Tag Archives: commercial lending

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.

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Commercial Bridge Loan: How to Evaluate the Pros and Cons

You’re greater than doubtless conscious of your commercial short-term financing choices and how they’ll make it easier to obtain your long-term objectives at this level. However, in case you are leaning in direction of a commercial bridge loan, be sure you weigh all the execs and cons earlier than making your last resolution.
The commercial bridge loans are numerous issues. For example, these specific type loans could also be simply what you want in your future endeavor, they are often the capital you had been hoping for and they will help you notice your funding objectives in document time. However, for all the good that comes with commercial short-term financing, there are nonetheless just a few minor disadvantages and one main drawback to this specific form of commercial financing.
In actual fact, the story all the time begins out the identical. So typically you’ll see a brilliant, enterprise savvy particular person with an incredible funding plan get a commercial bridge loan with out weighing the execs and the cons. Consequently, their nice funding can simply blow up of their face as a result of they didn’t actually take the time to contemplate one among the largest disadvantages—bigger or somewhat pricey common funds. Positive, this enterprise savvy particular person greater than doubtless was conscious that short-term financing is simply that short-term and with all issues short-term there tends to be a worth. However, like most individuals, this brilliant, savvy enterprise particular person merely didn’t notice precisely how short-term impacts the reimbursement course of.
Moreover, most commercial bridge loan lenders are merely not versatile with it comes to delayed or delinquent funds. This implies earlier than you realize it you can be struggling to pay late funds, penalties, and even bigger loan charges. You could even assume effectively ensuring you will have everlasting financing lined up will be sure that you received’t find yourself proudly owning an absorbent quantity of money on common foundation. Effectively, after all, long-term financing that’s readily accessible will assist remedy this downside, however long-term financing that isn’t fairly but accessible means you continue to incur curiosity (excessive curiosity) in your commercial bridge loan in the meantime.

 

Past the
Pitfalls
 
commercial bridge loan
So at this level you might be most likely questioning—effectively if bridge loans have the capacity to flip right into a monetary nightmare, why are they nonetheless so fashionable in the funding property business? Effectively, as beforehand talked about, when dealt with proper, bridge loans can finally assist get the job performed. Furthermore, most lenders enable their debtors to select from a number of reimbursement choices. Thus, in case you take the time completely assume by your present and future monetary scenario, your plans in your commercial property in addition to simply how you intend to pay your loan again in full then a bridge loan isn’t a nightmare ready to occur.

Desires

come true while you assume issues by

 
In the end, as beforehand talked about, short-term financing could also be simply what you want to get your subsequent enterprise enterprise going. However, it’s all the time in your finest curiosity to take a look at a commercial bridge loan or another form of short-term financing from each attainable angle to guarantee that you’re not placing your self in a worse place than you began out in.

 

Dennis Dahlberg Dealer/RI/CEO/MLO

Stage four Funding LLC
Arizona Tel:  (623) 582-4444 

Arizona Tel:      (512) 516-1177 
Dennis@level4funding.com
www.setabay.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Arizona | 78701    

 
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About the writer: Dennis has been working in the actual property business in some capability for the final 40 years. He bought his first property when he was simply 18 years previous. He shortly discovered about the superb funding alternatives supplied by trust deed investing and hard money loans. His want to assist others make money in actual property investing led him to specialise in different funding for actual property buyers who could have hassle getting a conventional financial institution loan. Dennis is keen about different funding sources and sharing his information with others to assist make their desires come true.
Dennis has been married to his fantastic spouse for 42 years. They’ve 2 stunning daughters 5 superb grandchildren. Dennis has been an Arizona resident for the previous 40 years.