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Qualifying for a commercial loan is not always easy for people who are new into this type of business financing. There are many lending institutions which have kept their requirements while others have increased the documents they need for their borrowers to supply them upon the request of a loan. But because there are several lenders out there, you are confident to find one that’s not to rigid in their requirements and can give you with a number of business financing alternatives.

One of the things you need to look for before going to any lender is whether or not you have made a good business plan. A business plan for your company is actually a way to show banks about current business and where it will go when you get the loan. You could hire professional writers which are expert in this area i unsure about making a convincing business plan.

The next thing you must do before going to a lender is to consider the financial standing of your business first. It’s important to clear your debts first before approaching a commercial lender. If you’re using a credit card, make sure that you start to pay it off on a monthly basis. Consider paying your outstanding debts as it can influence your income to debt ratio and can make your business attractive to lenders.

When you have all these items put together, you are now prepared to go to a lending institution. If you already have a relationship with a bank, it is best that you work with them for they can make their decisions according on their local area. If the bank turns down your offer, you can consider for other solutions and lenders in your area. There are several other places where you could access any loan. You need to keep your eyes open to the possible solutions available for you. For example, you can apply for SBA loan that you can qualify easily.

When it comes to commercial lending, you need to make sure your business is in the best position to qualify for one in order for you to get the approval your loan.



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If there is room for improvement and you need a commercial loan, depend on National Commercial Funding (NCF) to make the development a reality. As an established direct lending company, NCF provides the best choices for commercial loans at better rates than that of other commercial lenders and banks for real estate agents, mortgage brokers, and borrowers. Where else can you get the lowest interest rates in the lending industry?

NCF provides several loan program options to pick from, and borrowers can always acquire the perfect commercial loan solution quick and easy. If you are in the market for a property to lease or use for your business, NCF has the responsive program to help you improve your business horizon in quick and simple ways.

NCF has the funds to provide for commercial loans above $500,000. You can maximize your commercial and investment assets and fund your business growth more than significantly.

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The past two years have been some of the toughest times for small businesses in living memory, and one of the most damaging aspects of the current financial climate for businesses is the scarcity of credit from the banks.

In 2008, the market crashed and one market that was hit the hardest was the property market. Many businesses defaulted on loans as they were unable to keep up their repayments, and this left banks uneasy about lending for commercial property as well as residential property. But it would appear their faith is returning and lending is back on the rise for commercial property.

The Bank of England released figures that showed that lenders had increased their commercial mortgages being accepted by a large amount, giving businesses new hope that they will soon be able to gain acceptance for commercial mortgages to aid the recovery of their companies and sectors.

The Government has come under fire over recent months from small and medium sized businesses who feel that they are being locked out of the commercial mortgage market. So, in response to these concerns, the Government has implemented action nicknamed ‘Project Merlin’ – a plan to increase the amount of bank lending to small firms.



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Although banks and other business lenders have made a pointed effort to portray themselves as lending normally, very few business owners are likely to suggest that there is anything normal about obtaining financing from current commercial finance programs. It has become a routine occurrence for small business owners to be told by their current commercial lender that it will be necessary to seek another source for commercial loans and working capital.

I published several earlier articles which addressed some of the problems that commercial borrowers are experiencing when they attempt to obtain working capital financing and commercial loans. It has become clear that current commercial lending conditions have become even more difficult for most business owners. For example, one of these commercial finance reports described the unfortunate possibility of firing your banker as one of several guerrilla financing techniques that might be required for a small business to survive in the face of extreme business banking conditions.

It would not be realistic to suggest that there are one or two obvious business lending sources that will solve the working capital needs for all businesses in need of help. Nevertheless I would not advocate the guerrilla financing tactic of firing your bank and your banker if there were not suitable alternative sources for small business financing.

Identifying the most likely alternatives can be accomplished in several ways but one of the most effective approaches will include detailed discussions with commercial loans experts that are experienced in nationwide business financing similar to what the business owner currently needs. Realistically the search for new commercial lending sources must start with an admission from a small business owner that they do in fact need to find a new source for business loans.

The best commercial finance solutions will depend on the business location, type of financing, kind of business, operating history and size of loan desired. A key point for business owners to remember is that there really are a number of viable and effective commercial lenders that are currently active in making commercial loans to businesses that are in desperate need of commercial financing. Some of the most realistic sources for small business loans are operating regionally rather than nationally.

In addition to the advice contained in this article, small business owners should review commercial finance resources such as The Working Capital Management Guide, a free online publication which focuses on short term capital financing strategies. Commercial borrowers should also have a candid discussion with a commercial loan expert who is capable of providing appropriate help for their unique business financing needs.



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We usually do not pay for the typical commercial mortgage broker business to work in commercial construction loans or residential subdivision construction loans. Here’s why:



With the possible exception of the apartments, the U.S. is awash with additional buildings. Homebuilders are sitting on hundreds of thousands of houses unsold. The vacancy rate nationally for office buildings is close to 20%. Retailers are getting clobbered in the current recession, so that the vacancy rate for retail space is skyrocketing. Occupancy rates of hotels are plummeting. The simple fact is that the U.S. does not really need a lot of new buildings.

Even when the economy was strong, the typical mortgage broker business rarely went to work at any decent construction business loans.

The reason is because banks make a ton of money if you do a good construction loan. It has always been easy for skilled developers simply go to a local bank and obtain a construction loan.

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A Review of Priority Sector Lending by Commercial Banks in India ?Introduction To The Study

??????????? Availability of cheap and adequate credit is a boon for the Economic Development of a country.? By providing credit to farmers, industries, traders and businessmen the economic progress can be achieved.? The banking system can influence economic growth by enhancing resources in the direction of national objectives and priorities.

??????????? The banks play a very crucial role in the process of economic development and so the availability of banking infrastructure is considered as one of the prerequisites for rapid and balanced development of the country.? The banks in India have an important responsibility of chanalizing the funds with most important sectors to fulfill the predetermined objectives.? There is a rapid expansion in banking, deposit mobilization and credit development due to which there is change in the scope of banking operations.

Lending To Priority Sectors By Commercial Banks

??????????? The concept of priority sector was evolved in the late sixties in order to focus attention on the need to ensure adequate credit facilities to certain neglected sectors of the economy particularly in the rural areas.? The involvement of banks in priority sector lending has grown considerably with special emphasis on opening branches in un-banked areas.

With a view to ensure flow of credit to the neglected sectors like agriculture and small scale industries, the concept of priority sector lending was evolved and commercial banks were advised to grant at least 40 percent of their total advances to priority sector comprising of agriculture, small scale industries, small road and transport operators, retail trade, small business, professional and self employed persons, education which stood at 14 percent of the total advances in 1969, increased to 46 percent as at the end of 1988.? And the percentage of advances to priority sector was 35 during 1997.

Side by side with the expansion of bank deposits, there has been continued expansion of bank credit reflecting the rapid expansion of industrial and agricultural output.? The banks are also meeting the credit requirements of industry, trade and agriculture on a much larger scale than before, just as bank deposits have expanded, bank credit too has expanded tremendously particularly since July 1969, from about Rs.4,700 crorers in 1970-71 to Rs.7,25,370 crorers during 2002-2003.

In recent years, bank credit has picked up smartly by around 20 to 21 percent per year and many factors have contributed to this:

1. Increase in credit facilities by ?commercial banks ?results in large reduction in reserve???? requirements (CRR/SLR); 2. Release of impounded cash balances under incremental cash reserve ration (ICRR); 3.Sharp increase in food credit mainly due to increased food procurement operation; 4.Increased demand for credit from public undertakings and the large increase in export credit; and? 5.Fall in the interest due to RBI’s cheap money policy – rapid expansion in bank lending for industry, for housing, for buying of cars etc,.

In the sphere of bank credit, however, some of the old abuses regarding bank lending are still to be met with.? For instance, bank credit is freely available to well established houses of industry and trade without much difficulty while the tiny and small businessmen really find it difficult to get credit from banks; even now, some powerful but unscrupulous speculators are able to use bank funds to corner shares and acquire control over companies.

??????????? Before 1969 commercial banks had largely neglected agriculture on the ground that rural credit was to be undertaken by cooperative credit societies and banks.? Accordingly, they remained largely indifferent to the credit needs of framers for agricultural operations and for land improvement. ?This was regarded as a basic reason for the failure of planning in the agricultural sector and consequently for the failure of general planning.? At the same time, as the banks were owned and controlled by big industrialists before nationalization, small industrial concerns and business units were ignored by banks.

??????????? Soon after nationalization, the commercial banks were asked to be specially concerned with the financing of priority sector of agriculture, small scale industry and business and small transport operators, In course of time, other priority sectors were also added, such as retail trade, professional and self-employed persons, education, housing loans for weaker sections and consumption loans.

The rationale of priority sector lending was one of the causes for nationalization of the top 14 banks in 1969.? However, it was the Working Group on the Priority Sector Lending and the 20 Point Economic Programme chaired by Dr.K.S.Krishnaswami which clearly spelt out the concept:

??????????? The concept of Priority Sector Lending is mainly intended to ensure that assistance from banking system should flows in an increasing manner to those sectors of the economy which though accounting for a significant proportion of the national product have not received adequate support of institutional finance in the past”.

The different segments of the priority sector are as follows:

1.????? Agriculture

2.????? Small Scale Industries

3.????? Small Road and Water Transport Operators

4.????? Retail Trade

5.????? Small Business

6.????? Professional and Self-employed persons

7.????? Education

8.????? Housing Finance

The Reserve Bank of India issued certain directives to the commercial banks regarding Priority Sector Lending.? Priority Sector Advances should constitute 40 percent of aggregate bank credit.? Out of priority sector advances at least 40 percent should be allocated to agriculture.? Direct advances to the weaker sections in agriculture and allied activities in rural area should form at least 50 percent of the total direct lending to agriculture.? Bank credit to rural artisans village and cottage industries should at least be 12.5 percent of the total advances to small-scale industries.? About 12 percent of bank credit should go to exporters.? The commercial banking system and particularly the public sector banks under the influence of the finance ministry and the ruling party politicians took to priority lending enthusiastically.

The total credit extended by the public sector banks to agriculture, small-scale industry and other priority sectors went up from Rs.440 crores in June, 1969 to Rs.1.71,190 crores in March 2002.? As a result, advances to priority sectors as percentage of total credit increased from 15 percent in June 1969 to 43 percent in March 2002.? The rate of progress was quite rapid soon after nationalization but later progress was more modest.? The relatively slow progress of advances to the priority sectors was due to the fact that the bank officials from top to bottom were not imbued with the new objectives of banking.? At the same time banks were also worried at the poor and unsatisfactory recovery performance of the agricultural and small sectors.

Table

PUBLIC SECTOR BANKS’ ADVANCES TO PRIORITY SECTORS:

AMOUNT OUTSTANDING ????(Rupees in Crores)

Priority Sector

June 1960

June 1971

June 2002

March 2004

Agriculture

160

340

63,080

90,540

S.S.I

260

440

49,740

65,850

Other Priority Sector

20

130

53,710

1,07,440

Total P.S Advances

440

910

1,71,190

2,63,830

Total bank credit

3,020

4,080

3,96,950

7,64,380

Percentage of Priority Sector Advances to total bank credit

12

25

43

34

Source :-? RBI Annual Report 2003 – 04

The priority sector advances include small transport operators, self-employed persons, rural artisans etc., inclusive of funds provided by RRBs by their sponsoring banks, loans to software industry, food and agro-processing sector.? The initial enthusiasm in favor of priority sector lending gradually wanted because of certain concrete problems faced by the banking sector.

In their anxiety to reach the target of 40 percent, the banks went in for indiscriminate lending.? In many cases, there was external pressure too on the banking sector to lend to weaker sections.

As priority sector loans were small accounts, public sector banks were not able to monitor the distribution, follow-up and recovery of tiny loans.? This increased their costs on the one side and aversely affected their profitability, on the other.? The commercial banks were squeezed in both ways.? On the other hand, they were forced to keep a high proportion of their deposits as much as 53.3 to 55 percent in liquid reserves till 1992 under CRR (15%) and SLR provisions (38.5%).? They had, therefore, only about 45 percent of the deposit resources for loans and advances.



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Commercial lending refers to the practice of company owners to get financial help from loan company. Businesses do not have to really be big since the loans can also work for small as well as medium-sized business. Depending on the size, the request of funds can range from thousands to millions of dollars. Lenders guarantee that they run credit check on the borrower and must supply their collateral as security to the loan and also the monetary down payment.

Borrowers need to have a business plan that they will prepare before they meet with investors. This plan is known as objective. The idea here is to make sure that lenders will be able to see the products and services the business owner will provide. Business plans are very important to map out the direction the company intends to go and then track if they believe they will earn money in the end.

Lenders in addition need to see the kind of cash flow the borrowers work with. Borrowers will be required to bring in their financial records that will sum up the amount of money going in and out of every month or year.

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Before a large number of applications were rejected due to strict criteria which catered more prime business. But now there are some more forward thinking lenders who have entered the market.

Commercial Loans

Lenders will lend on the following types of businesses or Small and Medium Enterprises, including retail, tourism, care sector, B&B’s, Shops, Pubs, Guest Houses, Farms, Land, Hotels, Industrial Units, Offices, Factories, livery, Restaurants and Take Away’s.

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Like it or not, environmentally conscious, or “green” principles have come to dominate the field of commercial real estate development and commercial mortgage lending. Green building and sustainable design are now the standard in new commercial construction and residential developments. And, with local and national governments getting greener all the time, look for energy and resource efficiency to become mandatory, with green mandates being placed directly into building codes. Funding sources such-as banks, Wall Street brokers, insurance companies and hedge funds, are following suite and these principles are rapidly becoming a part of the commercial mortgage industry.

The US Department of Energy’s Center for Sustainable Development recently reported that 40% of the entire world’s energy supply is used by buildings. That’s a huge number. And, in the United States, construction accounts for our largest manufacturing sector, representing a staggering 13% of US GDP and nearly 50% of total wealth creation. Even tiny percentage gains in efficiency can amount to massive over-all energy savings.

Both institutional and private lenders as well as the REIT, (Real Estate Investment Trust) hedge fund and private equity industries have all embraced the environmental building movement. Green is the color of money and green is the color of commercial mortgage construction lending now and into the future. Lenders love green construction because good for profits as-well-as being good for the planet. Energy costs money, resources cost money and cleaning up messes’ costs money. Saving energy, saving resources and sustaining a site all save money, during construction and throughout the operational life of the property. Lenders know that green means efficient and, when they evaluate a project for financing they want to be assured that the funds they invest will be used cost-effectively and that the building will be economically viable.



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Recent commercial lender changes are likely to impact most small business owners. If a commercial borrower wants to continue their present banking relationship, they will find (in most cases) that the business lending changes are permanent and cannot be avoided. A few new and more flexible commercial lending sources represent a welcome exception to this trend.

One of the biggest commercial lending changes involves new guidelines for working capital financing. Most banks appear to be quietly eliminating business lines of credit or severely reducing the amount they are willing to finance to a level which is not helpful to an average business. Very few businesses can survive without a reliable source of working capital, so this change promises to receive the highest priority from most small businesses. To replace the disappearing commercial lines of credit, the most practical options for business borrowers include working capital loans and merchant financing from one of the alternative commercial finance sources still active in small business financing programs.

The difficulty of locating investment property financing illustrates another business lender change. If the commercial property is considered to be owner-occupied (the owner occupies a substantial portion of the building), more banks will be interested in making commercial real estate loans. Investors that do not occupy the property often own business properties like shopping centers and apartments. For many banks, it appears that they are currently restricting their commercial lending activities to those which qualify for SBA loans (Small Business Administration) which generally exclude investor-owned situations.

A third significant business lending change is demonstrated by revised guidelines for refinancing commercial real estate loans. In almost all cases, commercial lenders have dramatically reduced the loan-to-value percentages that they will lend. In some areas and for specific types of businesses, many banks will no longer lend over half of the appraised value. While this causes difficulties when attempting to buy a business, the problems for a commercial borrower reach a crisis magnitude when refinancing an existing commercial loan. In many cases the original business loan was based on a much higher percentage of business value than the bank is currently willing to provide. The lending problem is further compounded when a current appraisal reveals a decrease in value since the original loan was made. Due to a distressed economy which frequently results in decreased business income that then leads to lower commercial property values, such an outcome is especially common.

In a fourth example of commercial lending changes, for virtually all small business finance programs many small business owners have already discovered an inflated fee structure from most banks. Perhaps the bank perspective for some of the commercial financing fee increases is that they need to find a revenue source to replace the diminishing income from small business loans which has resulted from bank decisions to decrease commercial loan activity. When they encounter suddenly increased business financing fees levied by their current bank, business borrowers should seek different commercial funding sources except in unavoidable and unusual circumstances.

A final example of commercial lender changes is depicted by banks changing their overall guidelines for small business financing. Many banks have effectively stopped making any new commercial loans to small businesses regardless of business income or creditworthiness. Unfortunately these banks are not announcing publicly that they have discontinued small business finance activities. This means that while they might accept business loan applications, they do not intend to actually finalize commercial financing in most cases. Whenever it becomes obvious that the bank has no real intentions of making a requested working capital loan or commercial mortgage, this approach has clearly frustrated and enraged business borrowers.

The five commercial lending changes described above are unfortunately the proverbial tip of the iceberg. As they approach business lenders to obtain commercial real estate financing, working capital loans and small business financing, business owners will need to be especially skeptical and diligent.

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