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Encyclopedia > Commercial lender (US)

In the US a commercial lender offers loans backed by hard collateral. In most cases this is real estate, but it can also include factoring, non-conforming assets, or other sources of collateral. Collateral could mean: Collateral in finance means a security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to repay. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... This article is about the financial term. ...

Contents


Commercial Lending Practices

Commercial lenders include commercial banks, mutual companies, private lending institutions, hard money lenders and other financial groups. These lenders typically have widely varying standards on which they base their loan criteria and evaluate potential borrowers-- but are often focused exclusively on the private market and have more lenient financial qualifications than banks. A commercial bank is a type of financial intermediary and a type of bank. ... A mutual organization (or society) is a cooperative organization (which is often, but not always, a company or business) based on the principle of mutuality. ... Hard money lenders are commercial real estate lending companies offering a specialized type of real-estate backed loan. ...


Commercial lenders specialize in hard money and bridge loans, often those that close quickly, in as little as two weeks. The commercial loan industry is most often accessed through brokers, who provide an evaluation of a borrower and then recommend the loan to a number of different commercial lenders whom they feel will be most likely to fund the borrower's request. Going through a broker rather than directly through a lender may cause longer wait times for loan financing and more up-front fees. For the use of the term in politics, see hard money (politics). ... A bridge loan is similar to a hard money loan. ... In commerce, a broker is a party that mediates between a buyer and a seller. ...


Costs of Commercial Lenders

Commercial lenders weigh the type, quality, and equity of the hard collateral very heavily. The provide the borrower with the greatest flexibility but also the highest rates when compared with bank loans. Many commercial loans are bridge loans where a higher rate is a good trade off for the speed with which the loan is delivered and the flexibility of the finance terms behind it. . Collateral could mean: Collateral in finance means a security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to repay. ... A bridge loan is similar to a hard money loan. ...


Commercial Lending Industry

Thanks to freedom from regulation, the commercial lending industry operates with particular speed and responsiveness, making it an attractive option for those seeking quick funding. However, this has also created a highly predatory lending environment where many companies refer loans to one another (brokering), increasing the price and loan points with each referral.


There is also great concern about the practices of some lending companies in the industry who require upfront payments to investigate loans and refuse to lend on virtually all properties while keeping this fee. Borrowers are advised not to work with hard money lenders who require exorbitant upfront fees prior to funding in order to reduce this risk. If you feel you have been the victim of unfair practices, contact your state's attorney general office or the office of the state in which the lender operates. In most common law jurisdictions, the Attorney General is the main legal adviser to the government, and in some jurisdictions may in addition have executive responsibility for law enforcement or responsibility for public prosecutions. ...


See also

A bridge loan is similar to a hard money loan. ... Hard money lenders are lending companies offering a specialized type of real-estate backed loan. ... A mortgage is a method of using property as security for the payment of a debt. ...

References


 
 

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