To be the next Donald TrumpAnnie Changcommercial lending, factoring, equipment leasing, credit Donald Trump didn't get to where he is by investing only in real estate. He has a keen business sense and is able to aggressively take advantage of many strategies to maximize his capital and streamline his assets. He has wisely diversified his portfolio by offering more products. Best of all, he knows he works with the best and most knowledgeable group of people in the business. Like Mr. Trump, you need to work with experienced and knowledgeable people. On average, only one out of 20 commercial loans gets closed. What can you do to ensure that yours is the one, instead of the other 19? Many brokers are not experienced with commercial projects; let someone else be their guinea pig. Commercial lending The commercial lending world can be frightening to many of us. The truth is that most of your competitors will be unfamiliar with, and not attempt to learn, the details of commercial lending. By doing a little homework and becoming familiar with different programs and capital sources, you will be successfully setting yourself apart from your competition. You will be able to get the most for your clients when working with a professional commercial mortgage broker. It is critical to set the proper expectations with the client. Unlike residential loans, the commercial loan process takes longer to close and involves more paperwork. Costs can quickly discourage clients; be sure to understand them and be able to explain why they are necessary. Your customers may even confuse different types of loans. Many ads can give commercial customers a false impression by offering low credit requirements, documentation and costs, but these are typically residential loan processes. Commercial loans generally don't need credit and background documents, but instead rely heavily on business plans and projected revenues. By setting the proper expectations from the start, you can minimize the surprises, especially the unpleasant ones. Commercial projects and clients are not more difficult than others, but there are differences. You need to become familiar with these differences. Generally, commercial projects get funding and loan programs from much different sources than residential. Once you become familiar with the available programs, you will add value to your services. Additionally, you will experience an increase in your yearly income and reputation status by offering these additional products. Here are a few additional strategies for maximizing capital that will be helpful to commercial clients: Factoring Factoring is a form of commercial finance where a business sells its accounts receivable invoices at a discount. Businesses always need cash to operate more efficiently. Instead of waiting for invoices due in 30-90 days, business can benefit from the factoring process by selling these invoices for cash. Businesses will have instant cash that can be invested immediately and produce a greater return. Another great benefit is that factoring is off-balance sheet financing, so it is not a form of debt or equity. This fact makes the factoring more attractive than traditional bank and equity financing. Equipment leasing Businesses free up their cash by leasing needed equipment instead of buying it. By leasing equipment, a business only needs to invest a small amount of cash and lease the equipment to start. The benefits include having less cash tied down to the assets and no worries about obsolescence. Plus, a write-off is a tax benefit for leased equipment. Business line of credit This service provides cash to a business for its operating needs. Lenders will loan money to a company with collateral, such as the cash value of insurance, additional commercial and/or residential real estate, or other assets that have value. These strategies will help you to be more professional. A smart way to separate yourself from the others in your profession is to partner with an experienced commercial broker who has access to a diverse range of commercial lenders and programs. He should be able to work with you and your clients exclusively, and should understand the urgency of completing your projects. Finally, on your quest to become the next Donald Trump, don't overlook the basics. Always act in a professional manner. Treat your clients with dignity and respect even when you have differences. Image is very important; remember to give your clients frequent updates throughout the process. Also, return phone calls in a reasonable amount of time - generally within 24 hours. It is often these little things that can ultimately make or break the deal. Although it sounds simple, they often get overlooked. By using smart business strategies and developing your knowledge of commercial capital products, you will be on your way to competing with the master players in the business world. Annie Chang is a senior loan officer of commercial, residential and commercial loans with Prime Share Pacific Mortgage, a full service brokerage firm in Castro Valley, Calif. She can be reached at (925) 216-3618, e-mail [email protected] or visit www.changteam.com.
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