Commercial Loans - Bad Credit

Commercial loans for borrowers with bad credit are limited to a few options. Often borrowers find themselves in very difficult positions as many traditional and nontraditional banks will not even look at their loan request if their score is below a 650. Too often the borrower's credit score is unfairly reported as many commercial borrowers have great credit history, but because they have multiple mortgages, multiple lines, etc. their score is erroneously brought down even though they have never been late on a single payment. We see it all the time.

Options for borrower with bad credit are, in general limited to 3 options - SBA commercial loans, commercial hard money and "story" lenders.

SBA commercial loans carry a lot of misperception by borrowers. The biggest and most important for you to know is that NOT all SBA lenders are the same. And more to the point, the SBA never actually loans any of its own money. They only guarantee banks that they will be paid back if the borrower defaults. So the point is that the banks make up most of the underwriting criteria. There is NO minimum credit score that the SBA mandates. For example we work with a bank out of New Jersey that will often fund SBA commercial loans with borrowers credit score in the low 500's.

Commercial hard money is probable the first thought for many when considering a commercial loan with a borrower that has bad credit. Most hard money commercial lenders are interested in the properties equity and or its cash flow and the borrower's credit score is often just an afterthought.

Commercial Hard money lenders want to see at least 40% equity in the property or a 60% loan to value in order for them to seriously consider funding the deal. Speed and flexibility with underwriting are the highlights of commercial hard money. The expense is the downside. Borrowers should expect to pay 3-6% points and have a rate around 13-16%.

"Story lenders" are banks that are willing to listen to the borrower's story about their difficult situation.

They are often willing to overlook many difficult situations such as bad credit, weak business cash flow, high loan to values, etc. Although there are few banks that would describe themselves as a story lender the borrower should look locally or work with professionals in the business that may know of a few banks that can get over their difficulties.

For example, we recently closed a loan that was in foreclosure by refinancing it with another bank that was more willing to listen to the borrower than their existing bank. Their situation was that their loan had ballooned and despite their best efforts they could not get their existing bank to refinance the loan or find another bank that would either. After a year of searching they couldn't get it done and their existing bank put more pressure on them by calling the "note" (forced foreclosure). We knew of a bank out of California that would be interested, provided the borrower refinance some of their unsecured business loans into the proposed loan to improve the borrowers over all cash flow.

So, borrowers with bad credit seeking commercial loans should be prepared for some "brain damage" as they will have to find a viable source after hearing many "no's".

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial real estate loans or commercial mortgage broker store or commercial loan rates

Startup Business Financing

Before you start to obtain startup business financing, it is very important that you determine the approximate amount that you will require. The current assets minus current liabilities will be the working capital of the business. Most of the time, you can see such information in the balance sheet and through this you will be able to know how much money will be required to carry out your business on a short-term basis.

Having found out the amount of startup business financing required, you will have to think of a way in which you can get a loan for your business.

o Start-up Financing is available to entrepreneurs whose business is based on a solid business model with a credit worthy structure. o Banks award business loans to those that have a well spelled out plan which showcases your partners, your track record, your strategies and advantages.

Banks are conservative where investments are concerned. The chances of getting a loan will be more for an existing business in comparison to a new one.

o No bank wants to lose money by taking risks. If your business proposes to be a risk, you'll have to work harder to get your small business loans approved

On the other hand, you will be able to acquire a startup business financing loan if you make a good loan request and have a good plan for your business. Help can be obtained from the SBA as well as the Small Business Development Centers can be obtained easily, as they are situated in most major cities in the United States. Your business plan must consist of your personal bank statements, sales and cash projection. If you are taking the help of the SBA then you will need to state how you will reimburse the startup business financing loan and you will also be required to guarantee the same. The bank might want to see your personal investment in the business apart from the time that you give to the business.

o Banks would want to know your business's financial prospects. They want to gauge its worth and how much money you're moving. o Alternative sources, (excluding banks) may want you to "pay" more for your start up business loan. o You may have to pay higher interest rates. You might also need to offer some equity in your business to receive funding

Ways in which you can get loans faster and easily

Financial assistance sometimes comes from institutions in the form of credit or loan. This loan can be obtained at a relatively short period of time and there are financial resources that will help you get the loan. Few of such startup business financing resources are:

- Credit cards: You can get a credit ceiling of twenty thousand dollars (for your small business) from big credit card companies if you have a good credit record. - Unsecured business loans: Try such a loan if you do not want to guarantee the loan personally or if you do not have a credit record. - Equipment leasing/financing: Many companies are willing to lend you the money taking equipment as collateral for your loan. - Asset based loan: is ideal for using equipment to acquire loan, account receivable or leveraging your stock.

o Those having a mortgage with a bank, find it easier to obtain small business loans. o Check newspapers for financing offers. Such institutes grant small business loans and processing might be easier with them. o Availing a start up business loan has become easier, thanks to a growth in competition among lenders. o Plenty of channels are available for raising capital. Most of the above avenues have abundant variations. Build up a solid business plan, along with a financial adviser, and just start asking.

Do not forget to check your financial requirements regularly and inform the investors about the financial position as well as the progress of the business on a regular basis.

Hi, I'm Akhil Shahani, a serial entrepreneur who wants to help you succeed. If you like to work smart, check out http://www.SmartEntrepreneur.net It's full of articles and resources to help you start and grow your business successfully. Please visit us & download our special "Freebie of The Month" at http://www.smartentrepreneur.net/freebie-of-the-month.html

SBA Loans, Angel Investors, and Entrepreneurship

SBA loans are alternatives to using angel investors. Next, your success as an entrepreneur relies on you being a knowledgeable and experienced manager pertaining to the industry in which you plan to enter. Many angel investment groups only meet once a quarter as it relates to providing financing to small businesses. Due to the economic recession, most angel investors are seeking to obtain low risk investments that generate highly recurring streams of income that can come in the form of dividends, cash payouts, or other forms of capital disbursements. The presentation of a business plan will be different depending upon the requirements of the individual financier.

Successful entrepreneurs keep their overheads low and their productivity high. Minimize the amount of capital needed by keeping overheads low, productivity high, and ownership of capital assets to a minimum. Angel investors want all of their investment put directly into making the business grow in order to insure a high rate of return. Venture capital is only reserved for large scale businesses. Negative economic changes should be discussed in your business plan as it relates to working with a SBA lender, angel investor, or venture capital firm.

If you are seeking to purchase real estate, you may want to work with a private lender that can provide the capital that you need if you do not qualify for traditional mortgage or hard money financing. We will discuss the acquisition of real estate via a number of different financing means as we progresses through these series of articles. Real estate is usually one of the best investments that you can make as an entrepreneur if you are seeking to acquire owner occupied properties that will be used in conjunction with your operations. This is due to the fact that you will be able to generate a very high rate of return on the capital appreciation associated with your building or properties. The capital return related to any real estate investment should be clearly shown in all aspects of your business plan as this is a large appreciable tangible asset.

It is inadvisable for an entrepreneur to wait for the launch of a new business to become knowledgeable in that field. You should review all legislation that may impact your business when you are producing a business plan for an individual investor, SBA loan, or any other type of financing. For the best success, enlisting the help of a highly qualified business plan writing professional is always recommended. As we discussed before, is extremely important that you have a certified public accountant were covered in working with you when you're seeking capital from an outside funding sources.

Angel Investor List Download. No registration required! Includes Free Business Plan Template.

Matthew Deutsch is a prominent business plan writer. His work has been included in nine books pertaining to this subject. Additionally, Mr. Deutsch has written extensively on subjects regarding entrepreneurship, small business lending, angel investing, and other related topics.