COMMERCIAL LENDERS IN THE UNITED STATES

2007-03-08 10:33:40

( Business )



Commercial lenders in the United States are usually lenders who require collateral for the loans they extend to borrowers. Real estate properties are usually the type of collateral that commercial lenders require.

Commercial banks, mutual companies, private lending institutions and other financial institutions are considered commercial lenders in the United States. These lenders have their own sets of criteria on commercial lending. Borrowers' capacity to pay the loan is stringently evaluated. Processing of real estate collateral documents is also strictly followed.

Commercial lenders usually hire the services of brokers to process commercial loan applications. Brokers recommend loan applications for approval of commercial lenders. Commercial lenders strictly evaluate the type, equity and quality of real estate collateral to determine the amount of loan as well determine the appropriate loan package to be provided to borrowers.

Majority of commercial lenders offer shorter loan terms compared to residential lenders. Thus, borrowers must assess if they can afford to pay off their loans at shorter period. Commercial lenders mostly charge higher rates as a trade off for the quick processing of borrowers' loan applications.

Balloon payment is the typical type of repayment designed for commercial loans. Commercial lenders collect the full amount of principal payment at the end of the loan term. Thus, borrowers must be confident that they can pay off the entire loan at the end of the term to avoid incurring higher amount of penalty and avoid getting a negative credit report.

The processing of loan applications in the commercial lending industry has become faster in recent years due to the support of regulatory measures implemented by the government. These measures were passed to address the need of borrowers to avail funds faster to help them implement various investment activities. It has resulted to increase investments in the economy as well as to a robust commercial mortgage lending industry.


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