Commercial Mortgage

It’s true that in any economy banks plays an important role. They tend to regulate the economy of a country. They grants different loans to different borrowers based on their requirement. However a borrower seeking a commercial mortgage loan can go to a non-bank financial institute for the loan rather than approaching a Bank. In many cases, banks decline the loan applications are they do not find the concerns worthy enough to be granted a commercial loan. Apart from this there are many other reasons why you can approach a non-banking concern for getting commercial loan.

Reason #1

Most of the banks charge from the borrowers an up-front commitment fee. However a non-bank institution would not charge such fee for granting any type of mortgage.

Reason #2

For a commercial mortgage, most Banks will require a business plan. Preparation of a business Plan also requires quite an amount of funding. However, non- bank business lenders generally do not ask for any business plan while underwriting a commercial real estate loan.

Reason #3

You need to furnish proper tax returns documents to a Bank during the application process. If they do not take the tax return they would ask to sign some form as per their country norms. But a non-banking financial institute would not ask for the tax return, neither would they require you to sign a form.

Reason #4

Unlike Banks, a non-banking financial institute would not require cross collateralization of private property. Hence, your private property remains safe.

Reason #5

Many banks are not showing interest in providing commercial loan in properties such as auto service business, bars/restaurants, funeral homes. While there are no such declination from the non-banking lenders for these types of commercial property.

Reason #6

The minimum amount limit which can be granted by a bank for a commercial loan is much higher than that granted by a non- banking finance institution. Thus if require a lesser amount then taking loan from a non-banking institute would be better.

Reason #7

Most of the Banks will need from 3 to 9 months to close a commercial loan. The processing period is much shorter in non-banking financial institute. They try to close a deal within 45 to 55 days.

Reason #8

There are strict guidelines by different banks for “seasoning” or “sourcing” of assets while a non-banking financial institute is not that strict for such matter.

Reason #9

Many banks would ask for income verifications or audit reports even after the commercial loan closes. A non-banking Financing institute will not verify such documents either before or after closing the loan procedure.

Thus, when going for a commercial mortgage, borrowers have to find out a company that offers the best deal in the market. Entrepreneurs looking for a loan to start a business but not in possession of the proper documents can opt for a non- banking financial institute. However, it’s true that Banks are considered much safer.