Published February 11, 2012
If you have recently been turned down by your bank for a commercial real estate loan, don’t take it personally. Many banks today are simply not making commercial real estate loans to anyone. In most cases this is not because they do not have the money, but because they already have too much commercial real estate on their books, or because they want to play it safe and make less risky loans.
In September 2011, I brought two of my co-workers with me to meet with a group from Bank of America in San Francisco. They were interested in referring commercial investor loans to us that they had to turn down. In Bank of America’s case, it had been mandated from high up that they completely stop making commercial investor loans.
Almost all commercial banks in America are still making commercial loans to businesses. It is less risky for a bank to make a loan to a small business because businesses are less likely to default during tough times. If a small-business owner is in a slump, he will likely pay the mortgage on his company office before his consumer debt (credit cards, house payment, auto payment), because he can’t afford to lose the source of his income.
At Apartment Loan Store, we get our funds primarily from non-bank sources. These sources are not regulated as tightly as the commercial banks in your neighborhood, and they do not have the FDIC regulators going through their files every six to twelve months to make sure that they are making only very safe commercial loans. These sources include life insurance companies, real estate investment trusts, hedge funds, Fannie Mae, Freddie Mac and FHA. If you have been turned down by your bank on a commercial loan, call us at 866-811-9515 to see if we can help you.
By Terry Painter, President