Commercial loan brokers and borrowers often give up far too easily. They get a commercial loan application in the door that they think is pretty good. Then they take the deal to three or four commercial banks, who proceed to criticize the deal to death. "I don't like the location." "The borrower isn't strong enough." "One of the leases expires in just 14 months." "The borrower doesn't have enough liquidity."
Then the commercial loan broker loses confidence in the deal and quits. He thinks to himself, "This must not be as good of a commercial loan as I thought it was. I better go find a better one." Arghhh! There is probaly nothing really wrong with the deal. Let me make something clear:
EVERY COMMERCIAL LOAN EVER CLOSED HAD A FEW BLACK HAIRS.
Read my lips. Every commercial loan ever closed had a few black hairs. An intelligent eight-year-old girl (boys are still pretty 'tupid at that age) could pick out flaws in a commercial loan package. Bankers often think they are a genius when they find a flaw in a commercial loan, and then they tell you to come back when you have a better deal. Horse pucky! When you weigh the pro's and the con's of the deal, your commercial loan should probably be made.
So what happened? You took your deal to a bank or a particular bank loan officer who just didn't feel like lending today. Because the banker wasn't in the mood, he picked on the first black hair that he could spot and then sent you packing with a pat on the head. "There's a good little boy. You come back later with a perfect commercial loan or the broomstick of the Wicked Witch of the West." Hellooo? There is no such thing as a perfect commercial loan!
Now we get to the point of today's training article:
Commercial loans should close EASILY. If your banker is using weasel words, move on immediately to another bank!
When your banker uses weasel words like, "Well, I'm not sure," or "I'm worried about the loan-to-value ratio," he is just setting you up to turn you down tomorrow. Commercial loan packages seldom get prettier overnight. Banks seldom develop a voracious appetite for commercai loans overnight. Therefore the instant your bank loan officer starts using weasel words, immediately submit your deal to three more lenders.
Three is a magic number for me. I try to make it a rule to always have my commercial loan submitted to at least three different lenders at the same time. "Oh, my gosh, George, what if two lenders come back and issue me a term sheet at the same time?" Oh my gosh, what if Michelle Williams and Mila Kunis both asked me out at the same time? Ha-ha. Ain't gonna happen in real life. Always have at least three bankers looking at your deal at the same time.
Now remember, the lesson for today is this: Commercial loans should close easily. Why? How? The answer is that you have to find the right lender for the right deal at the right time. That's the key. When you find the right lender at the right time for your deal, you will be amazed at how easily the deal will close. There will be zero hard-selling on your part, and the "huge" black hairs will appear trivial to the banker. So if your banker seems like he is fighting you - if it seems like the going is hard - you just haven't found the right lender for your deal.
This leads me to my next point: Be prepared to take your commercial loan to at least twenty to thirty banks, or other commercial lenders, before closing it. Using email and Dropbox.com, this is super-easy these days.
Of course, if you take it to a bank, and the banker is drooling all over it, then it sounds like you have found the right bank at the right time. You certainly should never quit on a deal after presenting it to just ten or fifteen lenders. Placing commercial loans is a numbers game. The more commercial lenders to whom you present your deal, the more often you will "get lucky" and find the right bank at the right time.
"But George, where am I going to find all of these banks?" Finding banks is easy-peasy:
- C-Loans.com has 750 commercial lenders, and you can actually submit your deal using C-Loans.
- CommercialMortgage.com has another 3,500 commercial lenders.
- There are 6,799 commercial banks in America.
- There are 6,143 credit unions in America.
- Go to maps.google.com and enter the address of the subject property. Then ask Google to plot the nearby banks. Banks love to lend close to their office.
One final point. Let's suppose you have a commercial loan in Northeast Boston. You approach the First National Bank of Northeast Boston, but the white, sixty-year-old, sleepy (lazy) commercial loan officer brushes you off. Hmmm. First National Bank should have been perfect for this deal. The property was right in their sweet spot in terms of loan size and location. Solution: Wait 48 hours and then present it to a different loan officer at the same bank. The new loan officer - Asian woman loan officers are often dynamos - might just love your deal. I have successfully closed numerous commercial loans using this trick. The new loan officer might be in the mood to close some deals.