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.
