Bankers Trust Escrow

Even today, in these difficult economic times, there is no shortage of investors and developers seeking commercial real estate mortgages. The problem is lenders are not financing deals as if they were just a year or two earlier.

If you want to improve your chances of obtaining approval and closing of your agreement, bring these things to the table.

Cash = commitment

100% financing is off. Some borrower liquidity in the market now is a strict requirement of all legitimate lenders, including private and hard money 'lenders.'s Point of view of lenders, the borrower deposit more the better, but, if there is sufficient equity in a building or project, the lenders work with as little as 10% down. They can build in an institution or a mezzanine structure in certain preferred shares, but addresses the quality can be done with small amounts of money borrower. That being said, not to apply for funding to 100%. Lenders are now looking for commitment and nothing demonstrates the commitment of money as in the transaction. (Note: If a lender or broker tells you that they offer 100% financing, beware, chances are good that, in the end they will not be able to fund and you lose your deposit and due diligence on the money.)

Credibility

Lenders are looking for credibility. This is not the time to ask a lender to finance your experience. Do not buy your first hotel during a credit crisis. Finance companies will ask questions about your experience in the hospitality industry and be nervous if you do not have much experience in the industry. The same goes for retail, office and industrial. It is now time to go with what you know or partner with an investor with experience in a particular industry that you are trying to penetrate. Believe me, the lenders go with what they know and they know the first time and are at high risk.

Credit

You do not have perfect credit to get approved for a business loan, but your credit record better not to present it as a bad payer is. If you're credit score in question, be prepared to be able to mitigate this negative factor is a co-signer, a larger downpayment or cross-guarantees or other real estate you own. Lenders do not know you personally, but they know exactly how many times you've been more than 15 days late on all of your mortgage and all payments by credit card. They look at your credit report as a report on your financial nature. This is not always fair, but to be fair to the lenders, it's really all they have to continue.

Equity

Equity is the protection to a lender. If you can demonstrate fairness in a building or parcel of land lenders feel more secure and more likely to put money in the escrow account and the timing of the closing date. There are simple ways to increase a lender equity protection (I say simple, not easy). The most obvious is to do more, a deposit, another is to ask the seller to carry back a portion of the debt. An effective method to also consider is to increase the value of a property by taking steps to get right. Sometimes, simple techniques can greatly increase the value of a project. A zoning change has been known to double the property values and can often be done simply by asking the local zoning authority. Site work cheap can also have a dramatic effect on how the bank views a property and they will certainly appreciate your pocket money on the deal.

We face challenges today in the arena of credit, but deals are still being made, the buildings are purchased and developments are still moving forward. If you want your agreement to be one of those for the funds to take steps to show the lenders what they want.

MasterPlan Capital LLC - Financing for all types of commerce.