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Home > Bad Credit Commercial Loans
Commercial Loans Bad Credit
As the saying goes "sh*t happens" and many borrowers have bad credit. Many borrowers with perfect or near perfect credit history have bad credit due to the flaws with the bureau's. We are not here to judge or criticize people. We have seen it all. We are only interested in trying to figure out how to close commercial mortgages.
Below we give some thoughts on current "bad credit commercial loan" options and few things you can do now to improve your score.
First and foremost there are still loan options for borrowers with bad credit in the current credit crisis. You are not wasting your time. The most prominent commercial loans for bad credit include the SBA 7a loans, commercial hard money loans and so called "story lenders". Besides just knowing the type of loan programs, it is critical to know the individual lenders and banks that look beyond credit scores. This is were we can be of real help. All of these loan programs have strengths and weaknesses which we go over below, as well as in other section of this website.
Commercial Loans Bad Credit
This may seem painfully obvious, but needs to be said - everything should be done by the borrower to restore/improve their personal credit score. And there are things that borrowers can do to improve their score. We hear a lot of discouraged comments from borrowers that feel their situation is hopeless. You need to be as unemotional as possible and do your best to deal with the problem. You will need to be patient. Here are a few things you can do immediately:
- Try to make sure that none of your balances exceed 50%. For example, if you have
a credit card with a limit of $15,000, and have a current balance of $10,000, try to bring down the balance to $7,500 or less. Or you may want to call the credit card company to see if they can raise the limit to $20,000 or more, again so your balance becomes less than 50%. However do not switch debt from one card to another as this is a redflag with the credit bureaus and will bring down your score. Say you have 10 credit cards, look at all of them and see which ones you can bring down below 50%, even if there are cards you can't bring down below 50%.
- Look for mistakes on your credit report. Its estimated that 75% of all credit reports have mistakes on them. If you discover something wrong with your report you have to begin the process of pledging your case to the bureaus/creditors. Keep in mind that you want to do this via letters as verbal conversations will be a a waste of time. Be thorough with whatever proof you have and be diligent about following up. Remember that you may have to send four of five letters per dispute and it will be your responsibility to make sure the creditor removes the mistakes. The process may take several months but your actual time into each dispute will most likely be only a few hours. Keep your patience.
- Even if you have negative line items that are accurate (you really were late) you may want to dispute them anyway. First of all, negative items have to be removed after seven years. So work on these right away. Also, keep in mind that companies go out of business, so there won't be anyone to dispute the item. If they don't respond back to your argument, the item is supposed to be removed. Also, it's expensive for companies to dispute items, so even if they are still in business they may not want to bother and you might get lucky and have the item removed.
- Get one of those credit repair books, and follow their advice! Try to find one that is really simple and lays it out on a step by step process. And... do the work. has a FREE credit repair book that you can down load right now, which is good and thorough. Your library will probably have books on the topic as well.
- For those of you that want to be aggressive, is solid though use your judgement... Aas some of the recommendation are a little too "grey" in our opinion.
As far as the credit repair companies be warned. This is a sleazy business for the most part. One of the warning signs is if the credit repair company charges a one time, upfront fee. We typically see $500 to $1,000. Most of these companies over promise and under deliver and besides you can do everything they will do yourself. If there are any "secrets" at all, its knowing the details and how to write a good dispute letters with the proper legal language. The free ebook mentioned above shows you how to do this. Or again the other book will some pretty aggressive techniques, some of which you probably shouldn't implement. Again, you need to be thorough, organised and follow up to effectively improve your score.
The only reason why you should consider hiring a credit repair company is if you just know you don't have the time or won't be able to do the necessary follow up. Over the years has done a good job for over 30 of our clients, though you need to be realistic about your expectations.
See article "Can Credit Repair Companies Be Trusted?"
The good thing about this credit repair company and why we mention them here, is that they have a very automated system that will take care of the follow up  and they know what they are doing. They been in business for over 25 years. Also, they're an actual law firm. If anything their free ebook, mentioned above will be a good resource. If you end up using them please keep us in mind on your loan, as we want to compete on it. We hope that you find this information useful and that this recommendation will be thought of as a beginning to a working relationship.
Going back to the bad credit commercial loan options...
Bad Credit Business Loans - SBA Commercial Loans
SBA commercial loans are one of the best options for borrowers with bad credit seeking commercial mortgages. Because the SBA essentially guarantees that the funding bank will get their capital back in case of borrower default, some banks are willing to take more risk and losen their underwriting guide lines and thus work with borrowers with poor credit. However most banks will not lower their credit standards even with the SBA guarantee so it is critical that the borrower works with the right bank. For example we work with a PLP SBA lender that will lend to borrowers in the 500's if the rest of there situation is decent.
Poor Credit Commercial Mortgages - Commercial Hard Money
Most borrower think of commercial hard money loans as there only source for bad credit commercial loans. Most hard money commercial lenders are interested in the properties equity and or its cash flow and the borrower’s credit score is often just an afterthought. Commercial hard money lenders want to see at least a 60% loan to value in order for them to seriously consider funding the loan. Also, the exit plan of the borrower is critical. In other words, how is the lender going to get there money back when the loan balloons? Speed and flexibility are the main benefits. The expense is the downside.
Commercial Mortgages with Bad Credit - "Story Lenders"
“Story lenders” (which is not a real term) are basically banks that are willing to listen to the borrower’s story about their difficult situation. They are often willing to overlook many difficult situations such as bad credit, weak business cash flow, high loan to values, etc. The important thing here is that these banks will need to be convinced that there is a logical reason for the issues and that the issues have been resolved. The borrower will have to document there case thoroughly and be willing to provide other sources of business for the banks, such as deposits, benefits, etc.
Get pre approved now by filling out the mini commercial loan application for more meaningful answers.
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