Christian Commercial Bank Lending
Christian financial institutions offering commercial bank lending primarily service the needs of corporations and larger businesses. Also known as business banking, commercial banks are not only banks but intermediate business between banks and other financial institutions unlike retail banking which provides services directly to consumers. These high-end institutions fund corporations, sole proprietorships and partnerships on many levels - from large businesses to overseas companies in a variety of nations - and include many different services from mortgage lending to supplying international capital to low and middle-income countries.
Companies need capital to achieve their vision and financial goals. Commercial bank lending is there to help. Representing over 18 percent of all financial assets, commercial lending provides these companies with the funds they need to grow their business. Commercial loans, often called business or industrial loans, can be used for land, to purchase buildings, or purchase capital and equipment to use for manufacturing, distribution, wholesale, transportation, communication and much more. Although still a form of debt, these loans are not available for items such as investments or personal expenses. Companies often choose a revolving line of credit to purchase materials or merchandise and repay the debt as merchandise sells. Credit is extended as it is paid off, much like a credit card, and can be used for replacing equipment or restructuring buildings. Farmers can also take advantage of commercial bank lending to expand their agricultural farms and purchase much-needed equipment.
One of the highest expenses of a business owner or corporation is real estate. Since commercial bank lending usually have more capital to offer, corporation often use them as a real estate lender. Loans can range from $200,000 to $15 million that can be used for purchasing land and constructing office buildings, warehouses, or manufacturing centers. It can also be used to refinance or make repairs and improvements on the property. Funds can also be used to develop for subdivisions, condominiums or apartment buildings of five units or more. Terms on loans usually average about 30 years and have low adjustable rates. Institutions, mainly federal agencies, that offer commercial bank lending also purchase real estate loans from smaller banks to reduce the amount of risk if the borrower defaults.
But getting a commercial real estate loan is a little more difficult than most people think. Lenders scrutinize the borrowing company or corporation, the actual building that will be inhabited, as well as the tenants that will live there, in the case of subdivisions, condominiums or apartment buildings. If the corporation has a history of bad credit, the building to be purchased needs work or if the tenants that will inhabit the building are risky, the lender may not willing to invest in the property. Some commercial bank lending institutions are even taking their loan offers online. Through various software programs, they connect buyers and brokers with lenders and provide comparative information on a variety of lenders for companies that are seeking loans. Since commercial real estate is so competitive, most companies just care about the bottom line - finding a lender that can offer the best deal. These sites also offer resources for alternative financing solutions and advice on how to go through the process. Turn around time on applications is almost immediate. Businesses must choose a broker who knows the commercial lending process and is familiar with all the players to walk them through the process. Some lenders will loan to industrial sectors while others will not. It is crucial to know the lender's specialty as well as how much the business can afford. Visit a few before deciding where to apply. Then choose a lender who is knowledgeable and who verifies information in a clear, organized and accurate manner.
Larger financial institutions that focus on or have departments that specialize in commercial bank lending often get are involved in what is considered international lending. In this highly specialized field, banks provide private capital to developing or middle income countries to invest in humanitarian projects or social reform to alleviate poverty. Public projects can vary from water and sanitation systems to oil and gas refinement to rebuilding roads and dams within the country. School systems also benefit from money borrowed. These funds generate jobs, promotes competition, transfers technology and help develop financial systems within the government. Loans and grants are also used to promote economic and policy reform within struggling nations. The Bible talks frequently about taking care of the poor around us. "Blessed is he that considereth the poor: the LORD will deliver him in time of trouble." (Psalm 41:1) But for American banks, these loans are not charity. Repayment terms range from 20 to 40 years. Grace periods are often extended on the principal for 10 years and no additional interest is accrued. However, some lenders do charge a small percent service fee - about 0.75% to the borrowing nation.
The commercial bank lending business is very diverse in what it offers to large businesses, corporations and even to developing countries. As a larger entity in the financial world, it might not be applicable to many individuals and small businesses that operate daily from various loans and lines of credit. But many of these institutions purchase outstanding loans from smaller organizations and at some time, most people will deal with the in some form. They keep our large corporations in business, our market economy operating, and millions of American jobs in tact.
Christian Commercial Lending BrokerA commercial lending broker could be likened to a hotel concierge whose job it is to know just exactly where to find that authentic Slovakian chef or the vintage brownstone with the lions out front somewhere on one of the five boroughs. Working their magic, the agent is the middleman between lender and borrower, finding the lowest rates, the lowest points, and the best lending agreement with the fastest turnaround time. The commercial lending broker can make a lot of money finding that special deal, but the agent must have a vast amount of knowledge about where to go next when a deal falls through. The agent must watch the markets day by day for a view on where interest rates are on the cost spectrum and must be able to schmooze the customer who may get discouraged after finding out what the broker has been able to craft in terms of a deal. Keeping a borrower on the line can be one of the most challenging parts of the job.
When a commercial lending broker gets a customer who needs to find fast money to close a deal, the agent will have a list of hard money lenders that has been compiled from his own research. These private investors are not in the phone book as lenders, but have built a reputation for lending fast turnaround money for "gotta have it now" transactions. Hard cash lenders are typically local investors who will charge their commercial clients high interest loans, sometimes known as bridge loans for a short amount of time, typically no more than eighteen months. An agent can sometimes "vet" a customer before leading him to a hard money lender by sizing up his net worth and finding out what cash the customer has available. The hard money lender usually does not lend over sixty or seventy percent of the actual cash needed to make the deal. The Bible speaks of two deaths: one physical and one eternal. Jesus said Christians never need fear either when He declared, "I am the resurrection and the life: he that believeth in me, though he were dead, yet shall he live." (John 11:25)
Getting to know the customer's own situation must be one of the broker's most important tasks. Trying to craft a lending agreement for a business owner who has a poor credit history will be wasted time for the commercial lending broker and his borrower. Banks usually have the highest lending standards of any lending institution with credit unions not far behind. But the agent may know some banks not fitting this stereotypical role which can work with a less than stellar customer that he recommends; however, that takes years of building relationships. Finding an agent with this kind of knowledge takes some homework on the part of the borrower. A number of online training courses for becoming a commercial lending broker actually admit that the number one key to success is knowing where to find the right money for the right customer!
Becoming a commercial lending broker does not take a college degree. These professionals however, must be licensed through the passing of a difficult state examination covering all aspects of real estate and lending law. The rewards for such diligence can be highly rewarding financially, with commissions running from the low thousands to many in the five figures for mega commercial deals. Building a successful brokerage business means keeping in constant contact with business persons in all walks of professional life. Through mailings offering special interest rates to just casual drop in chats to emails and memberships in civic clubs, the broker is constantly looking for ways to keep his name in front of potential customers. But is a person is looking for a broker, be aware of some of the tactics a broker can use to try and secure a deal.
There are times when a lending agreement starts getting a little ripe and is on the verge of collapsing. A commercial lending broker may tell a small business owner that there are no worries and that the closing is just getting pushed back a week or two. Some owners may, on just the oral word of a commercial loan broker stop paying on a present mortgage loan believing that all will work out and sometimes disaster happens. Borrowers should always insist to see a "locked-in" loan agreement on the lender's letterhead before making any moves that might backfire. While rare, a broker may ask the customer to falsify documents to pump up financial statements, and may have different rates and terms on the day of closing than what had been earlier promised. Of course, most wise business persons will have an attorney present at the closing to monitor the health of the agreement for the borrower.
The Christian commercial lending broker has an honored place at the table of a businessman's contacts. He dispenses to the company representatives information that will be valued in the hundreds of thousands of dollars in most cases. In sharing that information, it will be couched in terms that represent it as the best deal possible. It may or not be, depending on the honesty and forthrightness of the agent. It is extremely important that the broker is someone that the business trusts, has fully vetted and one who has a sterling reputation of putting his clients' needs before his own. In a world of greed and self-interest, the search may take a while to complete.