1)Failing to discuss the Personal Gaurantee clause.  MOST no lien business and commercial/building/asset backed loans will require a personal gaurantee.  If you are unwilling to give a personal gaurantee and don't tell your broker/banker this time may be wasted.  Yes your broker should tell you if the bank requires a PG.  There is nothing wrong with you not wanting to sign a PG.  Do you limit your chances of getting a loan?  Quite significantly.

2)Failing to know your personal credit report and your business credit report.

I use for my personal credit report, free once a year  www.annualcreditreport.com

For your business credit report visit Dunn and Bradstreet's website.  If you don't have business credit a D&B rep will discuss this with you.  Chances are you do have a business credit history (rent for office, business cell phone, business credit card, Coporate Auto Loan, Business Accounting Fees paid monthly etc)

Think about it logically-if you don't have business credit or a proven track record on a personal level how will an undewriter feel comfortable lending you hundreds of thousands if not million dollars?  Answer:They won't and you will need to get a Situational Loan(which we do-minimum is $1 million!)

3)Comparing Business Loan Cost to Residential Loan Cost.  Business Loans are very intense and more money may be required upfront.  We have our $500 application fee and the Appraisal will cost $1500 to $2,000 dollars.  Bridge Loans, Mezzannine Loans and Situational Loans may involve 4 points or more being charged on the loan amount.  Since these are short term loans that is how we make our money. 

4)Trying to push the unsecured loan into the secured part of your loan(For example..you want to buy a Restaurant and the building that the Restaurant operates in.  Most times the Restaurant is  a corporation or entity seperate from the building.  Our Commerical Appraisers will not risk there licenses for this type of maneuver.  Solution:Apply for two seperate loans or a Situational Loan(Min is $1 million).  We broker Situational Loans!

5)Not having a 10 to 30% downpayment for Commercial Purchases Even if you are the next Warren Buffet or Bill Gate you still need a downpayment.  The amount required depends on the type of property and grade.  There are other factors as well.  for specifics llok at my blog titled CURRENT LENDING CRITERIA  Current Lending Criteria Blog will allow Business Owners and Real Estate agents to see what kind of commercial loans American Cash Solutions Inc. can do. Please keep in mind that this blog has just been launched and will be expanded every month.  For March through July call us or apply at www.mybuildingfunds.com  since we will not have all the loan types up for you to see here.

6)Applying for a Full Income Commercial Loan after many years of Evading Income Tax!Well I was blunt on this one but let me explain.  A wealthy man walked in one day when I worked at a major bank to apply for a full income commercial loan..he was declined.  Of course the bank back then gave me little explanation and little training.  Of course I asked him for his tax returns.  Of course this got his hopes up.  Of course his accountant was more than happy to get the tax returns together.  Of course the banks underwriting department was more than happy to read over line by line each and every page of the tax returns and happily issue an immediate declination.  Of course the customer informed me that this happens all the time.

I figured it out.  This high roller was showing less than $35,000 on his tax returns in income after all expenses.  so the underwiter didn't take in to account the fact that the money went south?  Didn't the undewriter realize that the pillows had more than just goose  feathers inside?  Didn't the underwriter realize that Andrew Jackson, Benjamin Franklin, George Washington, Hamilton and Lincoln all took part in ensuring the matresses in my clients bed were a bit more wide than the standard matress that you and I own?  The reality is that the undewriter probably has a few family members that own businesses-cash businesses.  However there is no room for cash businesses showing low income results on tax returns applying for hundreds of thousands of dollars even if "off the books" they make six figure incomes.  Even today that rule still dominates the commercial halls of lending.

In plain english, before you apply for a loan speak with your accountant to determine how much you "show" on your tax returns and share this information with us before you apply for your loan.  On certain commercial refis and purchases we do have banks that do stated Income Stated Asset loans!

7)Failing to Have A Business Plan!We sympathize with small business owners on this one.  I've heard all the excuses and have been guilty of them myself.  The most popular one is  I don't need one cause its all in my head.  If you can't afford to pay for your business plan to be "put together" you can get software at Staples for less than $200.00  While these softwares are rigid they are certainly better than nothing.  Most business planners charge minimally $3,000.  Create a business plan so you can really say to yourself and the employees and customers that rely on you that you really do have a plan!

8)When Declined By 1 Bank, Assuming No One else Will Do The Loan!  When I worked at a bank branch I was amazed at how many people actually got declined by their own bank.  It was clear that somebody would do the loan for them-just not their bank!! Now, we brokers can and never will imply that you will get your loan...even if an approval is issued we need to get to the closing table.  One particular bank may need to limit its geographic or credit risk in one particualr area.  Banks don't like to put all their eggs in one basket(town) and like to do loans in more than one city.  Similiary, banks don't want to be caught with to many bad loans, and can only lend out so much money a any given time.  While a bank is a bank, they need money to.  Some banks may get there money from the deposit flow from cds, savings and checking accounts and other deposit vehichles.  A sudden drop in these credits may lead to a restriction in the amount of money they can lend.  So, if you are turned down by one bank go to a Broker(us) and let that Broker find out if a bank somewhere in America is eager to lend out money! Now I wrote this at 11:30 pm because it is amazing how many people tell me they'll never get a loan and I think its a mistake to listen to just ONE bank when it comes to the financial success of your business!!!

More to come on mistakes borrowers make when applying for Commerical Loans.