Commercial Loans Can Help Dreams Can Come True—Or Turn Into A Nightmare

The right commercial loans can help make your dreams come true or turn them into a nightmare—if you are not careful.

Even people that have the greatest, coolest bosses on the planet can’t help but wonder what it would be like to be the man (or woman) in charge. What if the business was their business? What if they were the owner, the shot caller, the man (or woman) that made big money?

But that is just a pipe dream. It will never happen. Yeah, you are the brains behind the brawn at your current job, but you’d never get approved for a big enough loan to start your own business.

Then you find out that commercial loans do not have to be bank approved. You can apply for loans through one of your local hard money lenders.

When The Dream Goes Right…

Hard money lenders are easier to get approval from for commercial loans, but what you have to be careful of are the terms of the loan. Make sure you know exactly when you will be expected to make payments, how much they will be, how much the interest is, and whether you have a balloon payment at the end.

If all those things work out for you, it is not hard to imagine the loan being the start of what becomes your beautiful business. Since you planned well, you asked for how much you needed plus ten percent (just in case). You knew how much to apply for because you did your homework.

Your developers finish your project on time, you open shop, and the public loves your business. The money comes rolling in, and you can pay off the loan on time and even make the balloon payment.

When the dream goes right, it can be fantastic, but sadly that is not always the case. Sometimes it goes wrong—oh so wrong.

When The Dream Goes Wrong…

You are the brains at your current job, so you decide to venture out on your own with supreme confidence in your chances for success. When you start looking for commercial lenders, you get overwhelmed and just pick someone. This guy has done hundreds of commercial loans. Surely, he’ll be fine—right?

As it turns out, he totally didn’t understand your business, underfunded you, and demanded you begin making payments pretty quick. It would take too long to start the whole process over, so you go with it.

Your attempt to cut costs results in more costs and you have to get a bridge loan to make up the difference. Construction is delayed, you open months later than planned, and your original lender wants you to start making payments before you’ve had a chance to establish the business.

There’s an obvious lesson to be learned here. Do your homework. Know what you need and what you could need. Also, know what your lender will do before you even start the process. There will be a lender that knows your business and can help. You just have to look.

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.