How banks work


Investment Property Mortgage Loan Applications That Succeed

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



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