So, you’re thinking of getting a commercial real estate loan from a traditional bank? You want to be sure ask your Banker the following questions before you do a commercial real estate loan with a Banker from a traditional institution. You will be surprised at what they say.
Number One.
Will you require additional collateral on my commercial real estate loan? Typically the answer you're going to get (if they're being honest) is that they're going to collateralize your commercial real estate loan with ANY other collateral. They can collateralize anything that you have of value, such as other real estate, other properties, or car titles - anything that you own free and clear they're going to use as collateral. They don't tell you this when you make your initial loan application. So if your loan goes bad, they're going to take everything you have.
Number Two.
Do you file a UCC lien filing on my loan? And if so, what does this do? Well, let me tell you what it does. They're going to say yes, (again, if they're being honest) and the details will be buried in the documentation when you sign your loan papers. A UCC lien filing will put a lien on everything that you own that's not titled or deeded. So, if you own a business, they're going to put a lien on your business equipment, office supplies, your accounts receivable and even your bank account. So if your loan commercial loan goes bad, they will take all of this. They'll take the money out of your account. They'll take the desk out of your office to get their money back. Banks are ruthless.
Number Three. Do your loan covenants require me to submit quarterly or yearly financial information? Do you require me to submit business tax returns or personal tax returns? Do you require personal financial statements or business financial statements? Do you pull it annual credit report?
The answer is that most of the time, if not all of the time, they do.
Number Four. What happens if I don't meet the Covenant requirements? The answer is that they will call your loan due and payable in full. Then they will foreclose on your property and take all of your additional collateral and all the other property you own to satisfy their loan that you owe them.
Number Five. Does the bank have the right to call your loan due for any reason at any time? The answer is yes. It's buried in their loan documents.
Number Six. Does my loan have a balloon payment? Or, in other words a maturity date when the entire balance is due all at once before the amortization period is over? The answer in most, if not all cases, is yes. There's a balloon due. You may have a 20 or 25 year amortization where your payments are amortized over a long period of time but you have a maturity date when it all becomes due and payable in full before that time. Usually 5 7 or 10 years.
Number Seven. Is my interest rate fixed for a period if so, how long? Most banks and financial institutions do not do fixed rates on your loans for commercial real estate. Typically, they do adjustable rates that are tied to the market and your payment goes up when the market index goes up.
Number Eight. Does my rate and payment fluctuate?The typical answer is going to be yes. If your Banker is honest and tells you the truth, then you're probably not going to be interested in that type of loan. The good news at Amusa Commercial Capital. You can always depend on upfront forthright answers. The answer to these questions Amusa Commercial Capital are going to be different than they are at a bank. We do not require additional collateral on our loans. Our loan covenants do not require you to submit financials or tax returns each year. Our loans are fixed period and fixed rate loans, which means you've got a long term with no balloon payment. Typically up to 30 years with no balloon payment. You can get a fixed rate for 5 to 30 years at Amusa Commercial Capital where your loan rate will not change.
