This real estate and business financing article discusses a concept which is referred to here as “Thinking Outside the Bank”. It is meant to be a variation of the well-known “thinking outside the box”. Despite the prominence of traditional banks, they are not the only viable source which should be considered for a commercial mortgage or commercial loan. There are many reasons why a commercial borrower might not go to a traditional bank for a commercial real estate loan or other business finance circumstances.

Business borrowers have more commercial mortgage and commercial loan alternatives than they realize. As noted above, I refer to these business financing alternatives as “Thinking Outside the Bank” because a typical commercial borrower probably believes that a bank is the best source for a business loan in business investing situations. Non-traditional business lenders are usually viewed as having the competitive edge for many common commercial financing and commercial real estate investment property financing scenarios.

In some cases a traditional bank will offer to provide a business loan but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the commercial mortgage outright, perhaps because they do not even provide business financing to the commercial borrower’s particular industry. In either case, the commercial borrower is likely to benefit by “Thinking Outside the Bank” for their business investing efforts.

Commercial loan borrowers might feel that a bank is their most likely source for business financing. However, since traditional banks usually focus on a few types of businesses and commercial real estate investing, non-traditional business lenders should be emphasized for any business loan situation. Therefore the recommended business finance and commercial mortgage strategy discussed in this article is to “Think Outside the Bank”.

As I reported in a previous business financing and investing report, in many commercial mortgage situations it is common for a local bank to assess stricter commercial loan conditions than would typically be seen in a competitive business loan scenario. Such banks can often take advantage if there are few business lenders in their market.

A prudent response by business borrowers is to consider non-traditional commercial mortgage options. It is not necessary for borrowers to depend upon traditional banks for business loan strategies. For typical commercial loan scenarios, a non-bank lender can often provide better business financing terms because of the competitive market situation.

There are at least three business financing situations in which business borrowers will typically experience that non-traditional lending sources can provide conditions that are best for the borrower: (1) commercial real estate investment property loan programs; (2) credit card factoring and business cash advance programs; and (3) working capital management programs for credit card processing.

Business Loan Investing Options – Commercial Real Estate Investment Property Loan Programs -

Two of the most common commercial mortgage difficulties experienced by commercial borrowers can be avoided if they “Think Outside the Bank”. The first business financing situation is the prevailing practice of traditional banks to avoid most special purpose investment properties (such as funeral homes and golf courses).

A second business loan possibility is the frequent practice of many commercial banks to add recall and balloon conditions to their commercial loans. The bank can then require early payoff of the commercial real estate loan under stipulated conditions. Both business financing situations can easily be prevented by a non-traditional lending source.

Business Financing Choices – Business Cash Advance Programs -

Most businesses that accept credit cards will qualify for a business cash advance with their credit card receivables. Traditional banks will typically be very poor candidates to consider if a business needs assistance with credit card factoring and business cash advances.

Because successful business owners typically need more working capital than they can obtain from a bank, it is important for a business to “Think Outside the Bank” with non-traditional lenders to help with this working capital management function.

Credit Card Processing Programs – Working Capital Management Choices -

The selection of a credit card processing service can be critical in improving the cash flow of a business with significant credit card activity. Credit card processing providers can be combined with the credit card financing process mentioned earlier.

In coordinating a business cash advance and working capital business loan program, it is usually possible to achieve improvements in the business owner’s credit card processing services. Traditional banks are usually not competitive in providing assistance with a business cash advance using credit card receivables. So it is likely that a non-traditional lender will be the major source of competitive help with credit card processing improvements.

A closing business financing and commercial real estate investment property financing thought: I have written an earlier business loan article about commercial lenders to avoid. It should be noted that there are in fact both traditional and non-traditional (non-bank) lenders which should be avoided.

When business owners are “Thinking Outside the Bank”, they should be ready to avoid troublesome non-traditional business lenders in their investment quest for worthy working capital management dealing with commercial real estate loans, credit card financing and credit card processing.

Florida Home Buyer Tax Credit Extension makes it through Congress

November 1, 2009

For Florida homebuyers this is great news! Congress both extended and expanded the First-Time Home Buyer Tax Credit program Thursday for Florida homebuyers.

The White House says the President will sign it into law.

The up-to-$8000 tax credit’s expiration date has been pushed forward to spring, requiring Florida homebuyers to be under contract before April 30, 2010, to take advantage and to be closed by June 30, 2010.

The program’s basic eligibility requirements remain the same:

• Florida Buyers can’t purchase the home from a parent, spouse, or child
• Florida Buyers can’t purchase the home from an entity in which they’re a majority owner
• Florida Buyers can’t acquire the home by gift or inheritance
• All parties to the Florida purchase must meet eligibility requirements

The new law includes some notable updates, however.

For one, the definition of  Florida “first-time home buyer” has been expanded to include most homeowners with at least 5 years in their current Florida home. “Move-up” buyers like these are now eligible for IRS tax credits, but with a cap gain at $6,500.

This means that you don’t have to be a true Florida first-time home buyer to claim the “Florida first-time home buyer tax credit”.

Other eligibility changes include:

• The Florida homes sales price may not exceed $800,000
• The Florida home must be a primary residence
• Income thresholds raised to $125,000 for single-filers and $225,500 for joint-filer

And remember, the Florida First-Time Home Buyer program grants a tax credit as opposed to a deduction. This means that a tax filer would receive a cash payment of $2,000 from the U.S. Treasury if his “normal” tax liability totals $6,000 and he was eligible for all $8,000 available under the new tax credit law.

Questions related to home buyer

Two of the most specialized business financing and commercial real estate loan situations involve golf course financing and funeral home financing. These two complex business loan scenarios will be used to illustrate viable commercial mortgage strategies.

Funeral home loans and golf course loans involve difficulties not found in common business loan situations. A commercial loan to buy a business for a golf course or funeral home is among the most difficult business financing scenarios, and refinancing will probably be more difficult than the initial commercial mortgage purchase loan for buying the business.

Fewer Business Lenders – Funeral Home and Golf Course Financing

There has been a significant reduction in local and regional banks offering business loan programs for funeral home financing and golf course financing. This of course compounds the already difficult commercial loan environment for funeral homes and golf courses due to fewer commercial lenders which are willing to provide reasonable commercial mortgage terms.

Buy a Business – Business Opportunity Financing

Business financing to buy a business opportunity is a special business loan variation in which commercial property is not purchased. The land and buildings in such a situation are typically leased for ten years or more. Similar to a conventional mortgage to buy a golf course or funeral home, competitive business opportunity financing is not easy to find.

Business Loan Terms to Avoid – Funeral Home and Golf Course Loans

It is critical to avoid undesirable business loan terms when refinancing or buying a funeral home or golf course business. Particularly important terms involve the percentage of value for the commercial mortgage and the length of the commercial loan. Regional and local banks will frequently offer short-term business financing instead of a longer-term commercial loan.

Stated Income Commercial Mortgage Difficulties

Although a stated income commercial loan has a certain number of benefits in specific circumstances, the use of stated income business financing is not recommended for a funeral home loan or golf course loan. A major limitation of a stated income commercial mortgage is the maximum business loan possible. A further limitation is the low percentage of value for stated income commercial financing involving either golf course financing or funeral home financing.

Business Value and Commercial Real Estate Value for a Business Loan

For golf course loans and funeral home loans, the commercial real estate loan value is often less than the business value. This is particularly true with a funeral home appraisal. The problem with this disparity is that many business lenders will provide a business loan that includes only the commercial mortgage loan value, and this will produce significantly reduced business financing.

Funeral Home and Golf Course Financing – Avoid Excessive Business Loan Fees

Commercial borrowers should expect some legitimate and reasonable commercial mortgage fees during the initial commercial loan process. There are several commercial lenders that continue to take advantage of the severe lack of business loan choices for purchasing, building and refinancing a golf course or funeral home. One of the particularly unacceptable tactics is to charge exorbitant fees ($25,000 is not unusual) whether or not the business financing is successfully completed.

Commercial Lender Options for Funeral Home Loans and Golf Course Loans

As mentioned earlier, the supply of acceptable business lenders for this kind of business financing has been reduced. An agreeable commercial mortgage for a golf course loan or a funeral home loan will depend upon a wise lender choice.

A business borrower must be ready for the restricted number of qualified lenders for a golf course and funeral home commercial loan to buy a business. It is essential to find a lender with the resources to complete the complicated commercial mortgage process in a timely manner and concurrently avoid the business loan difficulties previously described.

Additional Business Finance and Commercial Mortgage Considerations

Even though the potential business loan problems described in this article are substantial, there are additional commercial mortgage difficulties which should be anticipated and avoided. Borrowers should plan to have early and extensive discussions with a business financing expert before proceeding with either purchase or refinancing efforts involving specialized real estate investment property such as golf courses or funeral homes.

Watch Related Video

www.rapidadvance.com rapidadvance serves the unique financial needs of small and mid-sized businesses by providing a great alternative to a business loan. As a leading provider of business cash advance funding services we understand your need to quickly access business funding.

Question about business loan

Many business borrowers do not prepare adequately for the commercial mortgage business loan problems that are common in most business financing scenarios. By anticipating typical commercial loan difficulties, business owners are more likely to avoid potentially disastrous business finance consequences.

With rapidly deteriorating financing for residential investment property, overcoming business loan and commercial mortgage problems is even more important. This summary provides an introduction to four critical commercial loan factors and should assist commercial borrowers to better anticipate key business financing difficulties.

It is not unusual to find that business investment lenders and business loan brokers are not as forward-looking about business financing and investing difficulties as most borrowers would expect, and I have published another article about commercial lenders to avoid. The focus here is on four typical commercial mortgage loan and SBA business loan difficulties often overlooked by commercial lenders and borrowers.

Commercial borrowers should be prepared for commercial loan scenarios that involve unexpected business financing problems. With business financing there are several key commercial mortgage problems which should be avoided. Business loan problems are more serious and prevalent than many borrowers would imagine.

Some of these commercial mortgage business loan difficulties might be unavoidable, but in most cases these business financing and SBA loan challenges can be successfully overcome. Commercial borrowers will be poised to take proper corrective action if they are aware of common commercial loan difficulties.

Avoidable Commercial Real Estate Investment Property Financing Scenario Number One: Use of secondary business financing -

Many commercial borrowers want the flexibility to use subordinated debt (a seller second or other secondary financing) in order to acquire a commercial property or business opportunity investment with a smaller down payment. Many forms of business investing will not permit a seller second or other forms of subordinated debt. With a commercial loan via non-traditional business lenders, a commercial borrower can use subordinate business financing (including seller seconds) to reduce the amount of their down payment.

Commercial Mortgage Example Number Two: Sourcing-seasoning assets and seasoning of ownership -

Some commercial lenders will require borrowers to document the source of the down payment for a purchase (sourcing). Many business lenders require borrowers to document where down payment money is coming from, often for up to 12 months in order to provide seasoning confirmation. Ownership seasoning is determined by establishing a minimum period for ownership prior to being eligible for refinancing.

Such a problem will probably not deter all borrowers. When it does apply, business borrowers should insist on a lender without seasoning and sourcing requirements.

Business Financing Example Number Three: Commercial mortgage recall terms -

Business loan recall conditions will often allow the commercial lender to force the borrower to repay their loan before the normal loan expiration. If a commercial loan agreement does not include recall terms, such a possibility is not of immediate concern to a borrower.

Commercial lenders will routinely include recall conditions in a business loan agreement. The provisions which will prompt a recall will vary and typically include annual business lender monitoring of financial statements, tax returns and credit history. Without agreed income, tax returns and credit standards, the lender can choose to require the borrower to pay off the commercial loan within a very short period of time.

Contingency Plans for Business Finance Recalls: What to do about a commercial loan recall -

To avoid an unanticipated recall scenario, commercial borrowers would be wise to consider only commercial loans which do not have recall terms. For commercial borrowers who have recall provisions in their business financing agreement, it will be equally wise to consider refinancing their business loan or commercial mortgage before a recall occurs so that refinancing is accomplished when it is most appropriate for the borrower.

When borrowers receive a business financing recall, they must quickly obtain refinancing assistance. When reviewing commercial loan choices for refinancing, borrowers should attempt to exclude potential lenders that require recall terms.

Business Loan Example Number Four: Business financing that needs a long-term commercial loan -

Is long-term investing and financing really possible for a business loan? Some business investment lenders will only offer 5 years (or less) before commercial real estate financing will expire with a balloon payment due.

There are commercial mortgage programs which can provide long-term financing, even though many lenders will only offer shorter-term options for investment business financing. Longer-term commercial real estate financing will often be the critical difference that facilitates a successful business investment because a new business loan will not be required for many years and commercial loan payments will also be reduced.

Additional Commercial Loan Problems and Solutions -

Unfortunately commercial borrowers will frequently encounter commercial mortgage business loan problems similar to those described here. To better prepare for this, an advisable approach is to explore business financing resources that will facilitate a better understanding of complex commercial loan issues. The Commercial Real Estate Loan Guide and The Working Capital Management Guide are two examples of business finance resources that will provide possible solutions for many difficult commercial financing situations.

Watch Related Video

www.rapidadvance.com rapidadvance serves the unique financial needs of small and mid-sized businesses by providing a great alternative to a business loan. As a leading provider of business cash advance funding services we understand your need to quickly access business funding.

Question about business loan