Tightening Credit Conditions Are Now Threatening Business Owners, Commercial Borrowers: Now Banks Are Denying Good Commercial Loans, Borrowers

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The fallout from the residential lending industry has started to spill over to commercial properties. There is a lot of good commercial deals and borrowers that are getting denied from the banks that they have been dealing with for years. Most of these individuals don't realize that they can still get financing from different avenues.

The fallout from residential lending has started to spill over to Commercial properties. That's the word from Shawn Carlson, author and small balance commercial loan expert.

"Commercial lending was always a relationship business. Now banks are turning away good customers that they have been dealing with for years. Everybody is getting concerned about the mortgage meltdown, and the institutional and community banks don't want to fall into that trap," said Carlson.

He went on to explain that banks are getting so nervous that they are calling some commercial loans due at the first sign of change in a business/property owner's financial situation. The updated tax returns and financial statements used to be a file stuffer each year, but is now an integral item in your file.

Also, today's bank officers are very conscientious about extending questionable credit. Where in years past you could still go to the bank down the street to get a loan for an income producing property that doesn't debt service, which is no longer the case. "I have had some large institutions turn down loans simply because one of the directors doesn't like the area when they discuss the project at committee," said Carlson.

"Individuals looking to purchase or refinance a commercial building still have plenty of options. However, they should realize that if they have strong credit and good liquidity they can still get their project funded even if a few banks say no," Carlson said.

Carlson explained that the bottom line is that there are a lot of good deals and good borrowers that are getting denied from the banks that they have been dealing with for years. Unfortunately, most of these individuals don't realize that they can still get financing from different avenues.

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