Commercial Real Estate Financing Barriers Shattered By Alternative Solution Providers
Creative commercial real estate financing alternatives are numerous and the funds plentiful for those who are willing to fire their bank's loan officer.
November 15, 2010 - Fredericksburg, VA - (http://www.smart-business-financing.com) Still reeling from the effects of the financial crisis, commercial banks are turning away good projects, cutting funding for projects in progress, and refusing to refinance loans with balloon payments - a common feature in traditional commercial mortgages.
Business owners and entrepreneurs who walk away from their bank's loan officer empty handed can take heart in the exploding field of alternative commercial real estate financing, where hundreds of billions of dollars are chasing projects to fund.
So says Mike Lieber, a 13-year finance industry veteran, and creator of the business financing web site, Smart-Business-Financing.Com. Lieber has made a career of offering creative solutions to common business financing challenges.
"On the one hand you have a depressed market and numerous other issues creating a very tight commercial lending environment. But one the other hand, with interest rates at near zero, there is plenty of private money in the market looking for decent returns," he says.
Traditional commercial real estate financing from a bank comes with a host of onerous and inflexible requirements, while frequently taking months to complete. Though banks generally offer the lowest commercial mortgage rates available, they are the most rigid in their lending, often refusing loans on certain classes of property or excluding borrowing companies in certain industries.
Private lending sources do not have to follow any set rules, so they are free to fund projects that fall outside the stringent lending criteria used by banks but that make good business sense.
Lieber frequently sees the situations that elicit frowns from bank loan officers. Balloon payment defaults. Incomplete projects due to cancelled funding. Down payment shortages. Unusual, or "non-conforming," property types. And many more.
"If a project is reasonable and it presents a good investment opportunity, we can usually offer a solution," says Lieber. "We are able to offer 100% financing on many of our good commercial projects, something a bank will never do."
Private commercial financing in the form of loans or joint-venture arrangements may come from wealthy individuals, investment groups or more sophisticated financing organizations, including "hard money" lenders and private equity companies.
In return for higher interest rates than those offered by banks, hard money lenders can fund commercial mortgage loans at lightening speed, with less documentation and little or no concern for the credit quality of the borrower. For larger capital needs, companies often turn to private equity companies, which can provide critical commercial real estate financing in the "equity range" of the total costs of a project. The equity range is the difference between the total cost of the real estate and the amount a senior lender is willing to provide -- normally no more than 75 percent. A mezzanine loan or an equity capital investment from a private equity firm can supply the cash needed to fill any gaps. Private equity companies are quite versatile and they can provide creative, flexible financing solutions, but they expect a good return on investment.
With so many choices, it is important that borrowers shop around, but according to Lieber, the goal of the shopping should not be just to get the best rate.
"Commercial mortgage rates and terms sometimes vary widely from one lending source to the next. But with such a big financial commitment at stake - and possibly a large profit - unless you have expertise in commercial real estate financing, you need a trusted professional to advise and guide you through the complex commercial loan process."
About AEGIS Financial Solutions, Inc.: Since 1998, AEGIS Financial Solutions, Inc. has bee offering financing solutions using the fast, flexible and powerful resources of the cash flow industry and asset-based finance techniques. Helping people solve financial problems and get money when they need it most is what we do best.
Press Contact:
Mike Lieber, President
AEGIS Financial Solutions, Inc.
88 E. River Bend Road
Fredericksburg, VA 22407
mjl@aegisone.com
PH: (540) 548-2270
###
November 15, 2010 - Fredericksburg, VA - (http://www.smart-business-financing.com) Still reeling from the effects of the financial crisis, commercial banks are turning away good projects, cutting funding for projects in progress, and refusing to refinance loans with balloon payments - a common feature in traditional commercial mortgages.
Business owners and entrepreneurs who walk away from their bank's loan officer empty handed can take heart in the exploding field of alternative commercial real estate financing, where hundreds of billions of dollars are chasing projects to fund.
So says Mike Lieber, a 13-year finance industry veteran, and creator of the business financing web site, Smart-Business-Financing.Com. Lieber has made a career of offering creative solutions to common business financing challenges.
"On the one hand you have a depressed market and numerous other issues creating a very tight commercial lending environment. But one the other hand, with interest rates at near zero, there is plenty of private money in the market looking for decent returns," he says.
Traditional commercial real estate financing from a bank comes with a host of onerous and inflexible requirements, while frequently taking months to complete. Though banks generally offer the lowest commercial mortgage rates available, they are the most rigid in their lending, often refusing loans on certain classes of property or excluding borrowing companies in certain industries.
Private lending sources do not have to follow any set rules, so they are free to fund projects that fall outside the stringent lending criteria used by banks but that make good business sense.
Lieber frequently sees the situations that elicit frowns from bank loan officers. Balloon payment defaults. Incomplete projects due to cancelled funding. Down payment shortages. Unusual, or "non-conforming," property types. And many more.
"If a project is reasonable and it presents a good investment opportunity, we can usually offer a solution," says Lieber. "We are able to offer 100% financing on many of our good commercial projects, something a bank will never do."
Private commercial financing in the form of loans or joint-venture arrangements may come from wealthy individuals, investment groups or more sophisticated financing organizations, including "hard money" lenders and private equity companies.
In return for higher interest rates than those offered by banks, hard money lenders can fund commercial mortgage loans at lightening speed, with less documentation and little or no concern for the credit quality of the borrower. For larger capital needs, companies often turn to private equity companies, which can provide critical commercial real estate financing in the "equity range" of the total costs of a project. The equity range is the difference between the total cost of the real estate and the amount a senior lender is willing to provide -- normally no more than 75 percent. A mezzanine loan or an equity capital investment from a private equity firm can supply the cash needed to fill any gaps. Private equity companies are quite versatile and they can provide creative, flexible financing solutions, but they expect a good return on investment.
With so many choices, it is important that borrowers shop around, but according to Lieber, the goal of the shopping should not be just to get the best rate.
"Commercial mortgage rates and terms sometimes vary widely from one lending source to the next. But with such a big financial commitment at stake - and possibly a large profit - unless you have expertise in commercial real estate financing, you need a trusted professional to advise and guide you through the complex commercial loan process."
About AEGIS Financial Solutions, Inc.: Since 1998, AEGIS Financial Solutions, Inc. has bee offering financing solutions using the fast, flexible and powerful resources of the cash flow industry and asset-based finance techniques. Helping people solve financial problems and get money when they need it most is what we do best.
Press Contact:
Mike Lieber, President
AEGIS Financial Solutions, Inc.
88 E. River Bend Road
Fredericksburg, VA 22407
mjl@aegisone.com
PH: (540) 548-2270
###
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