Apartment Building Loans - What You Need to Know For Today's Market

It's a tough time for the real estate market today. Mortgage banks are making their requirements more stringent in both residential and commercial markets, which make it harder for investors to invest in new properties. This means that those looking to buy apartment buildings need to be smart with their decisions and make sure that he is working with a reputable company that has experience with this type of investment when the economy is low. The following is some current information about how the mortgage banks are working.

The rules will not be bent anymore.

In the past, it was not uncommon for a borrower to be a little under the minimum requirements for a loan and still qualify. This is no more. Underwriters at these banks are becoming stricter when it comes to the requirements for getting these loans. In order to qualify, your net worth must meet the minimum requirements or you're out of luck.

There's aren't many loan programs for commercial real estate acquisition or refinance left. In the past few years, it has become increasingly difficult to find a mortgage broker who specializes in apartment building sales. It's much simpler to find one that specializes in residential real estate opposed to commercial real estate. Not too long ago, it wasn't very difficult to find and qualify for an 85% loan-to-value mortgage for an apartment building, but the same is not true today. Those people looking to invest in this type of real estate really has their work cut out for there because although there are plenty of brokers out there, it has become increasingly harder to find one that specializes in this type of real estate. I, personally, have never found a broker that handles residential real estate that also has a good track record with commercial real estate.

When you finally do find a mortgage broker that specializes in apartment or commercial real estate, there are several factors that need to be taken into consideration.

First, it is crucial for the investor to understand the fees that will be involved. In most cases, commercial mortgage brokers will charge only one point in fees on an investment. In my past experiences, I've seen new apartment building investors try to contact the banks themselves in attempt to avoid this fee. This doesn't work. Independent investors have to realize that any bank that handles apartment building investments is a broker and will sell their loans to the secondary market.

What most first-time apartment building investors may not realize is that by avoiding a broker to save money, it can cost more money in the long run.

Surprisingly, you will often find the best interest rates when going through a commercial mortgage broker. In addition, when you attempt to get the loan yourself, you're cutting your options short. When going through a bank independently, you will normally be offered only one or two programs for this type of investment, but when you use a mortgage broker that specializes in this market, your options more than double. This allows you to choose the program that is right for your unique investment.

Ted Karsch is the creator of the ultimate apartment buyer's resource: The Buy Your First Apartment Building E-Course His E-Course gives the beginning apartment building investor all of the tools and knowledge necessary to buy and manage profitable apartment building investments anywhere in the US. His website http://www.ApartmentBuildingInvestor.com provides tools, software and information for apartment building investors.

Unsecured Business Loans - Create a Right Cash Flow

Money is the fundamental asset of any business venture. You always need of a perennial source of cash flow. For that you will have to rely entirely on outside financial assistances. Every money support seeks a security in return against the loan. But, on applying for unsecured business loans you do not have to bother much about pledging-placing. You obtain funds without any collateral.

However, you are able to secure funds anywhere from £5,000 to £25,000. Yet, there are some lenders who take stake of granting more than this. You raise the fund from the offered limit to meet your business expenses. The raised fund is invested on raw materials, equipments, huge and imported machinery, commercial sites, investing in stocks and shares, employee salary, etc.

With the absence of collateral for loan provisioning, you will find these loans a bit costlier. The lenders charge you competitively to compensate their risk factors in lending you. But you can shop around for the best possible deal also. A number of lenders are out there in this respect. Collate some from them and compare their quotes. By making a comparative study of business loans, you could be able to cull out the best possible one.

Loan applications are made possible online as well as offline. Processing online though is preferred. It saves your time and energy. You fill out a simple online application for the business loan. Later, the lender asks for the business plan you have. Here, it is your duty to convince the lender. And once the lender understands, the way to secure fund for your business venture gets clear.

So, unsecured business loans are non-collateral-backed money provisions. With the lacking of collateral, such business loans become the life line for tenant, non-homeowners, graduates, self-employed, and homeowners also. So, derive the benefits of unsecured business loans to create a right cash flow.

George Linken works as financial advisor in Bad Debt Business Loans. He is offering loan advice for quite some time. To know more about Unsecured Business Loans, Bad credit small business loans, Bad debt business loans visit http://www.baddebtbusinessloans.co.uk/

Loan Workouts - Part I - Note To Lenders

It is news to no one that these are challenging economic times. What began as a sub-prime residential loan calamity in March 2007 has spread to economy wide weakness impacting consumers and business alike. Commercial real estate loans and business loans are no exception. With the current economic stress, commercial real estate loans, including especially construction loans and development loans, and business loans generally, are on an upward trend of default. The FDIC and other financial institution supervisory authorities have expressed concern. They have also expressed the need for close attention and creative problem solving to limit loan losses. Lenders should take heed.

Every commercial loan provides for legal and equitable remedies in the event of default. Lenders and their lawyers, accustomed to relying on the remedies contained in their loan documents, often do what is expected: When a borrower falls behind on its payments, or violates debt coverage ratios or other loan covenants, the lender declares a default, imposes an increased default rate of interest, accelerates the indebtedness and commences foreclosure or other loan enforcement proceedings. The question is, under current economic conditions: Does this make sense? The answer is: Sometimes yes; sometimes no. More and more frequently, the answer is no.

Think about it. The objective of loan enforcement is, or should be, to maximize recovery. In stable economic times there may be many circumstances where it makes sense to follow the predictable enforcement scenario described above. When times are bad, a critical analysis must be made to calculate what action will, in fact, maximize recovery.

In tough economic times, with property values declining due to a glut of defaults, rising storefront vacancies, tightening credit standards and skittish capital markets imposing higher yield requirements to offset rising risks, lenders must ask themselves: If I successfully foreclose this property, what am I going to do with it? What is my expected recovery? Declaring a default and mindlessly proceeding with foreclosure proceedings may be exactly the wrong solution.

There is a legal maxim that has equal application to lenders: "Ut vos reperio vestri in lacuna, subsisto fossura." which roughly translates to "When you find yourself in a hole, stop digging."

What works during good or even "normal" economic times, may not make economic sense during an economic downturn.

To survive a sizable loan default during times of widespread economic weakness a lender must think outside the box. The lender must focus on damage control. An elevated level of business acumen must be exercised.

The lender's underwriting criteria for loan origination may be irrelevant. What was required to originate the loan may not work now. Simple solutions are rarely at hand. The objective is to avoid, or at least minimize, loss. Here's how:

First and foremost, try to communicate with your borrower. Try to find out what is going on in the borrower's business that has resulted in this default. It is often more effective to look for solutions than it is to threaten the borrower with forced collection and foreclosure.

True. You may be annoyed that the borrower has not contacted you. Lack of communication raises suspicion and stress. The borrower should be contacting you, but this is no time to stand on ceremony.

Your borrower is likely under stress as well. Likely embarrassed he or she is not keeping up. Hoping against hope that things will turn around. If this loan is necessary for your borrower to stay in business, borrower may be emotionally paralyzed into inaction with disbelief at the borrower's financial predicament. The borrower may be afraid to call you out of fear of humiliation. This may be especially true if the borrower has historically been successful in business. For your borrower, this is likely a new and traumatic experience.

I'm not pointing this out because I want you to feel sorry for the borrower. I'm pointing this out to help you understand the borrower's frame of mind and to put the loan default in context. This is not personal. Typically the borrower is not trying to rip you off. It is unlikely the borrower is using business proceeds to live the high life at your expense.

There are exceptions, sure. Part of what you need to do when a loan starts to lag in performance is to find out what is going on. If, in fact, the borrower is taking you for a ride by diverting funds to personal extravagances instead of paying your loan then don't delay. Have a receiver appointed. Do what you must do to protect your collateral. In this case your collateral may be a wasting asset. Time is your enemy.

Assuming this is not the case, however, and that borrower has just fallen on hard financial times, try to understand the nature of the problem. Is this just a temporary cash flow problem? Did the borrower's primary tenant or customer slow down its payments? Did a key tenant file bankruptcy or close its business due to economic stress? Has a government payer suspended payments while a new fiscal budget is approved? Has an unexpected rise in fuel costs or other costs soaked the profit out of a fixed-term vendor contract borrower is obligated to perform?

If the borrower's cash flow problems are temporary, does it make sense to declare a default and compound the borrower's problems? Will this maximize your recovery?

If you work with the borrower, can the borrower pull through the current economic distress and get back on track? Does it make sense to extend borrower a temporary working capital line of credit, or increase an existing line of credit, to solve borrower's current cash crunch? Lending a borrower additional funds when the borrower is in default may seem counter-intuitive, but will it increase your likelihood of achieving a full recovery? What are your chances of recovery if you don't?

Is a loan modification agreement appropriate? What about extending the repayment schedule? Or reducing, instead of increasing, borrower's effective interest rate? This does not necessarily mean actually reducing the borrower's rate of interest, but perhaps agreeing to reduce the amount payable currently and accruing the rest.

Consider an example where the loan rate is 8% and the default rate is 12%. If the borrower is experiencing cash flow problems that have resulted in borrower's inability to remain current with payments based on a loan rate of 8%, is it reasonable to think borrower will be able to keep up with payments if the interest rate is increased to 12%?

In a loan default setting, one of the most misapplied financial maxims is: "higher risk requires a higher rate of return". This maxim is used as one of the justifications for applying a higher interest rate in the case of default. There is no question a loan in default presents a high financial risk.

While there is a reason to provide for a higher default interest rate, this is not it. The valid reason is to serve as a disincentive for default. But where a default is beyond the practical control of the borrower, should it necessarily be imposed?

The "higher risk/higher rate" maxim is really a principle of capital attraction. To "attract" capital for debt or equity financing, higher risk really does require a higher rate of return. Unless you are selling your defaulted loan, however, attracting capital is not the issue. You have already funded your loan. Your task now is to maximize recovery.

At the very least you need to recover your principal. If you can recover your costs of collection and accrued interest, better still. Ideally, you will recover it all, including your higher rate of accrued default interest. Recognize, however, that what is ideal may not be what is realistic. Once again, the guiding light is maximizing recovery. Sometimes making a profit is not an option. Minimizing loss may be the only viable strategy.

If you review borrower's financial condition and determine borrower's cash flow difficulties are temporary, instead of increasing payments to cover 12% default interest, consider whether it would make more sense to base payments on 4% and accrue the other 8% until borrower's cash flow situation improves.

If you determine borrower's cash flow difficulties are permanent and the best solution is to liquidate the collateral, consider whether you will recover more through a foreclosure sale or through sale as a going concern? What do you need to do to facilitate sale as a going concern? Who should run your borrower's property or business in the meantime? Is the extra cost of appointing a receiver or trustee going to result in a greater recovery for you?

On numerous occasions I have dealt with lenders who insist on rigidly sticking to their original lending criteria. Frequently, the lender demands that the borrower raise more capital to cure borrower's default and restore lender's required loan ratios. This is a great solution for lender if it is possible. The question to ask is how realistic is it and will it really solve the underlying financial difficulties. If the borrower does not have its own funds to invest, where is the additional capital supposed to come from?

Recalling the maxim for capital attraction stated above, what rate of return will prospective investors require to induce them to inject more capital into the borrower's already struggling enterprise? How will this high rate of return be realized? What impact will that have on borrower's future prospects for loan compliance? In the long run, will this strategy improve or impair your chances for full recovery?

In every case, the lender's mantra should be: maximize recovery; maximize recovery; maximize recovery. . . Every lender decision after default should be focused on this objective. The path to maximum recovery may not be obvious, and in some cases may seem counter-intuitive. Still, it must be your guiding light.

As we start down the path of considering a loan workout, it is essential that we obtain a clear and accurate picture of borrower's true financial circumstances. If you are not sure about the quality of financial information we are getting from your borrower, consider requiring that borrower engage an independent financial consultant. The consultant should be professional and qualified. The consultant must understand that although he or she is being paid by the borrower, the consultant owes a fiduciary duty to accurately report to the lender.

Fortunately, there are a lot of qualified professional financial consultants. They are not cheap, but they are often worth the added expense. Be sure the one you pick knows your borrower's business or can learn it very quickly. Require a strict and frequent reporting schedule. If you determine borrower's financial situation is not going to improve, be ready to pull the plug and do what you have to do to maximize your recovery.

If the borrower won't voluntarily agree to engage a financial consultant, go ahead and declare a default then require employment of a financial consultant as a condition to entry into a forbearance agreement. A forbearance agreement is a good idea in all events. It should include an acknowledgment of the loan default and a waiver of defenses as conditions to your agreeing to work with the borrower to try to find an amicable solution to borrower's financial crisis.

While you gather information and work with the borrower, have an attorney review your loan file to make sure you have everything you need in the event you must resort to forced collection and foreclosure. It may surprise you how often your documentation is incomplete or inaccurate. At a minimum, make sure your Note, Mortgage, Security Agreement and Guaranties are signed; that the Mortgage is recorded and your security interest is perfected.

What is the value of that personal guaranty now? Require current financial statements from the borrower and each guarantor. Determine whether the borrower has addition capital available or additional collateral to pledge to fully secure your loan. Make sure all necessary corporate resolutions and other authority documents are executed and in your loan file.

As you work with the borrower, you must always consider the risk that borrower may file bankruptcy. Understand the consequences.

Bankruptcy proceedings are often very expensive. For this reason, they may degrade rather than enhance your recovery, even as a secured lender. Perhaps to your surprise, being over-secured can create nearly as many problems in bankruptcy as being under-secured. The problems are not exactly the same, but each has its own challenges.

If your loan is under-secured, you will likely be treated as a general unsecured creditor for that portion exceeding the value of your collateral. To avoid this risk, it is not uncommon for some lenders to proceed to the opposite extreme of grossly over-securing their loans. This strategy, while in the long run preferable to being under-secured, is not without issues.

In cases where the borrower has significantly over-secured its loan, a bankruptcy judge has the authority to significantly reduce or suspend the borrower's obligation to make current debt service payments by determining the lender is adequately protected by the value of its collateral. That can mean no payments whatsoever on your loan while the bankruptcy is pending. If the cash flow from loan repayment is important to lender, this could create a serious problem.

The point of all of this, for lenders, is that to maximize your loan recovery, you must exercise good business judgment. Blind adherence to conventional remedies for breach of contract may not be your best answer. Be creative and focus on what will maximize your recovery under the unique circumstances of this particular loan default with this particular collateral and this particular borrower.

While doing this, do it in a way that does not expose you to lender liability. At all times you must maintain your role as a lender acting responsibly to maximize your recovery. Avoid any action than may transform you into a role tantamount to that of a business partner. This is not difficult, but may sometimes require you to walk a fine line.

Taking a creative approach to loan defaults and focusing on ways to work with your borrower are often essential elements to minimizing loan losses and maximizing recovery. This is the essence of an effective loan workout.

R. Kymn Harp is a seasoned attorney and trusted adviser to commercial real estate investors, lenders, and developers. He is a partner in the Chicago, Illinois law firm of Robbins, Salomon & Patt, Ltd. and may be reached at (312) 456-0378 or rkharp@rsplaw.com For more information, visit his website http://www.realestate-law.com

Unsecured Business Loans - For Short-Term Finance

Unsecured business loans are source of small financial support for any purpose of the trade. You can make use of the borrowed amount for buying raw material, purchasing office furniture, paying off old debts, buying equipments and machinery etc. However, your focus should be in availing an amount at lower costs, so that you can repay without burdening the finances much.

Through these loans, business people can borrow any amount from £5000 to £25000 or even above, without providing anything for collateral. Thus these are risk-free loans for the borrowers. They can have access to the amount for a short period of few months to 15 years.

However, unsecured business loans should be first extensively searched for a suitable deal. This is because a little higher rate of interest is involved in it. Still, the rate is usually fixed for the whole of repayment duration. Thus, you will be making fixed amount of payments towards the monthly installments.

If you have a bad credit history, still the loan is made available if you are wiling to make interest payments at higher rates. Thus, despite carrying multiple cases of late payments, defaults, arrears and defaults, it is possible to purchase these loans. Make sure they you have kept all the documents of your trade ready as the lenders will assess it for knowing about its financial health and repayment capability.

It is advisable to first apply for the APR quotes of the lenders. With each such lender having own set of interest rate, you can find an offer of the loan at competitive rates.

A way to find competitive rates on unsecured business loans is online mode. This step will help you in comparing the lenders for their lower rates but also for fewer additional charges as well. As you need to maintain a healthy credit history for your trade, ensure that each installments of the loan are paid back on time.

George Linken works as financial advisor in Businessloans.uk.com. He is offering loan advice for quite some time. To know more about Unsecured Business Loans, business loans UK, business loan UK, new business loans UK visit http://www.businessloans.uk.com/

Bad Credit Small Business Loans - Finances to Make Your Business a Success

Starting a new business or extending an existing one requires considerable amount of finances. When you are not having the finances, you tend to take the help of business loans. But you can only avail the finances if you are having a good credit record and a repayment capability. If you are having credit problems, then arranging the funds will be a bit difficult. Lenders are not likely to approve the finances considering the risk element involved. if that's the case, then you should consider availing bad credit small business loans. These loans help you, when you are having a suitable business plan, but having a tough time arranging the funds.

The main objectives of the loans are to provide monetary assistance to meet the various expenses pertaining to business. It does not really matter if you are having credit problems related to CCJs, IVA, arrears, defaults etc while deriving the loans. The money derived through these loans can be used to serve a number of purposes such as procuring raw materials, acquiring property, marketing and advertising, paying wages , clearing past debts etc.

Before availing the loans, you have to prepare a lay out plan and submit it to the concerned lender. In the plan, you have to mention the expenses pertaining to your requirements along with the anticipated potential output. This will help you derive the loans instantly.

Like any other conventional loans, these loans too can be availed in secured and unsecured form. Secured from of the loans are collateral backed, where in you have to offer one of your asset as collateral. Through this option of the loans, you can derive a bigger amount at comparatively low interest rates. Unsecured form of the loans can be obtained without pledging any collateral.

Considering your bad credit record, these loans are advanced with a high rate of interest. However a lot depends on the amount availed, repayment schedule along with your prevailing circumstance. Further to obtain low rate deal, you can use the online services. By comparing the rate quotes, you can choose a deal that suits your circumstances.

Bad credit small business loans enable you to take care of all the expenses despite having credit problems. These loans provide you a chance to optimize the finances and make your business a success.

Johns Tiel holds a master degree in Commerce from JNU. He is working as financial consultant in Chance For Loans. To find Bad Credit Small Business Loans, debt consolidation loans, debt consolidation loan, personal loans that best suits your needs visit http://www.chanceforloans.co.uk

Unsecured Business Loans - Secure Your Dream Business Easy

Securing the scintillating business plan is giving a financial reverse. Yes, there are several financial provisions available but available only for a limited class of borrowers. As a result, an army of borrowers remains devoid of it. Thanks to commercial institutions, since they have some or other feasible financial options always remain available for everyone. Entrepreneurs lacking asset pledging for the business loans can have good chances of securing unsecured business loans. Individuals do not have to place any of their important assets for the loan.

Securing fund with an unsecured loan is an easy task these days. More and more lenders are available to offer you with the fund you need. Borrowers of any class can raise sum anywhere from £5,000 to £100,000. You will have to repay the raised fund in a very short period. Reason for keeping the short repayment period of such loan is due to non-placing of repayment security for the loan. However, you can pay the granted sum in five years. In the event that you fail to make it, you do not have to worry. In specially cases, creditors can extend your repayment period further for ten years. You find a good amount of time for your loan repayment.

There is a bevy of lending options available for you online and offline. This has created a competitive aura across the money market. For the reason, not only are the funds getting easier under unsecured loan provisions but also the rates and other features are becoming better.

To get unsecured business loans is easy. It makes sense when you want start a new business venture. You need to buy all your equipment and materials. An office space, printing expenses and hire the personal you need to get your business started. For the purpose, you can apply for unsecured business loans.

All of that, you need to make a plan for your business venture. It should be an attractive one so that cut an ice over the creditor you are pursuing for the loan. Present it before creditor, if it gets snug to him, he will feel not hesitation granting you the money you need for your business venture. There are several lenders available online and offline.

Simon Peyton has done his masters in finance from CPIT. He is engaged in providing free, professional, and independent advice to the residents of the UK. He works for the Loans Fiesta. For any type of Unsecured Business Loans, loans for unemployed, unsecured loans, bad credit loans visit http://www.loansfiesta.co.uk/

Unsecured Business Loans - Easy Funds Without Any Risk For Business

In any kind of business, be it big or small, it is necessary to take some amount of risk. You can only take risk when you have got substantial amount of financial back up. Further arranging finances on your own at certain point of time can be a difficult proposition. In the absence of finances, you will not be able to take care of the expenses and invariably you have to rely on loans. In this regard, you can consider applying for unsecured business loans.

As the name connotes, you can apply for these loans without necessarily pledging any collateral. Without involving any collateral, it implies that your asset is from any risk. Moreover, the loans provide you all the benefits required to make your business a profitable venture. Bad credit borrowers too can apply for the loans, which mean that these loans are flexible in nature.

As a matter of fact, it can be used to set up or start your own business or to expand the existing business or refinance it. The amount derived under these loans can be used for purchasing raw materials, furniture, acquiring new plots, renting office premises, paying wages, clearing previous debts etc.

The amount offered under these loans is based on your repaying capability. Through the loans you can avail a maximum amount of up to £50,000. The repayment term is short and spans over a period of 6months- 10 years.

Before availing the loans, you have to prepare a feasible business plan to convince the lender. Depending on the status of your business, you have to provide details such as amount required, purpose of availing the loans. In addition to this, you have to provide bank statements, details about revenue generated etc. This information provides a fair idea to the lender about your repaying ability. Further, it also assists you to get a better deal on the loans.

Nowadays, unsecured business loans are also available with online lenders. all you are required to do is to fill a simple application form which is available online with relevant details about your business. The processing is fast as a result of which you get to derive these loans instantly. Further on comparing the rate quotes, you will be able to get a better deal.

Simon Peyton has done his masters in finance from CPIT. He is engaged in providing free, professional, and independent advice to the residents of the UK. He works for the Loans Fiesta. For any type of loans as Unsecured Business Loans, adverse credit secured loans, online unsecured loan, cheap secured loans please visit http://www.loansfiesta.co.uk/

Tips to Obtain Small Business Loans

If you are interested in starting a small business, then you have to know about small business loans. There are many different ways to get funding for your new enterprise, as well as many different kinds of loans. Finding the one that is best for your enterprise can be a daunting task, but with the right information, it is not impossible.

Most banks do not want to loan money to someone who is starting a new enterprise. When trying to get a loan for a small business, collateral will probably be needed for the bank to approve the loan. Things such as cars, houses, land, or other hard assets will usually work for collateral. The bank will probably want to have an asset-backed borrowing transaction with business owners, rather than loaning money to a business based on inventory or other such methods.

Having a co-signer is also an option for getting a loan from the bank, but make sure you trust the co-signer before trying this method. There is also another place that a loan can be borrowed from, which is the Small Business Administration.

This is a government agency that invests in new, small businesses. In many cases, if a loan is borrowed from the SBA, then the SBA will pay back 90% of the loan if you default on it. Another place to try for a loan is through commercial finance companies or venture capitalists.

When applying for small business loans, there are certain procedures that must be followed to increase the business owners' chances of actually getting a loan. Every place you approach with the hope that they will finance your new enterprise will look at your financial projections, credit history and your character.

If there is a personality conflict between you and the lender, then you probably will not get the loan. However, it is a good idea to try several different places until you find someone who gets along with you, so that you can get a small business loan.

There are also little quirky things that can be done to make a better impression on loan officers. Dressing professionally, keeping a professional manner, and calling ahead of time for an appointment are usually necessary to get loans for small businesses.

There are some other things that might increase your chances of getting a loan as well, such as being able to answer any questions about your business plan. Being over prepared is better than being under prepared.

Hopefully, you now have a little more information about small business loans and how to get one. If you are trying to open a new business, then look at all the information out there and maybe consider talking to a loan officer about your business plan before applying for a loan. He or she can give you some sound business advice.

Mike Selvon portal offers free articles on small business. Find out more about small business loans, and leave a comment at the small business advice blog.

Working Capital Loans and Plan B Contingency Financing

Contingency planning ("always have a Plan B") is likely to help small business owners avoid complex problems. But when it comes to commercial loans and commercial mortgages, working capital strategies often fail to include adequate attention to contingency plans and what can go wrong.

One of the most effective and entertaining depictions of contingency planning is a movie called "Rare Birds". This movie (starring William Hurt) includes variations of the line, "Always have a Plan B". For any business owner who doubts the importance of contingency plans, the movie will provide an enlightening perspective.

Commercial borrowers often assume that there are not effective alternatives to the business financing they are seeking. As a result, many business owners might believe that it would not make sense to explore a contingency finance plan. If you have seen the recommended movie, it will become second nature to realize at times like this that businesses should "Always have a Plan B".

Plan B contingency commercial financing should be viewed as insurance to protect a business owner in the event that something goes wrong with their working capital management. A few examples are provided below.

First, a surprising number of local and regional banks have recently decided to pull the plug on future business financing in their lending portfolio.

When they do so, very little advance notice has been provided in most instances. If a business has commercial loans or commercial mortgages with a regional or local lender, a Plan B should be developed for the contingency that alternative business loan arrangements could be needed in the near future.

Second, many small businesses have commercial loans that contain recall provisions that permit the lender to review the loan each year.

In this instance, the lender might continue a business financing role for some borrowers but will selectively eliminate what they consider to be marginal loans by exercising the recall clause. If they do, the borrower will need to pay off the entire loan or refinance within a limited period of time. One of the most disturbing aspects of these features is that the borrower loses all control even though they might have been making payments on time. The best solution for avoiding this possibility is to review current business loans and explore Plan B refinancing options if recall terms are included.

Third, many providers for business cash advances are notorious for making unrealistic promises regarding timing and payment terms.

To prepare for this possibility, business owners should engage in thorough discussions with a prospective business financing advisor before proceeding. Unlike the first two examples, in this case the Plan B approach occurs before finance arrangements are finalized.

Fourth, many lenders for commercial mortgages, business opportunity financing and SBA loans are equally guilty of over-promising and under-delivering.

This problem seems to occur disproportionately with regional and local banks. Similar to the recommended approach for business cash advances, commercial borrowers should pursue Plan B contingency financing. The ideal timing to discuss alternative commercial financing options is before committing to a specific lender.

"Always have a Plan B" is certainly intended to be the connecting theme for the four examples noted above as well as the numerous other possibilities where contingency planning is appropriate for working capital loans and commercial loans. The usefulness of a Plan B mentality is likely to be helpful to many aspects of running a successful small business. For various reasons, however, contingency planning appears to be under-utilized when business owners are seeking commercial mortgages, business cash advances and other forms of business financing.

Stephen Bush is Chief Executive Officer of AEX Commercial Loans Solutions. Steve provides working capital management strategies for small business owners throughout the United States. Please contact Steve at AEX Commercial Financing Group for candid and practical advice about business cash advances and commercial mortgages.

Automotive Property Loans - Credit Crisis

If you own an automotive property or are thinking of buying one, such as an oil change facility, collision shop or general auto repair, you've got to have you're "ducks in a row" as they say, to get the loan closed in this market.

Believe me I'm sick of hearing about it and sick of "warning" my clients. But as the credit crisis persists, you need to start thinking clean. In other words your loan requests have to be strong or you won't be getting any term sheets from banks. They'll simply pass on your deal. One of the more common issues is bad credit or mediocre credit. 6 months ago you could get away with a 620 and still have some good options. Now you really need a 680. Issues like late pays or an excessive amount of debt, even with good scores, will now kill most options.

Another common issue is so many automotive property owners don't show enough income to qualify. The idea on a bigger scale is to avoid as much taxes as possible, but when you go to get a loan, you've got a problem. Whatever money you saved by not paying tax you'll "pay back" to a lender in the form of a higher interest rate or by not getting a loan at all. Pay now or pay later. Tal to your CPA about this he may be able to help you create more noncash items like deprivation so that you can have the best of both sides - low taxes and a good rate.

Bottom line, if you want a decent loan, you've got to show a decent amount of income in this market. More exactly, you'll need to hit a Debt Coverage Ratio of a 1.3, which has gone up from a 1.2 (some banks used to go down to a 1.1). What this ratio means, is that you'll need to show $1.30 of net income, for every $1 of proposed mortgage payments. So after you pay all of your expenses and pay the mortgage you'll still have $.30 left over...

Automotive property loans are still doable! But you're going to have to be more serious about pulling them off. And (I'm not just trying to up sell you) you should be more concerned about if the funding bank is really going to close vs. picking one bank over the other to save 10 basis points on your rate. Prepare in the beginning and have your loan package look as clean as possible BEFORE you submit it to a bank. You don't want to have to "explain away" a single item if you can avoid it.

Click here to see current commercial loan rates Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial mortgage loans or automotive property loans.