All posts by bigdaddydennis

Questions to Answer before Using Commercial Lending

Commercial lending processes are not quite the same as personal lending. Borrowers will want to be prepared for this process and have information and answers prepared to expedite the application process.

Unlike with your home mortgage, a commercial property loan often requires you to pay off the loan much sooner than the term stated on the loan documents. You will pay the regular interest and principal payments for a specific length of time, generally 3, 5 or 10 years, and then there is a balloon payment due. This payment is the entire balance of the loan. In many cases the borrower will not have sufficient cash to pay the balance and will need to refinance or requalify for a loan. If the business has less cash flow that when it originally applied then the interest rate could increase or you might not qualify at all. In this case the property is at risk for foreclosure. So you will want to be very certain of the terms of your commercial loan and know that you have the means to meet the payment structure that is being presented. You don’t want to pay on a property for five years only to lose it in a foreclosure over a huge balloon payment.

In addition to understanding the actual repayment terms, you will also want to be sure that you are asking for a manageable loan amount. You will likely need to make a down payment of 15% to 35% to secure the loan. But consider the benefits of making a larger down payment if possible to lower the final payment amount for the future. Knowing how much you need to borrow and how much the lender will offer you needs to be balanced with your ability to pay on a monthly basis as well as at the end of the loan term. Planning for the future and that large payment can save you from facing foreclosure, the loss of your property and potentially the loss of your business.

You also need to answer your questions about a time frame for your loan. Knowing that a commercial loan is a long process with many steps can help you to manage your expectations and plan your purchase. There are many documents that you will need to submit to justify your business’s financial position as well as the personal financial footing of all of the owners. In addition, there are several levels of approval that will need to be cleared before the loan is actually completed and you can get your money. Having this information will allow you to plan your purchase and deal with any time constraints that the seller might impose.

Be Ready to Prove Your Business’s Stability

Because there is no government backing for a commercial loan, banks are very strict on their eligibility for commercial real estate loans. They will want to see that your business is established and has been successful for 3 – 5 years. To demonstrate this fact you could be asked to provide leases, asset statements and your original corporate documents to the lender. If the history is not long enough to satisfy the review committee then you could be asked to submit additional business or personal documentation.

Know the Hurdles You Will Face and Be Ready

Once you have answered many of these important questions about the requirements to secure commercial lending and repaying the loan, you will know if you want to proceed with the application. If you are moving forward then you will want to have all of your documents in order to help to speed the process as much as possible. Then with your loan secured you can take the next step and become a commercial property owner.

mark-gowlovech-150x150Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701   

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About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Managing Expectations when applying for a commercial mortgage

If you’ve never gotten a commercial mortgage before you may not know what to expect.

Getting a mortgage for a commercial property can be a bewildering and frustrating process. Don’t expect the process to resemble the application process for a residential mortgage.

Commercial banks are far more conservative in who they give money to and the process will likely take longer than you expect.

You as a borrower should begin the process expecting a lot of scrutiny. Commercial banks are far more risk-averse, because the mortgages they issue are not backed by any government entity. These types of loans often charge more in interest and require higher down payments than their residential counterparts. If you want to get favorable terms on your loan, be prepared to provide a lot of documentation. Have on hand, financial records going back three to five years, lease agreements, incorporation documents and asset statements. Your lender may ask for further documentation but it is important to have these basic documents on hand. This will not only ensure the process goes smoothly, but will also give your lender faith in your ability as a business owner to pay back the loan.

You should also expect to wait a long time before your mortgage is approved and be aware of the loans terms and conditions. Getting a business loan from a bank is a long process. Banks have the most stringent review process of any lending institution. They will thoroughly examine the documentation you provide and it may take several weeks to get a written commitment. Even after a written commitment is provided there is always the danger that the loan can be vetoed afterward, forcing you to start the process all over again. Even if you manage to secure a mortgage, it is not always a matter of paying the mortgage on time. Some lenders may expect you to provide documentation, tax returns, income statements or balance sheets on a regular basis. The lender may stipulate that your business maintains certain financial benchmarks, such as maintaining a positive cash flow during the term of your mortgage. If you fall short of the specific standards and conditions of the mortgage, you may go into default and risk foreclosure.

Putting it all together

Getting a commercial mortgage from a bank is a very different process than getting a residential mortgage. You will be expected to have a lot of money up front. Your financial history will be closely examined. The process is very time-consuming and there are no guarantees. It is important to be aware of these factors before beginning the process. The conditions set by your lender may require you to keep your business operating at a certain standard. If your uncertain as to whether your business can maintain these standards then you may want to look at other options instead of a traditional mortgage. In short, have realistic expectations about the loan approval process and be aware of the conditions of your loan.

Happy senior business man making his notes at workDennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

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About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

   

Finding the right Alternative Lender for your Commercial Loan

You may be seeking an easier way to get a commercial loan through an Alternative Lender. But with the bewildering array of options out there, how do you find which one is right for you?

Brandon-Abney-Arizona-Home-Mortgage-FHA-Specialists-150x150Have you been trying to get financing from a traditional bank, only to be turned down after a rigorous and exhaustive application process? Non-bank institutions are offering innovative loans to those who don’t meet the higher standards of traditional banks. But any online search will quickly reveal a bewildering array of options in terms of alternative loans. How do you find the right one for your needs?

The main reason to seek a loan from an alternative lender is that such sources often don’t set the same high standards as traditional banks. But what types of loans do these groups offer and how do you know which one is right for you? Broadly speaking alternative lenders offer three types of unique loans, cash advances, micro-loans and invoice financing.

A cash advance loan involves the issuing of lump sum in exchange for a percentage of future sales (i.e. credit card transactions). These loans are easy to qualify for and are usually quickly approved, but this comes with the disadvantage of extremely high interest rates and frequent payments that could eat away at revenues. Micro-loans are the most similar to traditional bank loans, but are often for smaller amounts and with a much faster application process. However these loans often require an excellent credit score and a well-established business. Invoice-financing involves borrowing an amount of money against unpaid invoices. This is great if you have many outstanding invoices and need quick cash to cover the shortfall. However if your customers don’t pay their bills, then you are responsible for paying off the remaining balance along with any fees or interest. This is simply a broad overview of the types of loans alternative lenders offer, indeed there are many more, but you will always need to take into account the needs and structure of your business before seeking financing.

What should you consider when getting a commercial loan from an alternative lender?

Consider how your business operates, the consistency of your cash flow, what you need the money for and how quickly you need it. Referring to the three types of loans described above as examples: Seek a cash advance if you need money quickly, your business is relatively new or if your credit score is low. By contrast you may want to seek a micro-loan if your business is well-established and your credit looks good. This can be a faster way of getting a small amount of money at a relatively low cost. Invoice factoring may be ideal if you have many outstanding payments from your customers and need money quickly to plug the gap in your revenue stream.

Ask yourself the right questions before seeking financing an alternative lender

Finding the right loan is always about asking yourself the right questions and thoroughly examining your situation. There are many other types of loans which alternative lenders offer. But the three types of loans described above apply to specific situations. Consider your specific situation to determine the specific type of financing you need. Armed with this sense of purpose you will be better equipped to navigate through the many financing options available online.

Happy senior business man making his notes at workDennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Does President Trump Have the Minerals to Say NO? Is he a Phony? Did he Lie to us?

We are again approaching a milestone in our history that will define us for the future. I’m not talking about some stupid Russian Investigation or Melania’s Shoes, or some other meaningless historical insignificant event.

What is about to happen in the next few weeks is that there is going to be another increase to our huge, very massive debt load on the United States of America. The looming debit crisis is about to hit the center stage of controversy on all the news media.

There is a massive gorilla in the room folks, and it’s just about to wake up.

We are rapidly approaching 20 Trillion Dollars in debt, a number that I cannot truly understand.

According to the Donald, 20 Trillion is the tipping point to financial ruin. It’s the point where everything will fall apart and we will enter an economic apocalypse like we’ve never seen before. (At least that is what he said during the election). It’s when the world will wake up and realize that the USA is bankrupt and has no chance of ever getting out of the death spiral of financial failure.

So will the Donald fix the problem? Put a stop to this insanity of destroying our children’s and grandchildren’s future, with no hope of ever making America Great Again?

I really don’t know, but I do know something, and that is 2+2=4. You can bank on this information. This is a mathematical fact that will never change.

Now you need to ask yourself this question……..

What Does 20 Trillion Debt = Banana? Happiness? A Better Way of Living? Good future?

The answer is   …… it equals a Whole Lot of Misery, Pain and Depression like we’ve never seen before.

So will the Donald say NO? Is it time to stop this path to ruin? We will see in the next few weeks if he has the Minerals to Fix America. After all, if we have a financial collapse like we have never seen before and we are in some epic depression, who’s going to care about what shoes the Donald’s wife wears?

Let’s see what’s going to happen, in the next few weeks; we will see if the Donald will do what he promised and why a whole bunch of the quiet majority voted for him to do.

Happy senior business man making his notes at workDennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC 
Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Dangers of Merchant Cash Advances

Merchant cash advances may seem like a quick and easy type of commercial loan, but do the benefits really outweigh the risks?

First what is a merchant cash advance? Broadly speaking it is a lump sum issued and then paid off with a percentage of future sales (most often credit card transactions). This means any time your customer pays with their credit card, a specific percentage of that transaction will go towards paying off the outstanding debt. Another feature of this type of loan is that you pay a factor, rather than an interest rate. A factor rate is a number multiplied by the amount borrowed, which gives you the total amount you owe. For example if you borrow 2,000 dollars on an MCA with factor rate of 1.5 then you owe 3000 dollars. This payment structure has very specific implications. But who would want to get an MCA in the first place?

This type of commercial loan can appeal to borrowers with bad credit, little in the way of collateral or those without an established business track record. Issuers of MCA’s often don’t ask for the same amount of documentation and usually have a broader criteria of who can qualify for their loans than traditional lending sources. Getting an MCA is also faster and easier than getting traditional financing. Obviously, this model appeals to business owners who don’t qualify elsewhere or those who need money quickly.

But consider the many downsides to this type of loan. MCA issuers don’t have to abide by the same regulations as other lenders and therefore they can charge exorbitant interest. MCA’s can be very expensive and it is not unheard of for borrowers to pay triple-digits in the way of APR. The fact that the amount owed is fixed based on a factor rate, also means there is no benefit to paying off these types of loans early. You will always owe the same amount for an MCA ( i.e. amount borrowed x factor rate), regardless of when you pay it off. The unique payment structure of MCAs however presents the greatest risk to borrowers.

What are the implications?

Because MCAs are often paid off on the basis of credit card transactions, they can consistently eat away at your revenue streams. The lender could be entitled to as much as 45 percent (depending on the agreement) of your daily credit card sales. Therefore if this type of loan isn’t paid off quickly, your revenue is deferred to paying back the loan rather than expanding your business (defeating the purpose of getting the loan in the first place). In the worse case scenario, you could find yourself trapped in a cycle of debt, taking out another advance just to pay off the previous one or getting new loans simply to continue operating your business.

Even though a Merchant Cash Advance may seem attractive if you have poor credit, consider the expense and risk involved in this type of commercial loan.

Considering the risks involved in Merchant cash advances you should probably consider them a last resort when seeking financing. While every business is different, the benefits of MCAs are few while the risks are numerous.

Dennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

EntRotten Credit? Ideas to improve your business credit score to get the commercial loan in Texas you needer a post title

Your business credit score is a vital factor impacting your ability to secure a commercial loan in Texas. Learn some strategies to improve your business credit score.

A beautiful woman holding a business cardYour business credit score can be more important than your personal credit score when it comes to qualifying for a business loan. According to the Federal Reserve, 45 percent of small business borrowers were denied loans because of their credit score. Having a low or even non-existent business credit score will put you into a bad position, forcing you to pay higher interest rates and accept less favorable payment terms. Learn some steps to build your business credit score and strategies to help you establish your credit.

It is vital that you regularly check that your information is current with all reporting agencies. Each business credit reporting agency uses a different strategy to determine your score, so check your score with all three major agencies ( Dun and Bradstreet, Equifax and Experian), at least quarterly. Carefully review your credit report, takes steps to correct any errors and consistently update the information each agency takes into consideration. That way you can ensure that whichever score a potential lender takes into account, your business credit score will be accurate.

There also certain steps you may not be aware of that can help you improve or establish a good business credit score. You should ensure that your vendors consistently report your payments to credit reporting agencies. Paying your vendors on or ahead of time is an excellent way to improve your score. Even if your vendors don’t report to an agency regularly you can still cite them as a trade reference on your credit report. Similarly you should ensure that your lenders actually report your payments to credit agencies. This is vital, as you want your on-time payments to be reflected in your score.

Some other ways to raise your business credit score

FICO-Score-Card-150x150The strategies outlined above are meant to help you consider issues you may not have been aware of. Knowing that each reporting agency calculates your score differently and that your payments to vendors (not just lenders) are reflected in your score are distinct factors taken to take into account with a business credit score. But strategies that improve your personal credit score are also applicable. Obviously you want to pay your debts on, or ahead of time in order to maintain your score. Credit utilization is also a factor, so you may consider getting a business credit card to help you establish your score. However keep the balance of these cards at 20 to 30 percent of the credit limit.

Your business credit score will impact the type of commercial loan you can obtain

Your business credit score will determine how much you pay in interest and the terms of any loans you may take out. It is important therefore that you keep your information up to date with all major credit bureaus, document your vendor relationships and ensure that your lenders actively report to credit bureaus.

userDennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Evaluating Alternative Lenders: Are they the right source for a Texas Commercial Loan?

If you own a small business, are just starting your business or if your credit is less than excellent then non-bank alternative lenders might be a good source of financing.

Arizona-Home-Loan-Team-Matt-and-Judy-Callahan-300x199Broadly speaking an alternative lender is any non-bank institution that gives loans to businesses. The internet offers a wide variety of financing options from these types of lenders, from the traditional term loans to more innovative loans like invoice-factoring and merchant cash advances. Below we discuss this growing industry and the general advantages and disadvantages involved in alternative lending. This will help you evaluate whether alternative lending is the best option for you.

Overall traditional banks are less willing to finance small businesses, so alternative lenders are becoming a go to source for smaller businesses to get the funding they need. Traditional banks see small businesses as equally risky investments that offer a smaller pay off. This tendency is reflected in the fact that traditional banks gave 72.5 billion dollars in financing to small businesses in 2006 versus just 44.7 billion in 2014. Small business owners still have to go through the same rigorous application process as their larger counterparts when getting loans from traditional banks, but they are more likely to be denied. By contrast, alternative lending is a booming industry, projected to provide 200 billion in financing by 2025. These types of lenders typically approve 61-65 percent of the applications they receive.

There are some noted advantages and of course disadvantages to getting a Texas Commercial Loan from an alternative lender. The most obvious advantage is the speed of the application process. It takes on average 25 hours to apply for traditional bank financing, not to mention the many weeks or months it may take to get approval. By contrast, alternative lenders are not nearly as regulated as traditional banks and many use software in order to approve your application quickly.

Alternative lenders also offer more flexible loans. For example you can borrow against outstanding invoices or purchase new equipment using the new equipment as collateral. Because the process is more streamlined, alternative lenders are willing to offer smaller loans that wouldn’t be economical for traditional banks. These and other factors make alternative lenders a great source of financing for smaller businesses, startups and business owners with bad credit.

Sounds great but what are the disadvantages?

The faster processing time and the higher rates of approval by alternative lenders means such loans are often more expensive and the terms of repayment can vary widely. Because these institutions process and approve loans faster, the loans they issue are considered riskier, resulting in higher interest rates. The loans issued are often for less money and the terms of payment may consistently eat away at your revenue streams. Some alternative loans require weekly or even daily payments ( for instance merchant cash advances take a percentage of your daily credit card transactions). Therefore if you are going to seek alternative financing it is important to plan ahead in order to find the least expensive loan on the terms that suit your needs.

Alternative lenders may be a good source for

a commercial loan depending on your situation.

The wide variety of alternative lenders and the many types of loans they offer mean that some of these advantages and disadvantages may or may not apply. Depending on your situation you may want to exhaust more traditional financing options before pursuing a loan from a non-bank institution. If you have a good credit score and have a well-established business, a loan from a traditional bank might better suit your needs. However if your just starting your business, need financing quickly, don’t have much in the way of collateral or if your credit score isn’t ideal, alternative loans can be a great way to secure the funding you need.

mark gowlovechDennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Evaluating whether an SBA loan is the right type of commercial loan for you

If you’re struggling to secure financing for your business, an SBA loan may be the right option for you. These government backed loans are ideal for borrowers with excellent credit but don’t have the collateral needed to qualify for other loans.

Kirah Bartlett Arizona Home Loan Office ManagerAn SBA loan is similar to a traditional commercial loan, but a portion of the loan is backed by the US government. This makes it safer for lenders to finance business owners who may not have an established track record, who lack sufficient collateral or who already have to much debt. However that doesn’t mean that anyone can easily qualify for an SBA loan. An SBA loan requires potential borrowers to have a good credit score and to provide a well thought out business plan.

According to David J.Hall, an SBA spokesperson “The main difference (between an SBA loan and a commercial loan) is that the SBA tries to make the loan more affordable by generally providing longer repayment terms and, in some cases, no fees to both borrowers and lenders.” SBA loans also require less collateral on the part of the borrower. SBA loans are longer term, require lower down payments and generally have flexible repayment options. SBA loan interest rates are also set within a fixed range, depending on the type of loan and therefore can be less expensive than traditional commercial loan. These advantages mean SBA loans are worth pursuing ,if you can qualify and if you can’t secure funding elsewhere.

The Small Business Administration broadly offers two types of SBA loans, SBA 504 loans and SBA 7(a) loans. The main difference between the two is that each has different restrictions on what the financing can be used for. SBA 504 loans are intended for the purchase of fixed assets such as real-estate and equipment. They cannot be used to purchase new inventory, to refinance existing debt or make speculative real-estate purchases. The SBA 7(a) loan can be used for a wider variety of purposes such as providing working capital, purchasing new inventory and refinancing existing debt.

Depending on which type of SBA loan you need there are still some minimum qualifications required by the Small Business Administration. Your business must be for profit, it must be defined by the SBA as a small business, a definition that varies depending on your industry. Your business must operate in the US, you must have a reasonable stake in the business itself and above all you must have exhausted all your other funding options. A good credit score and viable business plan are also necessary to qualify.

Is an SBA loan the right commercial loan for me?

If your a small business owner with a reasonable credit score and a well-thought out business plan but don’t have an established track record then an SBA loan is a great option. The favorable terms and low interest rates make SBA loans an excellent way to get the funding you need. However consider your qualifications and if you really have exhausted all your funding options before pursing an SBA loan.

Where do I apply for an SBA loan?

The best place to begin the SBA loan application process is the of course, the SBA website. The site should detail the first steps needed to begin the application process and help you connect with lenders that offer SBA loans.

Happy senior business man making his notes at workDennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial mortgages,commercial loans,commercial lender,commercial hard money lenders texas,commercial mortgage Texas,commercial loan Texas,commercial mortgage Arizona,commercial loan Arizona

Things to consider before applying for a Commercial Loan in Texas

Before beginning the commercial loan application process it is important to ask yourself the right questions. Asking yourself these questions will help you evaluate which funding source is right for you.

4page_img1Whether you should apply for a Commercial Loan Texas depends on your situation. Are you a new business owner without a proven track record? Do you need financing quickly? Your answers to these and other questions will impact the type of loan you should apply for or whether you should apply for a loan in the first place.

What are your personal and business credit scores? If either of these scores are low, you may not qualify for an attractive loan with a low interest rate and you may want to consider non-traditional financing options. Of course if you are a new business, you probably don’t have a business credit score. In such cases it is important that you have a detailed business plan prepared prior to beginning the application process. That way your lender will at least have confidence in your businesses ability to pay back the loan in the long run. In either case, if your credit score is low you may want to raise it before beginning the loan application process.

How fast does your business need the money and what do you need it for? If you’re business needs financing urgently, then your options are limited to loans with higher interest rates. The application process for business loans usually takes some time and expediting the process means you as a borrower are considered “riskier.” It is important to anticipate what your business needs in the future, in order to avoid taking out expensive loans. Also have a detailed understanding of what you will be using the loan for and what return you can expect on your investment. If you’re uncertain of how much money you need, you should consult with a business advisor before beginning the application process. Lenders will expect you to have a detailed understanding of how you intend to use the loan and to provide supporting documentation.

How do these questions help?

If you are a new business owner without a proven track record or if you have a poor credit history, you may want to reconsider taking out a loan. There may be less expensive options to secure the funding you need, such as seeking out new investors or selling off some of your personal property. It is also important to plan ahead of time, to know how your business generates revenue to understand whether the expense of a loan is worth it in the long run. Don’t borrow money if the project you are financing doesn’t generate enough revenue to justify making interest payments.

Above all consider your situation and plan ahead of time before

getting a commercial loan in Texas and plan ahead

Consider your situation before seeking a commercial financing. If your credit score is low you may want to consider other options. Before beginning the process, ask yourself if you really need the money or if the burden of a loan is worth it in the long run. If your uncertain how your business will make money from the project you are financing you may need to reevaluate whether a loan is worth it.

Happy senior business man making his notes at workDennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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Evaluating your options: commercial mortgages Texas vs. Leasing

Does getting a commercial mortgage make sense for your business or should you get a lease?

Consider the benefits and risks of both options before you decide.

You may not be aware of the specific benefits of mortgaging vs. leasing. Both options have their advantages and disadvantages. Below is a summary to help you decide which option may be best for you.

Should you choose to get a mortgage you gain equity in the long term, both as you pay down the mortgage and as the property appreciates in value. This translates into a valuable potential asset for your business, should you choose to sell or refinance the property in the future. Mortgaging also offers stability, as the monthly payment is usually fixed during the term of the mortgage. This option also provides you as a business owner the opportunity to rent any extra space you are not currently using. This ability to earn income from mortgaging your property comes with its tradeoffs. You will be investing more up-front and you will assume responsibility for the safety of your tenants should you choose to rent out any extra space. The high initial investment involved means you will be tied to the space for a longer period limiting your options to expand your business in the future.

Leasing offers greater tax benefits, costs less upfront and generally gives you a wider array of properties to choose from. With a lease, as a business owner you can deduct your lease payments and your utility costs, whereas with a mortgage you have fewer deduction options. The lower initial investment for a lease (usually the down payment is 1/6 of the down payment required for a mortgage) means you can invest more in your business operations upfront. In addition, as a general rule there are usually more commercial properties available for lease than there are available for purchase. Perhaps the greatest drawback of leasing, is that lease payments are usually higher than mortgage payments, you cannot earn equity and the terms of your lease may change. It is usually at the land-lords discretion to redefine the terms of a lease, giving your business less stability in the long run.

So what does all this mean?

When making the decision as to whether to mortgage or lease your business space it is important to ask yourself the right questions. Do you see yourself outgrowing the space in the near future? If so then it is probably better to lease the location. If not, a commercial Texas mortgage offers long term stability and the opportunity to gain additional income, either from equity or the rental of extra space. Fit small business, recommends mortgaging your commercial property should you anticipate staying longer than seven years and leasing it otherwise.

As a rule of thumb consider the needs of your business in the long term when deciding whether to pursue a commercial mortgage or to lease a property

Consider the needs of your business in the long term when deciding whether to buy or lease commercial property. Does your business need stability? Do you want greater control over your property? A mortgage is probably the best option. Do you want to more invest your business operations or do you see expanding in the near future? Then a lease might be the best option for you.

Dennis Dahlberg

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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