How to Know if Bad Credit Commercial Mortgage Lenders are the Real Deal

We’ve all seen the ads for Arizona bad credit commercial mortgage lenders and some of the deals look great. As the saying goes, though “all that glitters is not gold,” so it’s important to find out what a financing company is bringing to the table before you sign up,

Arizona bad credit commercial mortgage lenders usually all work on the same premise. It’s hard, if not impossible, to get a loan if you’ve got rotten credit or haven’t had a chance to establish credit yet. Sure, some will let you use your personal score instead of your business score to try to qualify, but that doesn’t necessarily help. After all, data from  CNBC concludes that the median score for an approval right now is 759, which is an “excellent” FICO score. Meanwhile, the average person has an average FICO score of 704. About 75% of the loans are going to people who have a score over 700, which means most of us—even those of us who have been diligent for years—are not going to qualify. So, there’s certainly a great need for alternatives.

However, each lender approaches providing this underserved market with funding a little bit differently, and knowing the nuances of the trade can help you identify whether a lender is really going to help you or if they’re full of smoke and mirrors or plan to charge you an arm and a leg for their services.

For example, entities which say they’ll lend to everyone or have an unusually high approval rate often have a trick up their sleeve. No lender can fund every deal—they’d lose money hand over fist. Some deals are simply bad ideas. In that case, the company may be trying to give you a false sense of security to encourage you to apply or are outright lying to get you in the door, neither of which is a good sign.

Work with Someone Who Knows How to Evaluate Your Deal

The second trick Arizona bad credit commercial mortgage lenders use to get you in the door is a one-size-fits-all approach. They fund all sorts of deals and aren’t particularly knowledgeable in the areas they serve. For example, if you do fix-and-flips, you want a local who knows the industry establishing your terms. If you’re planning to start a grow operation, you want someone who can accurately evaluate your business plan to see if it’s viable and will yield returns. If the person funding your project has no experience in your specialty, they can’t accurately assess what you’re bringing to the table. Worst case scenario, they’re getting behind you on a plan that will go bust; best case, they may not offer you the best possible terms because they erroneously assume your deal is riskier than it really is.

Beware of companies with a high number of complaints.

It probably goes without saying, but it’s important to check into the reputation of Arizona bad credit commercial mortgage lenders before you jump in. You want to choose someone who has been in business for years—a company that’s too new could be green or may have changed names to escape a bad reputation. A company that’s been around for an extended period of time, on the other hand, will probably have a few bad reviews simply because they’ve worked with the general public a lot, but should have overall good sentiments. This provides extra assurance that you’ll have a good experience too.