How to Work with Commercial Loan BrokersDecember 17, 2018
Assets America® is a full service, highly reputable commercial loan broker and commercial mortgage broker. Furthermore, we work with borrowers to arrange a full array of commercial real estate (CRE) loans and commercial & industrial (C&I) loans. Our loans start at $5 million with virtually no upper limit.
The main reason to use a commercial loan broker like Assets America® is to access an entire network of lenders and commercial funding sources. As a result, this will save you substantial time in trying to find the lender on your own with the best rates and terms that most closely meet your requirements. To that end, this blog will review how to hire and work with a commercial loan broker, and suggest questions to ask prior to hiring one.
Hiring a Commercial Mortgage Broker or Commercial Loan Broker
When planning a project, no decision is more important than how to arrange financing. In fact, the right lender will understand your needs and offer you the best available mix of terms and interest rates. However, trying to ferret out the ideal lender is an overwhelming task that can consume substantial time and office and human resources. That’s why approximately 70% of all commercial funding is done through the use of a commercial loan broker instead! But not all commercial loan brokers are equal…far from it.
Selecting a Commercial Loan Broker
Here are a few things to look for while searching for a commercial loan broker:
Many borrowers start with a Google search. First, you have to know that the top four entries and the bottom three entries on the first pages of results are paid ads. These paid ad entries in no way reflect Google’s algorithm that presents the most relevant results first. More than 70% of Google Searchers do not even click on these ads. The best thing to do is to simply skip any entry that begins with the Ad symbol. Instead, it is best to check the organic search results.
Moreover, you’ll find many of the top commercial loan brokers, including Assets America®, appearing on the first several pages of results. For example, suppose you are planning a shopping center project. Enter a Google search for “shopping center loans,”and you’ll see Assets America® appearing on Page 1 of results. This reflects the fact that the Google PageRank algorithm determines Assets America® to be an authoritative source of information on the topic and a popular choice among all Google searchers. While results vary by query, the important point is this: Eliminate any loan broker that resorts to paid ads on Google.
A second-rate website is a good indicator of a second-rate commercial loan broker. For example, look for a website that explains in detail the type of loans available, including important information how the loans work and which ones are most appropriate to your needs. Moreover, a good website will also offer many resource and blog articles that cover a wide range of pertinent topics to help educate and inform readers.
Furthermore, you can further evaluate a website on the care that’s gone into its design and execution. Look for a logical menu system that makes navigation literate prose that’s written to the highest standards, and compelling graphics that help tell the story. Likewise, a clunky website is a red flag for a broker who doesn’t try to be the best it can be, and therefore, usually isn’t.
The broker’s website should provide examples of deals closed. By reviewing these examples, you get a sense of the broker’s range of projects, its professionalism, and its commitment to its customers. Though, most websites only show a fraction of the actual deals closed.
What to Expect from Your Commercial Loan Broker
When you hire a commercial loan broker, you should expect a variety of high-value benefits, which we discuss next.
The mark of a good commercial loan broker is the ability to shepherd a loan transaction to a successful closing. Equally important, it must manage the formation of all tiers of deal making, properly structured for each transaction. As a client, you require focused, integrated and seamless transactions that offer superior terms, efficient execution and low risk. Whether the transaction includes capital formation, acquisition and sale, or a joint venture, Assets America® delivers successful solutions where other brokers fail.
Private Banking Experience
A good commercial loan broker has established a network of professional relationships with well-funded private lenders. These lenders can be both in the U.S. and around the world. As a result, any broker can broadcast a loan application to a hodgepodge of banks and other public lenders. It’s the very rare commercial loan broker that has assembled a network of institutional and private lenders that have the capacity to support client objectives.
Each borrower has its own unique requirements. A good commercial loan broker spends the time to learn those requirements in detail before preparing the loan request package. Also, the commercial loan brokerage firm helps evaluate the project’s feasibility within the constraints of time, budget, market and government requirements. To that end, we limit the number of clients we accept to ensure our capacity to provide the personal attention you deserve.
Loan Request Packaging
Many borrowers know what they want but don’t know how to ask for it. As a result, top commercial loan brokers work with their customers to produce a professional presentation. The presentation should incorporate all of the necessary information required by lenders to evaluate loan applications. Equally important, a good loan broker knows exactly what to include in loan applications. But even more importantly, it knows how to evaluate the numbers presented in the loan request package. And, it knows how to correct unrealistic assumptions and in general vet all the information provided. The result should be a compelling presentation that attracts the favorable attention of lenders.
11 Questions to Ask Your Commercial Loan Broker
- What kinds of loans do you offer?
- What are the terms I should expect?
- Which metrics do you evaluate (i.e. loan-to-value, debt service coverage ratio, and so forth)?
- Do I have to personally guarantee the loan, a recourse loan, or is it non-recourse?
- How much are the loan costs, including origination fees and third-party reports?
- What is the minimum size loan you arrange?
- Are there any prepayment penalties?
- What are my requirements for net worth (usually equal to the loan amount) and liquidity (typically 10% of the loan)?
- Do I need to deposit interest payments in escrow? If so, how many months’ worth?
- What do you require for a property’s leasing to declare the asset stabilized (typically 80% occupied)?
- How much insurance do I need (usually 100% of replacement value)?
At Assets America®, our large network of institutional and private funding sources provide all types of loans. We fund hotel loans, multifamily loans, and many, many more. So, contact us today for all your commercial borrowing needs.