Over 70 per cent of all residential mortgages in the UK are arranged through Brokers and in some sectors this figure is even greater however Business Customers are still in the main talking directly to their bank to sort out their commercial finance needs.
In the US, 80 per cent of commercial loans are arranged through brokers. In the UK, about 80 per cent of commercial loans are sold directly by lenders with only 20 per cent being arranged through Brokers.
Business Customers needing a commercial finance advice including a commercial loan or mortgage or other business finance product should find that an impartial finance broker has a lot to offer them by way of a professional service, delivering quick results and saving them time that would be better spent in their business rather than trying to source finance.
Commercial mortgage rates are rarely set in stone, unlike domestic and Buy to Let mortgages. Therefore each individual mortgage is priced to match the borrower’s personal circumstances. When a business customer has established a relationship with a bank they start taking advantage of that relationship because they know that arranging a commercial finance solution such as commercial mortgage, loan, factoring deal is time consuming and therefore they offer you a rate which has has no incentive.
If a business owner wishes to obtain the best deal in the market place then they need to commit time to researching the numerous commercial lenders that are in the market place and understanding the best source of raising business finance, understanding the terms and conditions of the product in the market together with the lenders’ processing requirements.
For Commercial property investors, it is important to consider the potential of a Business remortgage. Like residential mortgages, commercial mortgages can be refinanced to take advantage of more favourable terms, or they can be re-mortgaged to establish a line of credit to use for running the business. This is also true of other financial products such as factoring, invoice discounting as well. This will allow businesses to increase their margins by reducing their finance costs, and could allow further profit for further investment. This can also offer business clients a way to gain independence from their bank, separating debt from day to day banking arrangements.
This commercial financing 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 in their search for viable commercial financing.
I have been advising business owners for over 25 years, and I have encountered many commercial financing situations which have involved commercial lenders that I would not recommend as a result. These problematic situations have especially involved commercial mortgage loans, credit card factoring and unsecured business loans. As a direct result of these experiences and daily conversations with other commercial financing professionals, I do in fact believe that there are a number of commercial lenders that should be avoided. This conclusion is typically based on more than one negative experience or an obvious pattern of lending abuses.
I have published many articles which are designed to assist commercial borrowers in avoiding commercial financing problems. One of the most serious commercial financing situations is a commercial lender that causes problems for their commercial borrowers on a recurring basis. It is particularly this type of commercial lender which prudent commercial borrowers should be prepared to avoid unless viable alternative commercial financing options do not realistically exist.
Here are a few examples of why certain commercial lenders should be avoided.
COMMERCIAL FINANCING AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 1 – Yes or No?
I have published an article which discusses the tendency of many banks to say “YES” when they mean “NO”. Such banks will typically attach onerous commercial financing conditions to business loans instead of simply declining the loan. Business owners should explore other business loan alternatives before accepting commercial financing terms that put them at a competitive disadvantage.
COMMERCIAL FINANCING AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 2 – The Commercial Appraisal Process
For commercial real estate 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.
COMMERCIAL FINANCING AND COMMERCIAL LENDERS TO AVOID EXAMPLE NUMBER 3 – Think Outside the Bank
In smaller metropolitan markets, it is not unusual for a dominant commercial lender to impose harsher commercial financing terms than would typically be seen in a more competitive commercial loan market. Such commercial lenders routinely take advantage of a relative lack of other commercial lenders in their local market. An appropriate response by commercial borrowers is to seek out non-bank commercial financing options. It is neither necessary nor wise for commercial borrowers to depend only upon local traditional banks for commercial financing solutions. For most commercial loan situations, a non-local and non-bank commercial lender is likely to provide improved commercial financing terms because they are accustomed to competing aggressively with other commercial lenders.