Car Wash Financing – Should You Use A Mortgage broker

The question should be asked, should you use a broker for your car wash loan? The question actually should be, should you retain a competent broker? Brokers, just like lenders, come in all sizes and shapes. Newer ones, old ones, experienced ones, inexpert ones, good ones and not so good ones. It’s a mortgage lenders job to obtain new business for the bank that he/she works for. It's a brokers job to get new business also. Both have competitive advantages and disadvantages.

A local lending institution can frequently give the better deal if you are only searching for the least expensive rate and points for origination. The local lending institution can also often approve a loan faster since they might be geographically close to the property and know of the neighborhood and any competitors. On the other side, the bank might demand a commercial banking relationship and a merchant account. In these examples, you could really feel you’re in business with your local bank. Often if you’re attempting with a local lending institution, you could have a short note, such as 5, 7 or 10 years. Think about it this way. In five years, you get to go through the whole process again of getting a mortgage!

If you are applying to an SBA lending institution, there are several types although they are SBA lending institutions. An SBA lender is a bank or non-bank lending institution which has been permitted by the SBA to lend capital where the U.S. government will guarantee the loan in the case of default. An SBA lending institution with PLP status (Preferred Lender) is frequently the most effective way to go as the loan typically does not have to be submitted thru the SBA. The lending institution will underwrite the loan, approve it and get an SBA case number.

What people do not realize is some banks and lenders (be they SBA or conventional loans) are inclined to do loans whether there is either great cash flow or significant collateral. How would you know if a bank is a cashflow lender or a collateral lender.

Borrowers also do not usually realize the most significant difference between a bank and a non-bank lending institution. Non-bank lending institutions frequently are usually liberal because they aren’t normally subject to banking guidelines from the FDIC and OCC. This makes a HUGE difference.

The fact still is also that many banks and non-bank lending institutions don’t like to do certain asset classes and that will change from more often than one would think. Special use properties (gas stations, hotels, restaurants, car washes) go in and out of favor with underwriters on a regular basis. Often they go out of favor because a lending institution has had too many losses in an asset class. Often they go out of favor because they have too many in their commercial loan portfolio. Occasionally they go out of favor because they have got a new chief credit officer that’s got a personal bias towards a particular asset class. How would a business owner know any of these things?

A competent commercial loan broker will understand how to correctly package the loan and present it to a potential lender. Presentation is 1/2 of the battle. Many borrowers present a very poor package for a commercial mortgage. Again, a good competent mortgage broker will know how to put together a good outline of the transaction, the usage of proceeds for the loan, the financial strength of the borrower (s), the personal credit of the borrower (s), the strength and desirability of the proposed collateral, the cash flow of the current business or collateral and any pro forma projections for newer or start up businesses.

Competent mortgage brokers can make the process of procuring financing significantly simpler and expedite the loan. A good commercial broker will know and will have made contacts with multiple lending sources. They may also know when you should use a cash flow lender compared to to a collateral lender. They can also know when non-bank lenders will do transactions that banks might not consider.

Harold Jaynes has specizlied in doing gas station, convenience store and car wash financing since the late nineties. If you’re interested in car wash loans, visit their website and learn about all your available options.