Commercial Mortgage and Business Loan Lender Problems

Commercial mortgage borrowers should be prepared to avoid certain problematic commercial lenders unless alternative business loan options are impossible. One of the most serious commercial loan situations is a commercial lender that causes problems for their commercial borrowers on a repeating basis.

The conclusions in this article are based on a regular pattern of lending abuses observed by advising businesses for an extended period of time. I have encountered numerous business loan situations which have involved commercial lenders that I would not recommend as a result. Based on these experiences and daily conversations with other commercial loan professionals, I strongly believe that there are quite a few business lenders to avoid.

This business loan strategy article will describe the importance of avoiding "problem commercial lenders". The article will not name specific lenders to avoid, but key examples will be provided to illustrate why prudent commercial borrowers should be prepared to avoid a wide variety of existing commercial lenders when seeking viable commercial mortgage and business financing strategies.

Ineffective Pre-approvals for Business Financing

Business borrowers often want an early pre-approval for their business loan. The apparent result of the preliminary business financing approval is that it will allow the borrower to make other business commitments which are dependent on the commercial mortgage being approved.

An ethical commercial lender will treat any form of business financing approval very seriously. Commercial borrowers should expect that a meaningful version of such an approval will not be realistically possible in just two or three days.

Since this approach to pre-approvals frequently produces surprises for the commercial loan borrower, borrowers must be extremely wary of any commercial lenders that use this approach. There are several business lenders who provide this shortened and misleading version of a pre-approval within a few days of receiving initial applications.

Why do several business lenders utilize misleading business loan pre-approvals? There are several motivations and here are two of them. (1) To employ a commercial mortgage pre-approval approach that is similar to a residential loan process. (2) To prompt the commercial borrower to stop considering other lenders.

Due to the fact that numerous business loan processes are coordinated by residential mortgage brokers who are unfamiliar with typical commercial mortgage situations, this factor will be particularly pertinent when working with lenders that focus on business financing originated by less-experienced residential mortgage brokers. Such a misleading business lender should not even be considered for most commercial loan scenarios.

Misleading Yes or No Business Loan Situations

I published an earlier article which reported the questionable technique of many local and regional banks to say "yes" when they mean "no". When this happens, a bank will attach non-competitive commercial mortgage terms to business loans instead of refusing the loan. Business borrowers should explore other business financing options instead of accepting such unacceptable commercial loan terms.

Think Outside the Bank for a Commercial Mortgage

In some non-competitive business markets, it is unfortunately common for a lender to employ business loan terms that would typically not be seen in a more competitive commercial loan environment. Such business lenders can repeatedly take advantage of a non-competitive commercial lending imbalance.

An appropriate response by commercial borrowers is to seek out non-bank commercial loan options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for commercial mortgage solutions. For most business loan situations, a non-local and non-bank commercial lender is likely to provide improved business financing terms because they are accustomed to competing aggressively with other commercial lenders.

Commercial Appraisal Process and Business Financing Problems

For commercial mortgage loans, commercial appraisals are an unavoidable part of the commercial loan underwriting process. The commercial appraisal process is lengthy and expensive, so avoiding commercial lenders which have displayed a pattern of problems and abuses in this area will benefit the commercial borrower by saving them both time and money.

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