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Car Wash Financing - Should You Utilize A Mortgage Broker
The question may get asked, should you retain a commercial mortgage broker for your car wash loan? The question truly should be, should you utilize a competent commercial mortgage broker? Mortgage brokers, just like commercial bankers, come in all shapes and sizes. New ones, old ones, experienced ones, inexperienced ones, good ones and not so good ones. It is a mortgage bankers job to procure new business for the lender that he/she's employed with. It is a mortgage brokers job to get new business also. They both have competitive advantages and drawbacks.
A local lending institution can frequently give the better deal if you are only searching for the least expensive rate and points for origination. The local lending institution can also often approve a loan faster since they might be geographically close to the property and know of the neighborhood and any competitors. On the other side, the bank might demand a commercial banking relationship and a merchant account. In these examples, you could really feel you're in business with your local bank. Often if you're attempting with a local lending institution, you could have a short note, such as 5, 7 or 10 years. Think about it this way. In five years, you get to go through the whole process again of getting a mortgage!
If you are applying directly to an SBA bank, there are different types although they are SBA banks. An SBA lender is a bank or non-bank lending institution which has been authorized by the SBA to lend capital where the government will guarantee the loan in the case of default. An SBA lender with PLP status (Preferred Lender) is frequently the best way to go as the loan generally does not have to be submitted thru the SBA. The bank will underwrite the loan, approve it and get an SBA case number.
What borrowers don't understand is some lending organizations and banks (be they SBA or conventional loans) are inclined to do loans whether there's either strong cash flow or ample collateral. How would you know if a lender is a cash flow lender or a collateral lender.
People also don't normally realize the greatest difference between a bank and a non-bank lender. Non-bank lenders nearly always are logically more liberal because they are not usually subject to banking rules from the FDIC and OCC. This makes a big difference.
The fact still is also that many banks and non-bank lending institutions don't like to do certain asset classes and that will change from more often than one would think. Special use properties (gas stations, hotels, restaurants, car washes) go in and out of favor with underwriters on a regular basis. Often they go out of favor because a lending institution has had too many losses in an asset class. Often they go out of favor because they have too many in their commercial loan portfolio. Occasionally they go out of favor because they have got a new chief credit officer that's got a personal bias towards a particular asset class. How would a business owner know any of these things?
A good mortgage broker will know how to properly package the loan and present it to a prospective bank. Presentation is half of the battle. Many borrowers present a very poor package for financing. Again, a good competent mortgage broker will understand how to put together a good summary of the deal, the use of proceeds for the money, the financial strength of the borrower (s), the personal credit of the borrower (s), the strength of the proposed collateral, the cash flow of the present business or collateral and any pro forma projections for newer or start up companies.
Competent mortgage brokers can make the process of procuring financing significantly simpler and expedite the loan. A good commercial broker will know and will have made contacts with multiple lending sources. They may also know when you should use a cash flow lender compared to to a collateral lender. They can also know when non-bank lenders will do transactions that banks might not consider.
A local lending institution can frequently give the better deal if you are only searching for the least expensive rate and points for origination. The local lending institution can also often approve a loan faster since they might be geographically close to the property and know of the neighborhood and any competitors. On the other side, the bank might demand a commercial banking relationship and a merchant account. In these examples, you could really feel you're in business with your local bank. Often if you're attempting with a local lending institution, you could have a short note, such as 5, 7 or 10 years. Think about it this way. In five years, you get to go through the whole process again of getting a mortgage!
If you are applying directly to an SBA bank, there are different types although they are SBA banks. An SBA lender is a bank or non-bank lending institution which has been authorized by the SBA to lend capital where the government will guarantee the loan in the case of default. An SBA lender with PLP status (Preferred Lender) is frequently the best way to go as the loan generally does not have to be submitted thru the SBA. The bank will underwrite the loan, approve it and get an SBA case number.
What borrowers don't understand is some lending organizations and banks (be they SBA or conventional loans) are inclined to do loans whether there's either strong cash flow or ample collateral. How would you know if a lender is a cash flow lender or a collateral lender.
People also don't normally realize the greatest difference between a bank and a non-bank lender. Non-bank lenders nearly always are logically more liberal because they are not usually subject to banking rules from the FDIC and OCC. This makes a big difference.
The fact still is also that many banks and non-bank lending institutions don't like to do certain asset classes and that will change from more often than one would think. Special use properties (gas stations, hotels, restaurants, car washes) go in and out of favor with underwriters on a regular basis. Often they go out of favor because a lending institution has had too many losses in an asset class. Often they go out of favor because they have too many in their commercial loan portfolio. Occasionally they go out of favor because they have got a new chief credit officer that's got a personal bias towards a particular asset class. How would a business owner know any of these things?
A good mortgage broker will know how to properly package the loan and present it to a prospective bank. Presentation is half of the battle. Many borrowers present a very poor package for financing. Again, a good competent mortgage broker will understand how to put together a good summary of the deal, the use of proceeds for the money, the financial strength of the borrower (s), the personal credit of the borrower (s), the strength of the proposed collateral, the cash flow of the present business or collateral and any pro forma projections for newer or start up companies.
Competent mortgage brokers can make the process of procuring financing significantly simpler and expedite the loan. A good commercial broker will know and will have made contacts with multiple lending sources. They may also know when you should use a cash flow lender compared to to a collateral lender. They can also know when non-bank lenders will do transactions that banks might not consider.
About the Author:
Harold Jaynes has specizlied in doing gas station, convenience store and car wash financing since the late nineties. If you're interested in car wash loans, visit their website and learn about all your available options.