Kris Roglieri Published in Scotsman Guide’s Commercial Edition
“Don’t Take “No” for a Lending Answer”
Founder and President of Commercial Capital Training Group; Kris Roglieri was recently published in The January 2014 Scotsman Guide- Commercial Edition. In the featured article “Don’t Take ‘No’ For A Lending Answer“, Roglieri discusses why Commercial Real-Estate borrowers should consider alternative sources of funding when turned down from traditional lending options.
The article goes into how traditional lenders heightened funding requirements after the credit-bubble of 2008. This made it very difficult for many commercial real-estate borrowers to access capital for their property deals. It also created a cost increase for small business owners trying to secure access capital.
With these difficulties evolving on the horizon, many small businesses needed to seeking funding from alternative lending sources. Many private lenders emerged to fulfill the funding requests from qualifying applicants. These alternative lenders viewed the process of lending differently and viewed business lending requirements from a whole new perspective.
This new perspective included two specific types of criteria in order to qualify.
- The Future of the Business – In previous times, traditional lenders, such as banks, would evaluate a business on their past. With private lenders, the determination if a bank qualified for lending was based on future revenues of a business.
- Risk Tolerance – Alternative lenders had to take on a higher level of risk due to this transition in criteria. These types of loans were normally nonrecourse loans where the lender would endure the responsibility of any future liability exposure, personal guarantees, collateral and forward exposure.
The great thing about alternative lenders is that when business owners are in a time of financial need, they can access the cash almost immediately through private lenders. The process is less intrusive and time-consuming than the typical bank loan process. Even though, these alternative loans come with a higher interest rate, they are not designed to last long. A merchant cash advance is a standard loan type that is provided to businesses in need of short-term working capital for specific situations where a traditional loan would not be accessible.
Factoring is another example of an alternative lending source. This process allows you to sell your account receivables at a discount rate to a private lender to receive cash upfront. There are no interest rates associated to this funding channel. It is similar to credit insurance rather than a loan.