| Your commercial property loan is turned down | | | | loan before it approves a bigger one, |
| - Why?? It is particularly tough to get an | | | | especially with the sub prime catastrophe |
| investment property mortgage loan, and you | | | | that we're seeing today. A bad loan for lots |
| will often find yourself rejected for no | | | | of money is not good for the lender or the |
| clear reason. This can be frustrating, but it | | | | borrower. |
| is a learning experience. With each terrible | | | | |
| rejection, you get a little wiser. | | | | When you are working out your business plan, |
| | | | be realistic about how much you need, and how |
| Well, what if you could skip all of those | | | | much you are able to pay back. It's nice to |
| rejections and learn from others' mistakes? | | | | have more than enough money to start your |
| Let's look at the most common reasons why | | | | business, but it's not so nice when you are |
| investment property mortgage loans get turned | | | | struggling to pay the bills and have that |
| down. Then, you will know what to expect when | | | | giant debt hanging over your head. Ask for |
| you apply for your financing. | | | | just as much as you need, and don't aim too |
| | | | high. |
| The Type of Business | | | | |
| | | | The Source of Funding |
| The most common reason that loan applications | | | | |
| are rejected is that the bank simply does not | | | | Most traditional lenders will want to know |
| offer financing to certain kinds of | | | | detailed information about where the funds |
| businesses. Banks loan money on the basis of | | | | are coming from to make the down-payment. |
| possible risk, and some business types are | | | | This is a reasonable request, but it can get |
| considered riskier than others. If you are | | | | those of us seeking a loan into trouble. The |
| trying to get financing for a golf course, | | | | reason why this can be problematic is that |
| restaurant, gas station or church, you might | | | | they may consider the source a high risk. |
| find it tricky to get funding. On the other | | | | Remember, they're not as optimistic about |
| hand, if you are looking for funding for an | | | | your business as you are! |
| apartment complex or office building, it will | | | | |
| be much easier. | | | | Many businesses finance their down payment by |
| | | | using funds from what is called "subordinated |
| What is your solution? Look for a lender that | | | | debt." This basically means some kind of |
| specializes in that particular type of | | | | secondary financing, like a seller second. |
| business. On the Internet, there are all | | | | Banks and other traditional lenders don't |
| sorts of financing company options available. | | | | like to see this. A non-traditional lender |
| Also, look for non-traditional lenders who | | | | will be much more likely to approve a loan |
| may be more likely to take on what they | | | | that uses secondary financing as a down |
| consider riskier ventures. | | | | payment. |
| | | | |
| Don't Ask For Too Much! | | | | Finally, remember that we all get rejected! |
| | | | Probably everyone you know who has started a |
| A big problem that causes many rejections is | | | | small business has been turned down at least |
| that borrowers simply ask for too much money. | | | | once, and most likely many more times than |
| A bank is always ready to approve a smaller | | | | that. |