How to get a Commercial Loan

Since the credit crunch of 2009 more and more business owners are coming to grips with the lack of commercial  funds available for their business.  Just two years ago almost any business owner could walk into any bank and walk out with a line of credit.  That has all changed.  Even business owners with 700 and higher credit scores and excellent credit history are now being turned down by their banks for loans.

What is a business owner to do?  Cut jobs?  Slash expenses?  Increase marketing?   It still takes cash to operate a business.

Some business owners go with credit cards.  This is fast and easy to set up.  However, the interest rate and fees can exceed 18-27%, taking most of your profits.

Investors are another option but there is very little investment money out there for new or even existing businesses right now.  If you were to use an investor, they would want at least some control of your business.  This changes the dynamic from having “your own business”.

Hard money lending, also called asset based lending, is an option if you own your commercial property.  You could take out a hard money loan against the property.  Interest rates for this are high, usually at least 15% or more, with high points and a short term on the loan.  This is expensive money and can be used as a bridge to get through a short cash crunch but does not provide any long term solution.

Any other alternatives?  What about a commercial loan broker?  A broker is a commercial funding solution specialist.  A broker meets with the business owner and discusses your business needs, now and in the future.  The broker is able to analyze your financial documents and create a loan application package that focuses on the positive aspects of your business and what your business expects to achieve.  Putting together this loan package is critical to the approval process for your loan.  The broker also has multiple lenders in every category, and preferred relationships with these lenders.  By submitting your loan package to more than one lender, you will have much greater odds of getting a timely approval and may even have the opportunity to comparison shop for the best offer.  In 60 days you won’t have your loan come back declined and have to start over.  If it is declined by one lender, it may at the same time be approved by two others.  Remember, your loan package has been professionally prepared with the expert knowledge of the broker.  Approval is more likely. 

Just think about it.  They put the entire loan package together to show the assets of your business and present it to multiple lenders on your behalf.  The broker negotiates with the lenders and gets you your money.  So you have more time to run your business.

Ken Garratt writes for www.fundingapproval.com