Commercial Loans Blog

Business Equipment for Commercial Loan Brokers

Posted by George Blackburne on Mon, Apr 27, 2009

Scanners With Document Feeders Are Becoming Essential

Commercial mortgage loan brokers now only really need three pieces of equipment - a reliable cell phone, a laptop computer, and a combination copier / fax machine / scanner.

The need of a commercial loan broker of a good cell phone is obvious; but have you ever considered whose phone number you are promoting? Let's suppose that you send a thousand mail pieces and 3,000 emails every month for two years. Further suppose your marketing pieces encourage your clients to call the main office number for your broker.

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Now suppose your broker goes belly-up. Oops! All of those clients and referral sources will be calling a disconnected phone number. Yikes.

Or suppose a commercial real estate agent really needs a commercial mortgage loan for his client. He calls your office and asks for you, but you're out of the office. "Is there another commercial loan agent there with whom I could speak?" You've just lost a commercial loan and potentially a good commercial real estate agent.

The moral of the story is this: Promote your personal cell phone number, not the office number of your broker.

Let's talk about laptop computers. I recently converted to an Apple MacBook, and I absolutely love it. No longer do you have to spend hours updating your virus protection software and malware protection software. Sure, an Apple MacBook costs an extra $600; but the machine so worth it.

Don't worry about software. Microsoft makes Office software for the Mac. This means that I can still use the fabulous Apple OSX software and still communicate with my office. There is Word, Excel and PowerPoint for the Mac, and my staff at our commercial loan office can easily open with their PC's any file I create on my Mac. It's heavenly.

But the machine that gets me hot and sweaty is my new, combination copier / fax machine / scanner with autofeeder. The other day a broker faxed a commercial loan package to me. Because the original commercial loan package had been faxed to him, I was working with a second generation fax. The copy quality was starting to decline.

I printed out the commercial loan package and then scanned it using the autofeeder. I then clicked a few times on my laptop and created a PDF, which I simply emailed to my office. The quality did not degrade, and my commercial loan officer at Blackburne & Brown was able to issue a loan approval letter the same day.

This combination machine was not expensive. It was less than $300 and I absolutely love it. It's a Canon MX700 and I even bought it using the reward points on my credit card.

Topics: commercial real estate loan, commercial loan, commercial mortgage lenders, commercial mortgage rates, commercial financing, commercial mortgage

SBA Loan Gossip

Posted by George Blackburne on Tue, Mar 31, 2009

The Latest Skinny on SBA Loans and SBA Lenders

A buddy of mine in the SBA loan business called me today, and we chatted about a number of very important changes to the SBA loan program. The Federal government is trying to get credit flowing again to the economy, so they have made SBA loans much more attractive.

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First of all, until the end of the year or until money runs out, the SBA is now waiving its guarantee fees (points) on 7a loans and on the debenture portion (the second mortgage portion) of 504 loans. You will recall that the 504 loan program involves a conventional first mortgage loan from a bank up to 50% loan-to-value and a piggy-back second mortgage loan from a certified development corporation up to 90% loan-to-value.

The second thing the Federal government has done to make SBA lending more attractive is that the SBA has increased its guarantee of SBA loans from 75% of the loan amount to 90% of the loan amount. This should encourage SBA lenders to start approving more deals.

The third incentive is the SBA has effectively extended the repayment term of its loans. In the past, the real estate portion of an SBA loan had a term of 25 years, but that portion of the loan used to finance the acquisition of machinery or equipment had a term of just 10 years. If the borrower also wanted some working capital, the repayment of this portion of the loan had to be amortized over just 7 years. A weighted-average loan term was used. Now, if more than 50% of the loan is being used to acquire real estate, the entire SBA loan can be amortized over 25 years.

The SBA also announced two weeks ago that 504 loans can now be used for refinances, as opposed to just the purchase, of real estate and/or equipment. The announcement was somewhat unclear, however, and further clarification is expected from the SBA.

In general, the volume of SBA lending is way down. CIT Financial, the largest SBA lender in the country, is back in the market. CIT is now a national bank with one branch in Utah. More importantly, CIT, as a bank, now has access to the discount window at the Fed.

Banco Popular, the second largest SBA lender, has severely trimmed its SBA lending infrastructure. While the bank is still in the market for SBA loans, their SBA loan volume is down by more than half. So is the SBA loan volume of Bank of America and JP Morgan Chase.

Former giants in the SBA lending market - Temecula Valley Bank, UPS Financial, Small Business Loan Source, and Business Lenders - have all closed down their SBA lending divisions.

The secondary market for the conventional portions of 504 loans has completely dried up. These attractive first mortgage loans used to sell for 6 to 15 point premiums because of the implicit guarantee of having the SBA in a second mortgage position. The good news is that the Obama administration has earmarked a sizable amount of money aimed at buying up these 504 first mortgages in hopes of jump-starting this market.

The second mortgage portion of 504 loans are being written at a fixed rate of 5.67% today (3/31/09) for 20 years. The underlying first mortgages are typically written at an interest rate that is 1% to 1.5% higher than the 504 second mortgages. Wait a minute? Higher than the second mortgage? Yes, because unlike the second mortgages, these first mortgages are not credit-enhanced by the SBA.

I learned today that SBA 7a loans have a modest prepayment penalty during the first three years. It's a declining prepayment penalty of 5% in year one, 3% in year two, 1% in year three, and no prepayment penalty thereafter.

The SBA 504 program has a stiffer prepayment penalty. The bank making the underlying first mortgage is not allowed to charge a prepayment penalty. The second mortgage, however, has quite a stiff prepayment penalty - 10% in year 1, 9% in year 2, 8% in year 3, and so on. There is no prepayment penalty on the second mortgage after 10 years.

Gas station loans are still not being guaranteed by the SBA.  (Blackburne & Brown is happy to finance gas stations right now.)

While the SBA will still guarantee hotel loans, very few SBA hotel loans are being made by SBA lenders. SBA lenders are worried about declining trends. In other words, they are comparing this year's revenues to last year's revenue - and the trend is usually too negative. The expression - declining trends - is the hot, new buzzword in SBA lending.

If an SBA lender were to finance a hotel today, it would probably be a hotel highly visible from a busy highway. Many more business travelers are driving rather than flying because of the recession. The hotel lucky enough to get SBA financing would probably be a limited service hotel, typically without a restaurant and with far lower nightly rates. It would probably have less than 100 units.

The more expensive full service hotels, typically close to airports, are suffering far worse than the cheaper limited service hotels off of busy highways. These full service hotels would also require large loans, and lenders are loathe to make large hotel loans today.

Finally, if an SBA lender were to finance a hotel today, it would probably be a hotel with interior corridors. Older hotels and motels usually have exterior corridors, and women traveling on business today are likely to avoid such hotels due to security concerns.

The maximum SBA 7a loan is $2 million. Therefore, if a borrower wanted more than $2 million or if he wanted a fixed rate loan, the SBA 504 program would be the right program.

C-Loans recently received a loan that otherwise would have been perfect for the SBA; however, the borrower was a non-profit organization.  The SBA will not guarantee loans to non-profit organizations.

Conventional commercial real estate lending is down by more than 80% from early last year. SBA lending is also down by 60% or more. The Federal government's efforts to increase SBA lending is a noble effort. Let's hope it works.


Need an SBA loan? You can apply to dozens of different SBA lenders in just four minutes using C-Loans. And C-Loans is free!

Topics: commercial loan, commercial mortgage loans, SBA loan, small business loan, commercial mortgage rates, commercial lender, SBA lender, commercial mortgage

Wraparound Loans in Commercial Mortgage Finance

Posted by George Blackburne on Thu, Mar 12, 2009

When Money is Tight, Wraparound Loans Get the Job Done

A good way to understand wraparound mortgages ("wraps") is to follow a little story. Once upon a time Ida Investor bought an office building. The cost of the office building was $1,400,000 and she put down $350,000 (25%) in cash. Hometown Bank made a $1,025,000 new first mortgage for ten years at 6.25% interest.

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Ida Investor made a shrewd investment. The City of Hometown started to boom. The value of her office building skyrocketed, and just four years later Bobby Buyer offered to purchase the property was a whopping $2 million.

The problem was that commercial loans had dried up. Neither Hometown Bank, nor any of the other banks near Hometown, Montana, were making any new commercial loans.

Fortunately Ricky Realtor, Ida's real estate broker, had a solution. Bobby Buyer would give Ida Investor $400,000 in cash (20%) as a down payment.

Ida Investor would then carry back an all-inclusive mortgage (wraparound) in the amount of $1,600,000 at 7.25%.

Bobby Buyer would pay Ida Investor one payment every month, an amount sufficient to amortize a mortgage of $1,600,000 at 7.25% over 25 years. It would then be Ida Investor's responsibility to make the payment on the existing first mortgage, which had been paid down from $1,025,000 to just $1,000,000.

Since Ida Investor's existing first mortgage balloons in just six years, the all-inclusive mortgage (wraparound mortgage) would have a similar due date. These two mortgages would be coterminous; i.e., they have identical maturity dates.

Why bother with the wraparound structure?  The reason is because Ida Investor really wanted all cash on the sale. She didn't want to carry back a garden-variety second mortgage at a lousy 7.25% interest. Bobby Buyer, however, would never agree to pay Ida Investor 9% interest on the second mortgage.  He was way too stubborn.

The wraparound structure solved the problem. How? Remember, Ida Investor's old first mortgage had an interest rate of just 6.25%. The amount of the old money - wrapanese for the existing mortgage being wrapped - was $1,000,000.

The amount of the new money - wrapanese for the amount of the equity inside Ida Investor's new all-inclusive mortgage - is $600,000. Remember, the gross wrap was for $1,600,000 and the existing mortgage was $1,000,000. Therefore Ida Investor's equity in the wrap is $600,000.

Now let's get back to Ida Investor's return on her equity in the wrap. She's earning the wraparound interest rate of 7.25% on her $600,000 equity inside the wrap, which works out to be $43,500 per year in interest income.

But Ida is also earning 1% interest - the difference between 7.25% and 6.25% - on the existing $1,000,000 first mortgage that is being wrapped. This is an extra $10,000 per year in interest. If you add $10,000 to $43,500 you get $53,500 in annual interest income on Ida Investor's $600,000 equity in her wrap, or an annual interest return of almost 9%.

Look for more wraparound mortgages to be made on commercial properties in the coming years, as the banks remain tight-fisted about making commercial loans.


Need a commercial loan?  You can apply to 750 different commercial lenders in just four minutes using the same mini-app by using C-Loans.com. C-Loans is the internet's most popular commercial mortgage portal. And C-Loans.com is free.

Topics: commercial loan, commercial mortgage rates, commercial lender, all-inclusive loan, all-inclusive mortgage, commercial property lenders, commercial mortgage

Why the Banks Aren't Making Many Commercial Loans

Posted by George Blackburne on Wed, Feb 25, 2009

The Banks Don't Have Any Money

Every commercial loan broker will tell you that the banks are not making a whole lot of commercial loans these days. Surprisingly, the reason why isn't just because they are afraid to make new commercial loans.

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Another important reason is that many banks are fully-invested. In plain English, they don't have the money to make new commercial loans.

This lack of liquidity is not the result of loan losses associated with the subprime meltdown. Few small banks were involved in the deal-flow of subprime loans. When the music suddenly stopped, the small banks were not left holding a huge volume of unsold subprime residential loans. It is easy, therefore, to assume that the small banks have plenty of money to lend.

In fact, the opposite is true. Banks have always preferred to make short term loans, like construction loans and bridge loans. This way they constantly have a few outstanding loans paying off every month, giving them the liquidity to make new short term loans. Unfortunately, ever since the financial crisis began, their outstanding loans have not been paying off. Borrowers with construction loans and bridge loans have been unable to refinance their loans with long-term lenders. The banks have been forced to extend these short term loans into longer term mini-perms.

To make matters worse, most small banks had a great many lines of credit extended to businesses that they served. Most of these businesses are now losing money, so the businesses are drawing down on their credit lines.  This has further drained liquidity from the banks.

Lastly, this is a very difficult time for banks to attract new deposits. The prime rate is a rock-bottom 3.25% right now. The 11th District Cost of Funds Index, a fair proxy for the typical bank's cost of funds, is a whopping 2.75%. Twenty years ago a small bank could not survive on a gross interest margin of less than 6%. With sophisticated new software and ATM's, a small bank can modernly make a profit on a gross interest margin of 4%. Helloooo? Small banks are being forced to survive right now on a gross interest margin of just 50 basis points. They certainly cannot raise interest rates to compete for more deposits.

I feel like an early pioneer, whose wagon train is surrounded by angry Indians, and who learns that the cavalry detachment sent to relieve him is itself under siege by Indians.  The small banks were one of the last sources of lending that might save this faltering economy, and it now appears they too are under siege. Yikes.

Topics: commercial real estate loan, commercial loan, commercial mortgage lenders, commercial mortgage rates, commercial financing, commercial mortgage

SBA Loans During This Great Recession

Posted by George Blackburne on Thu, Feb 5, 2009

I Had a Long Conversation With a Veteran SBA Originator

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I have a buddy who has been originating SBA loans exclusively for over a decade. Yesterday we spoke about SBA lending for almost 40 minutes. Here are some of the highlights:

SBA lenders rely on selling the insured portion of their SBA 7a loans to bond investors in order to get their principal back with which to make new loans. During the nadir (lowest point) of the financial crisis last year, these bond buyers completely disappeared.

As a result, the huge finance company for which my buddy worked completely stopped making SBA loans for three months. Many other SBA lenders dropped out of the market as well. The only SBA lenders left in the market at the time were a few banks who had the luxury of holding newly-originated SBA loans in inventory.

Recently, however, my buddy's huge finance company converted to a bank and received over $2 billion in TARP money. As a result, his company is now aggressively back in the market to make both 7a and 504 SBA loans.

The SBA will not insure loans on apartment buildings and self-storage properties. These properties earn their cash flow from relatively long-term rentals. As a result, they do not create a lot of jobs and are therefore not eligible to be insured.

Hotel and motels, as my buddy pointed out, are suffering greatly as a result of the financial crisis. Few SBA lenders will make loans on hotels and motels right now.

My buddy's company will not consider gas stations as well right now. His company made a lot of bad gas station loans and lost tens of millions of dollars. Apparently few other SBA lenders will consider gas station loans right now because my own hard money shop, Blackburne & Brown, is seeing a ton of gas station deals.

To my surprise, my buddy told me that the SBA will make loans on mixed use properties. A mixed used property is one where there is both commercial space and residential income space (apartments). Being from New Jersey, he sees a lot of mixed use properties in downtown areas where there is an apartment upstairs and a commercial unit (storefront) downstairs. The only restriction is that the owner-used commercial space must be larger than the apartment space; however, since most of these properties have basements used by the owner of the commercial space, this condition is usually satisfied.

He also surprised me by saying that an SBA loan borrower does not have to have good credit. If the borrower's credit problems were a result of some situation that has subsequently been resolved (divorce, medical problem, etc.), the borrower will still qualify for an SBA loan. He just can't have a lot of delinquencies at the time of the application.

The biggest issue is that the borrower must be able to demonstrate from his tax returns that he has the ability to make the proposed payments. Of course he gets to add back any depreciation and interest payments on any loans that will be paid off from the proceeds of the SBA loan.

My buddy's company has plans to make between $400 million and $600 million in SBA loans this year; however, there has been a fundamental shift in the type of deals they will make.  No longer will they make loans where the underlying commercial real estate constitutes less than 50% of the size of the loan.

Prior to the financial crisis, SBA lenders were regularly making SBA loans with no commercial real estate as collateral at all. They would often finance the purchases of franchises and professional practices, for example. His own company will no longer make SBA loans without some commercial real estate as collateral.

I was surprised at the leverage that SBA lenders can achieve. Using the SBA 7a loan program, SBA lenders can finance not only the purchase of commercial real estate, but also furniture and equipment to use in the property. They can often finance up to 150% of the value of the commercial real estate!

Did you know that if an SBA loan goes delinquent for four months that the SBA lender can present the loan to the SBA, and the SBA will immediately return 75% of the SBA lender's original principal? The SBA lender is still responsible for foreclosing on the collateral and selling the property. Whatever the SBA lender recovers, it must give 75% back to the SBA; but it still gets to keep the remaining 25%.

Let's suppose a SBA lender makes a $1,000,000 loan. When the loan goes delinquent by four months, the SBA lender presents the loan to the SBA, and the SBA immediately gives the lender $750,000 (75%). If the property is later sold at foreclosure for a net sales price of $800,000; the SBA lender gives $600,000 to the SBA (75%) and keeps $200,000. The SBA lender therefore recovered $750,000 plus $200,000 on a $1 million loan, for a loss of only $50,000. This is a good deal.

Based on my buddy's comments, it appears that SBA lenders are likely to loosen up and make some loans this year.


Do you need an SBA loan? You can submit your 51% owner-used commercial property loan to scores of different SBA lenders in just four minutes using C-Loans.com. Ad C-Loans is free!

Topics: commercial real estate loan, commercial loan, SBA loan, small business loan, SBA 7a loan, commercial financing

Commercial Loans and Subchapter S Corporations

Posted by George Blackburne on Mon, Feb 2, 2009

Title to Many Commercial Properties are Held by Subchapter S Corporations

About 25 years ago some thief was climbing on the roof of a commercial building in New York. He was trying to break into the store to steal stuff, and he had no business being on the roof. The roof was near the end of its useful life, and the thief fell through the roof and severely injured himself.

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The thief must have had unbelievable audacity because he actually sued the owner of the commercial building for negligence for failing to maintain the roof. To the shock and awe of commercial property owners everywhere, this miserable thief won his lawsuit and was awarded over a million dollars in damages.

The property owner held title to the building personally, and he was personally wiped out when the judgment debtor took virtually everything the poor man owned.

From that moment on, commercial property owners across the country desperately sought a way to insulate themselves from liability. They could not hold title as a regular "C-corp" because they would be taxed twice - once as a corporation and another time when the owners drew out their profits as dividends. Limited liability companies had not yet been invented.

The solution was the subchapter-S corporation. A subchapter-S corporation can only be used for new business ventures, and there is a limit of 35 shareholders. You can therefore never take a subchapter-S corporation public.

The big advantage of the subchapter-S corporation, however, was that it was not taxed twice. The net income of a subchapter-S corporation passes directly through to the owners of the corporation without taxation. The shareholders only pay taxes once on the profits, as they are added to their personal income on their 1040's.

As a result, for about 15 years, title to a great many commercial properties was held by a subchapter-S corporation.

Modernly, subchapter-S corporations have been replaced by limited liability companies (LLC's). LLC's do not have to be new ventures, and ownership is not limited to 35 shareholders.

As a commercial mortgage broker, however, you will still occasionally see subchapter-S corporations. You will need to gather Articles of Incorporation (summary of the key organizational facts - like the name of the corporation, address, etc. - that is filed with the state), the Bylaws (detailed instructions on how to run the corporation), and a Corporate Resolution to Borrow (the minutes of the Board meeting authorizing the president to borrow money on behalf of the corporation).


Need a commercial loan? You can apply to 750 commercial lenders in just found minutes using C-Loans.com. And C-Loans is free.

Topics: commercial loan, commercial real estate financing, commercial mortgage loans, subchapter-S corporations, commercial financing

How to Get Commercial Loan Packages in the Door

Posted by George Blackburne on Mon, Dec 29, 2008

Includes George's Famous Pooh-Pooh Soup Story

You're a commercial mortgage broker. You've just quoted a commercial real estate loan to a borrower over the phone. The borrower appears interested, and you want to convince the borrower to send his commercial real estate loan application to you, as opposed to a competing mortgage broker or bank.

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The key thing to remember is the Theory of Momentum. A body at rest tends to stay at rest. A body in motion tends to stay in motion.  A potential commercial real estate borrower is therefore going to want to keep sitting on his hands.

To convince a potential commercial borrower to send his loan package to you, never ask for too many documents at one time.

If you ask for a huge checklist of documents, the borrower will surely procrastinate, during which time he'll speak with a competing commercial lender or mortgage broker, and you'll lose the deal. Instead, ask for just two or three documents at a time. Gather the six-inch-thick stack of required documents slowly over a period of weeks.

"But George, it will take months to close a commercial loan at that pace."

We've all heard the story about the young bull and the old bull standing at the top on the hill and looking down over a herd of beautiful heifers. The young bull turns to the old bull and says, "Hey, Pops, let's run down and kiss one of those cows." The wise old bull replies, "Son, let's walk down and kiss them all."

The point of the story is that if you rush things, your success rate is often much lower. If you ask for a huge checklist of documents, you'll only close one deal in fifty. If you gather the required documents in small, easy waves, you might be able to convince all fifty borrowers to send you a package.

But you have to give the borrower reassurance that his commercial loan application is looking good ... and this leads us to my famous Pooh-Pooh Soup Story:

Have you ever noticed that whenever you order anything to eat at an expensive French restaurant that the snooty waiter always says, "Ah, good choice. The duck a la orange is delicious!" And when you order dessert, "Wonderful choice, sir. The Crepes Suzette are
delicious!"

I've therefore often wondered that if I ever asked for Pooh-Pooh Soup (you guessed it, a log floating is broth ..... eeuuuuu!) whether the French waiter would say, "Ah, the Pooh-Pooh Soup is delicious!"

Now back to our training. We've pointed out that you absolutely need to ask for the documents in five or six waves of three or four easy documents to fetch. But the borrower will need reassurance, before fetching a whole new wave of documents, that at least so far his commercial real estate loan application looks good.

So when you get the first wave of documents - his current schedule of leases (rent roll) and his last year's actual operating expenses - quickly scribble out a pro forma operating statement and do a debt service coverage ratio calculation. Then, assuming the numbers look good, you can tell him, "I've crunched the numbers, and so far your deal looks very do-able!"  (The pooh-pooh soup is delicious!) "Now all I need is a financial statement and two years tax returns."

With these documents you can pull a credit report and report back to the borrower, "I've looked at your financial statement, tax returns and credit report, and everything continues to look very favorable!" (The pooh-pooh soup is delicious.") "Now all I need is a copy of the leases and a financial statement and two years' tax returns on the LLC that actually owns the property." And so on, being sure to reassure the borrower that his loan package looks good (the pooh-pooh soup is delicious) after receiving each wave of documents.

So, to summarize, the object of the game is to convert a telephone lead into a loan package. To get your commercial loan borrower finally moving in your direction, you must not ask for a huge checklist of documents. Instead, ask for a very short list of easy documents to gather. After receiving each wave of documents, be sure to tell the borrower that his deal looks great (the pooh-pooh soup is delicious!). It will take you slightly longer to close a commercial loan this way, but you'll close far, far more deals (you'll kiss them all!).


Do you need to place a commercial real estate loan right now? You can submit your commercial deal to 750 different commercial real estate lenders in just four minutes using C-Loans.com. And C-Loans is free!


Perhaps as many as 10% of all of the practicing commercial mortgage brokers in the industry are my former trainees. If you would like to really learn how to broker commercial real estate loans like a pro, please click here.

Topics: commercial real estate loan, commercial loan, commercial real estate financing, commercial mortgage lenders, commercial mortgage rates, commercial lender, commercial real estate lenders, commercial financing, commercial mortgage

Submit Your Commercial Loans Using PDF's

Posted by George Blackburne on Mon, Dec 15, 2008

C-Loans Just Introduced a Free, New Tool to Create PDF's

Let's start from the basic proposition that commercial lenders are picky and unpredictable. A commercial mortgage broker often has to shop his commercial real estate loan package to a dozen different commercial lenders before he finds a good home for the deal.

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If you, as a commercial mortgage broker, have to pay Fed Ex charges to a dozen different lenders, your package delivery charges will cut deeply into your profits. In addition, shuttling your commercial loan package between a dozen different lenders will take weeks, during which time your commercial borrower may find a cheaper bank on his own. Wouldn't it be great to be able to submit your commercial loan package by email?

If you create your commercial loan package as a PDF, you can submit your deal instantly to a dozen different commercial lenders across the country by email. The problem is, however, is that you don't have the $350 version of Adobe software to create the PDF's. Even if you did have the software, you really don't know how to use it.

C-Loans.com has just added a feature that will allow you to create a gorgeous PDF presentation of your commercial loan for free. Just come to C-Loans.com and enter your commercial deal as usual. Go ahead and submit your commercial loan to six lenders.

On the departure page you will find a new button that will allow you, with one click, to "Create a PDF". Be sure to save the PDF of your commercial loan package on your desktop. You can then attach this gorgeous PDF to an email to a dozen of your best commercial lenders.

What does one of these PDF commercial loan packages look like? Simply click here to see a sample commercial loan package as a PDF.


Do you need a commercial real estate loan right now? You can submit your commercial real estate loan request to 750 different commercial real estate lenders in just four minutes using C-Loans. And C-Loans is free!


Are you the owner of a commercial property? Do you want to hire George Blackburne personally to place your commercial loan? George charges one point upon closing, regardless of the loan size, to serve as your mortgage broker. Please click here if you would like to contact him directly.

Topics: commercial loan, commercial real estate financing, commercial mortgage lenders, commercial financing, commercial mortgage

Use Demographics to Check Out Your Commercial Loan Applications Early

Posted by George Blackburne on Thu, Dec 4, 2008

Free Online Demographics Tools Warn You When Your Loan is in a War Zone

Your commercial lender will be pretty sore at you if he spends two hours to drive out to inspect your client's commercial property, only to find out that his life is in danger because the area is a war zone, with hookers and drug dealers on every corner. That's your fault - the commercial mortgage broker - for not warning him in advance.

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It's pretty easy these days to determine online whether or not a commercial property is located in a tough area. Just go to City-Data.com and read the free demographic information they provide. The income levels, the education levels, and the crime statistics will all help paint a fairly accurate picture of the neighborhood.

The wise commercial mortgage broker will turn down commercial deals in low-income, high-crime, high-drug-use areas. These loans are almost impossible to place. Instead, he'll use his precious time to work on his marketing and his mailing lists.


Need a commercial real estate loan right now? You can apply to 750 different commercial lenders for free in just four minutes using C-Loans.com.

Topics: commercial loan, commercial real estate financing, commercial mortgage loans, commercial financing, commercial mortgage

Best and Worst Cities for Commercial Real Estate

Posted by George Blackburne on Tue, Nov 11, 2008

Where to Invest Your Money for the Next Upturn in Commercial Real Estate

The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, real estate brokers and Real Estate Investment Trust (REIT) executives. Their answers also apply to the residential market, since the single-family-home sector typically follows the economy. As wages go up and there are more jobs, more people can buy homes, pushing prices up.

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The best cities in which to invest are those that are considered gateways to international investment, have vital downtowns where people can forgo cars, and don't have a glut of condos or office space.

According to this survey, the number one place to invest in commercial real estate right now is Seattle. Seattle is a diversified market, has a good base of business and is becoming a 24-hour city.

Although the city is suffering from the loss of Washington Mutual and the downsizing of Starbucks, Boeing and Microsoft are still relatively strong. Apartment vacancies are low and there aren't too many new buildings going up, meaning the market won't be oversupplied. The same is true in the retail space.

San Francisco comes in second in the survey as the best location to invest in commercial real estate.  San Francisco learned from the tech crash of 2001 not to overbuild. There is a reasonable supply of office and apartment space, which should limit vacancies. San Francisco's port is also expected to help the city during the downturn as Americans continue to rely on Asian imports.

Washington, D.C., New York and Los Angeles round out the top five.

The least attractive major city in America to commercial real estate investment is Detroit, Michigan. Detroit has been reliant on the car industry, which is rapidly shrinking. Other businesses are unlikely to fill the void in the next few years, which means the city will be hit hard by further economic struggles.

The second worst city was New Orleans. The city has been losing businesses to Houston, Dallas and Atlanta since Hurricane Katrina hit in 2005.

The other cities at the bottom of the list — Columbus, Ohio, Milwaukee, Wis., and Cleveland — suffer from dying industries and lack of tourist appeal.


Do you need a commercial real estate loan right now? You can apply to 750 different commercial real estate lenders in just four minutes for free using C-Loans.com.

Topics: commercial real estate loan, commercial loan, commercial real estate financing, commercial financing, commercial mortgage