In the United States, lenders offer loans backed by hard collateral. In many cases, this is real estate, but can also include factoring factors, inappropriate assets, or other sources of collateral.
Video Commercial lender (U.S.)
Praktik kredit komersial
Commercial lenders include commercial banks, joint ventures, private lending institutions, hard money lenders and other financial groups. These lenders usually have very diverse standards in which they base their loan criteria and evaluate potential borrowers - but are often focused exclusively on private markets and have finer qualifications than banks.
Commercial lenders specialize in borrowing money and bridges, often close to quickly, in just two weeks. The commercial lending industry is most often accessed through brokers, which provide borrower evaluations and then recommend loans to a number of different commercial lenders that they feel are most likely to fund borrower demand. Going through a broker rather than directly through a lender can lead to longer waiting times for loan financing and more upfront costs. However, they can facilitate the process and generate innovative and unique ways to overcome obstacles that may not be accessible to the borrower.
Maps Commercial lender (U.S.)
Cost of commercial lenders
Commercial lenders weigh the type, quality, and equity of hard guarantees heavily. They provide borrowers with the greatest flexibility but also the highest rates when compared with bank loans. Many commercial loans are bridge loans, where a higher rate is a good trade off for the speed of loan delivery and the flexibility of financial provisions behind it.
Commercial lending industry
Thanks to the freedom of regulation, the commercial lending industry operates with special speed and responsiveness, making it an attractive option for those seeking quick funding. However, it also creates a highly malignant lending environment where many companies refer lending to each other (brokering), increasing the price and loan points with each referral.
There is also great concern about the practice of some borrowing companies in the industry that require upfront payments to investigate loans and refuse to lend on almost any property while maintaining these costs. Borrowers are advised not to work with hard money lenders that require an upfront cost before funding to mitigate this risk.
Commercial lenders and loan terms
In recent years there have been some significant advances. A good example is that credit unions are now allowed to engage in commercial loans with only a few restrictions. The most notable among these restrictions is that credit unions are prohibited in most cases from lending over 80% of the value of real property. This is done to protect union members from excessive risk and is a common practice in the industry as a whole, although not enforced. On the other hand, credit unions are cooperative and can therefore offer a competitive advantage over other institutions in terms of levels and other requirements.
Most commercial lenders prefer to offer a provision for a shorter period of time than a housing lender may be in thirty years or more. Commercial lenders sometimes offer five or ten year loans with longer payouts, leaving behind balloon payments when the loan expires. Which often requires property owners to come up with own balloon payments, or to refinance or sell.
In addition, commercial lenders may try to impose "prepayment penalty" to guarantee certain returns, if the loan is not kept for a full term. Pre-payment levies often range from one to five years and for the amount of interest or number of months as will often be seen "six-month interest guarantee" etc.
Commercial bridge loan
Commercial bridge loans are sometimes referred to as short-term financing, bridge financing or even hard money. The bridge loan is easy to qualify as long as there is remaining equity in the property sufficient to cover the capital of the lender's commercial liabilities.
Commercial bridge lenders will ignore property issues, incomplete licenses, credits and other issues in exchange for higher returns. But they will be looking to offset those risks by lending lower loans to a value ratio typically below 65% of the value of the property.
See also
- Money lender
- Mortgage loan
- Commercial bank
References
Source of the article : Wikipedia
0 Comments