and credit score.
How We Can Help
If you find yourself frustrated with the commercial loan process, don't despair. The speaker invites you to visit bookwithbo.com for assistance. They offer a proven process, leveraging their extensive network to match your unique situation with the right lender.
Conclusion
Navigating the world of commercial loans can be challenging, but with the right guidance and realistic expectations, success is within reach. Whether you opt for traditional lenders or explore alternative funding sources, remember that assistance is available. Embrace the guidance provided and turn your frustration into a successful commercial loan journey.