How to Evaluate Potential Lenders for Commercial Loans

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How to Evaluate Potential Lenders for Commercial Loans

4page_img2-bigAny time that you are entering into a business deal it is important to know who you are doing business with. That is never more important than when you are seeking commercial loans.

One of the most important questions that you can ask a potential lender is how quickly they process commercial loans. Many times a great business deal has only a very short window of opportunity. So you will want to understand how long it is going to take your lender to process your request and your documents. This is also a good time to verify exactly which documents the lender requires so that you can be well prepared when you begin the application process. If the time frame for approval sounds too long then you might also want to ask if there is any way to expedite the process.

Another critical factor to selecting a lender is the fee structure for their commercial loans. Most lenders will advertise their interest rate very clearly but there can be a lot of other fees that will be added into the cost of your loan. You need to know what those fees are for and how much they will cost you so that you can determine the full cost of the loan from each lender. You might be required to pay an application fee up front to cover the administrative costs of reviewing your documentation. This is a nonrefundable fee and does not guarantee that you will be approved for the loan. In addition you will most likely need to pay appraisal fees, a survey fee, legal fees and a loan origination fee. Some of these fees could be rolled into the loan or they could be due at the closing. It is best to ask for a full fee schedule to know exactly what you are expected to pay and when.

Get to Know the Lender

You will also want to do some research on the lender. It is helpful to know if they write many commercial loans. This can help you to decide if you are willing to pay the nonrefundable fees knowing that the chance for approval might be very small. You will also want to decide how comfortable you feel working with the lender and the employees there. In some rare cases you might need to work with them due to an unforeseen issue. In these cases, such as a slow month of business or damage and inability to conduct business for a short time, you will want to know who you will need to speak with and how they could assist you.

Questions for a Potential Lender

When you are speaking to potential lenders, this is your opportunity to interview them as well as their chance to interview you. Having a few questions prepared to ask all of the potential lenders will help you to have a means of comparing and contrasting their services and features. Asking about fees and if they have the ability to waive any of the fees will tell you how eager they are to get your business. Asking who will be your main point of contact will also help you to determine if you would be working with the local office or if you will need to communicate via email or a phone call. And asking what their policy is for assisting you with issues will help you to evaluate their customer service. All of these factors could be very important to you over the term of your loan.

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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
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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.

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