What is a direct commercial lender?


A direct commercial lender is one that funds loans on hard collateral and collateral is not restricted to real estate but can be factoring or non-conforming assets. Direct commercial lenders can be commercial banks or mutual companies and any financial groups and institutions. Commercial lenders can offer different non-standard loan programs with higher rate than usual bank loans and allow for greater flexibility.

Commercial lenders' specialty is hard money loans and bridge loans. Both types signify need for quick financing and allow for less than full documentation, have a rate of 12-15% and do not exceed 60 to 75 percent LTV. While bridge loans usually refer to funding property in transition, while waiting for other financing, hard money loans can also be used to save a real estate from pending foreclosure.

Commercial loans are more often shopped by brokers for a certain customer rather than offered directly by the lender. Direct commercial lenders will often prefer to loan money on shorter terms than common residential lenders do for example, 5 or 10 years instead of 30. Prepayment penalties are commonly imposed by commercial lenders as a way to ensure higher return.

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