Malpractice in any activity typically occurs when there is
a serious failure of professional duty. With borrowers
seeking small business loans and commercial real estate
financing, malpractice can occur with both commercial
lenders and brokers for commercial loans.
During the opening segment of the television series Hill
Street Blues, Sergeant Phil Esterhaus usually ended with a
suggestion (let's be careful out there) that will also be
helpful in avoiding malpractice situations involving
working capital financing. Although that is a worthy goal,
the actual practice of avoiding problems with business
loans is somewhat difficult and complex. One of our most
effective solutions for this dilemma has been to openly
acknowledge that such difficulties exist and simultaneously
provide detailed advice and strategies.
We have published a special report addressing one of the
biggest recent causes of malpractice involving business
financing and commercial real estate loans. Most commercial
borrowers are probably aware that chaotic conditions
started impacting residential real estate beginning about
12 months ago. This has produced problems for commercial
borrowers since it has resulted in numerous former
residential lenders and brokers now attempting to execute
business loans because their previous residential lending
activities have all but dried up.
Inexperience involving commercial loans is never a good
thing when you are describing a commercial lender or
broker. What borrowers need to be acutely aware of is that
inexperience coupled with the complexity of business loans
is likely to result in a recipe for malpractice in almost
all cases.
Even though a broker or lender was superb at executing
residential mortgage financing, please do not assume that
they will also be good (or even marginally capable) when it
comes to commercial mortgages, working capital financing or
small business loans. We have prepared a series of reports
which focus on over twenty critical differences between
residential financing and business financing. In reality it
takes years to master commercial loans.
Another common source of malpractice with working capital
financing is currently seen with many agents for business
cash advance programs. Most of these agents represent only
providers for credit card receivables financing and simply
do not understand business loans in general. They are
focused on only the narrow but important service that they
provide and are not capable of assisting with other forms
of business financing.
Although it might not be obvious to most business owners,
the malpractice potential with business cash advances is
also directly related to the first example described above
involving inexperienced brokers and lenders. In many cases
throughout the United States, call centers that previously
focused on residential real estate loans have simply
switched their focus to merchant cash advance programs.
Once again inexperience is never a good thing when
complicated working capital management services are
involved.
A final example of malpractice exposure involves SBA loans
and specialized forms of commercial real estate loans.
Although many commercial lenders seem to suggest that they
can do SBA financing, in reality very few do what they
claim. One major business financing lender ceased most
business operations during the past year because of
apparently fraudulent SBA loan activities.
Specialized commercial property such as funeral homes, gas
stations, bowling alleys and golf courses have always been
recognized as problematic for commercial loans. For
example, one prominent provider of funeral home financing
is the subject of multiple lawsuits regarding their
irresponsible commercial funding activities.
Commercial borrowers should rightfully conclude that an
important step in avoiding potential malpractice
circumstances might simply be to avoid certain lenders and
brokers. We would agree wholeheartedly, and in fact
published a special report some time ago dealing with the
need to avoid problem brokers and commercial lenders.
As serious as the three examples of malpractice described
above are, they are truly just the tip of the iceberg when
analyzing potential obstacles for business loans and
working capital loans. Our advice is meant to reinforce the
importance and value of being prudent in pursuing
commercial loans.
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Steve Bush is a small business loans expert - learn how to
avoid mistakes with commercial loans and find out about
business cash management strategies at AEX Commercial
Financing Group =>
http://www.working-capital-management.org
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