Commercial Loans Why Banks Are Reluctant to Offer Them
... And why we can help
Commercial mortgage loans are those loans you need when purchasing a motel or a hotel, a restaurant, a manufacturing plant, a warehouse, nursing home, mobile park, multi-family rental buildings, night clubs, office buildings, movie theaters and hundreds of other commercial properties.
However, you probably won't have much luck with such mortgage loans through the regular banks for a variety of reasons.
First of all, there is the specter of the past (more specifically, the boom and bust of the '80s) repeating itself.
Right now the economy is not doing that bad but there is also a glut of commercial properties built constantly. That's why the banks are carrying an ever-increasing load of commercial mortgage loans as a percentage of their total assets.
According to the Federal Deposit Insurance Corp., the percentage of commercial real estate loans lent by federally-insured banks jumped from 15% to 20% in the mid '90s to 40% in the year 2005.
So just like in the early '80s a similar expansion in commercial activity led to a bust, these days there is a similar apprehension that the banks might be getting a bit overextended in their commercial lending.
What this means for you, the average consumer, is that it is getting harder and harder to qualify for a commercial mortgage loan at a conventional bank.
Even if you find a no-doc small business mortgage loan, it usually has a $100,000 cap and comes with a hefty collateral requirement.
Here are some of the documents that a bank loan officer might ask you to produce before he would even look at your loan application in any detail:
- Your personal income tax returns, probably at least for the last 3 years.
- Articles of incorporation and corporate income tax returns at least for the last 3 years.
- Documentation of any bank assets, property, stocks and other valuables that can be held as collateral.
- State or City Occupational License and Corporate Resolution of Authority (which determines who is authorized to sign papers with the bank on behalf of all owners and/or partners).
This is all in addition to a sound Business Plan (usually 5 years) which proves to the loan officer that your business indeed will make money and has a low risk of default.
One thing a bank hates more than anything else is a defaulting loan. Thus they'll do anything and everything to prevent that from happening and that's why they'll pile up one tough requirement after another especially on the first-time commercial mortgage loan customers.
But does all this mean that you should give up on your business dreams? Of course not.
For one thing, the rents on commercial properties have increased by about 13% between 2005 and 2006, according to Global Real Analytics. The vacancy rates for commercial properties in the U.S. is at a low 11% as well. So it might be an excellent time actually for you to profit from investing in commercial property provided you have a solid business plan.
That's where the Mortgage Wizards Inc. come into the picture. We can provide you with the commercial mortgage loan you need with less paperwork and sometimes even less requirements and a lower credit rating than the regular banks can.
Why postpone your dreams for a better and more prosperous future?
Call us TODAY at (877) 310-FUND for a FREE and totally confidential consultation to see how we can help you best with your fixed- or variable-rate commercial mortgage loan
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