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Business Loans – 7 Reasons Not To Use A Bank (Page 1 of 2)
So you’re a small business owner and you need a business loan to further the objectives of your company. Where do you turn?
When it comes to a business loan or commercial real estate loan, there are many good reasons NOT to turn to a traditional bank. Here are some of the most important reasons. Many small business owners, will find most of these points directly applicable to them.
“THE BANK TURNED ME DOWN”
Of course the biggest reason most small businesses go looking for alternative sources of commercial real estate loans is because they have been declined by the banks. Small businesses are often forced to look for other sources of funding because the banks will not provide it. This is not even listed below, since there are many positive reasons to prefer non-bank funding, EVEN IF YOU CAN get an approval from a bank.
REASON 1 – The minimum loan amount available from banks is too high
In many cases banks will not offer a commercial real estate loan for less than $250,000. So if you only need $100,000 you will be pushed to borrow more than you actually need. Or if your property will not support a $250,000 loan you are out of luck with the banks.
The solution is to look for an alternative funding source that can provide a lower minimum amount. Some commercial financing services will go as low as $100,000, and will often give you better terms and much better service than the traditional banks.
REASON 2 – Many traditional banks will charge you an up-front “commitment fee” just to examine and process your application
Banks usually think they are doing you a favor by processing your application, so they will often make YOU pay for their attempts to win your business.
The solution is to find other established and credible lenders who are eager to offer you better service without charging you a fee for processing your application.
REASON 3 – Most traditional banks will severely limit the amount of cash you can get from a commercial real estate loan.
Banks usually have very narrow rules about where you can use the cash derived from a commercial real estate loan. If you need a cash injection for your business, or want to use the proceeds from a commercial mortgage as a down payment for another property, most banks will not be interested in that type of loan.
Look for a lender who does not restrict your use of the cash derived from commercial real estate loans. Some services, (see links below) can provide commercial loans that give you up to $1 million in cash to use however you want.
REASON 4 – Most traditional banks require detailed business plans before approving a commercial real estate loan.
Many small businesses have business plans, but they are usually not sufficiently detailed to satisfy the banks. As a result, applying for a commercial real estate loan from a bank can turn into a very time consuming and expensive process. Creating the type of business plan that is adequate for the banks will usually cost thousands of dollars.
The Importance Of Adding To Your Real Estate Investment Group (Page 1 of 2)
But teacher, the computer gremlins ate my homework!!!!! Unfortunately, that is what happened to my well crafted article for last week, right before I left to teach classes at the Learning Annex in New York.
The good news is that after being in NYC, I can now give a really strong example about todays topic which covers what to do once you have found ( or created) a great real estate investment group. What MOST people do from human is exactly opposite of what it takes to be a part of a real estate investment group that yields outstanding investments time after time.
It is human nature to believe that if you have something good, you dont share it with others for fear of not having enough to go around. Psychologists call this a “SCARCITY” model were people believe that there is only a finite supply of anything worthwhile. Coming from a very conservative background, where I grew up the son of a college professor, I was cursed with this scarcity belief.
As I started to gain more and more success, the more I realized that many successful people believed exactly the opposite of me: that is, they believed that by working together and sharing, you could produce an INFINITE supply of whatever was wanted. This is what experts refer to as an ABUNDANCE model.
So how does that apply to us? Let me give you the example from the Learning Annex. During our last night, we had a person in attendance that has been with our group for some time and has participated in multiple projects. This person is a full time real estate investor, is very savvy in her choices, and its a big believer in the power of real estate investment groups.
Afterwards, we got talking about how she might be interested in purchasing multiple units in our N. Tampa project and probably would also know others that were interested. To her credit, she did not want to “hog” too many units for either herself or others outside of the GetPreconstructionDeals.com real estate investment group.
In my opinion, this person could SUBSTANTIALLY INCREASE the ability of others in our real estate investment group by telling others now. Yes, we may run out on “this project” but now lets look complete the chain of events:
1. Some people cannot get into the project because it is sold out;
2. Because it is sold out, several developers take notice and want to offer special incentives to the real estate investment group;
3. Another good project is offered and because of more people are around, a substantial number of properties are consumed, some of them by people who could not get in last time.
4. In turn, this continued activity attracts even better opportunities by developers
5. Because the opportunities are continuing to flow, more and more people are attracted to the real estate investment group;
6. The process simply continues providing an ABUNDANCE of opportunities for all.
Now, suppose you do the opposite and individuals decide that it is a bad idea to grow the real estate investment group. Now what happens?