Top Ten Tips for commercial loan success

Top Ten Tips for commercial loan success

Jonathan Rubins of Alternative Bridging Corporation Limited gives us an insight into dealing with commercial finance .



Jonathan Rubins of Alternative Bridging Corporation Limited gives us an insight into dealing with commercial finance...

Tip 1: Less is not more when it comes to a Commercial application.

Due to the very nature of the loans, Commercial applications are very information heavy and an enormous amount of time can be saved if a coherent but full pack of information is submitted to the lender on day 1. Detailed projections, property information details on tenants, information on the borrower including relevant experience and other assets all help a lender evaluate the loan both on the basis of it being a sound proposition and the likelihood of refinance being achievable.

Tip 2: Get Help

Often Borrowers try to save money by either employing cheap professionals or doing it themselves. The old adage of you get what you pay for is never truer than in this instance and our Lawyers bill increases if they have to play detective. Equally time is often wasted while valuers chase leases, plans etc.

The same applies to getting help from Brokers who can package and explain what is often a good proposal but poorly presented; an enormous amounts of time and money is wasted whilst the lender sifts through paperwork that is either inadequate, wrong or lost within a sea of irrelevant papers.

Tip 3: A little research goes a long way

Understand your proposal, it is amazing how often we are presented with transactions were the introducer has no idea about the case and often hasn’t even met the borrower. Spending some time researching the transaction often saves on embarrassing silences and multiple email questions when Underwriters get their hands on your case. Well prepared Brokers are often able to nip in the bud questions that deflect from the overall proposition.

Tip 4: Get Organised

One thing that seems to really hold up drawdown is poorly organised borrowers. Huge amounts of time are wasted whilst Lawyers and Valuers chase for information that is usually known by the borrower. Piecemeal provision of information just leads to more and more questions. Make sure your borrower has all the information likely to be requested and has briefed his Solicitors.

Tip 5: Why are you taking out that loan?

The commerciality and thought process behind the loan decision is often overlooked. Have you considered why you want the loan? Have you requested enough / too much? Commercially, does it make sense to you or the lender to take the loan? How will you repay it and have you allowed enough time to do so?

All of these questions are being considered by your lender and being prudent should be by the borrower and his advisers.

Tip 6: Maximising your customers loan
A fully researched and planned proposal will allow you to maximise your customer’s loan. Have you reviewed the security? Does the client have other property that can be utilised to increase the advance or provide comfort to the lender? Has the client provided the valuer with all the relevant and correct information? In a recent case we had the borrower missed providing details of 4 lettings in a multi-let property. All of this will ensure the client gets the best possible loan.

Tip 7: Stay in Touch

I cannot recall how many times we have had to chase for answers to the simplest questions where often the Introducing Broker knows the answer. By liaising with the Lender regularly the whole momentum of the loan can be kept up ensuring a swifter completion and therefore faster commission payment. We never get bored hearing from an Introducer and often a brief chat can unlock a problem that has been holding completion up, don't be a stranger.

Tip 8: Manage Expectations

Try and manage your borrower’s expectations throughout the process. There is little point promising drawdown in 3 days at 95 per cent on a Cowshed in Lytham and no matter how hard you try you can only assist, not drive, the lender’s administration team. As with any loan, there are various stages that need to be achieved and managing the borrowers understanding of this is half the battle.

Tip 9: Liaison and management

Throughout the process staying in contact with the client is paramount to ensure a speedy drawdown. All too often they believe their Lawyers or other advisers are doing everything necessary when often a gentle nudge or even the provision of some missing information will ensure completion is hastened. Don't be worried to stay in touch.

Tip 10: The Last Push

Don’t give up the end is in sight. As drawdown approaches client’s often relax as soon as their Lawyer gives them a date. Often they ignore several last-minute issues that need to be undertaken before the money is released. This might include Insurance, or even something as simple as transfer details. At this stage a good broker can be instrumental in ensuring a smooth drawdown and therefore quicker payment of their commission.

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