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There are two basic commercial loan types: traditional, and hard money loans. Traditional loans are usually obtained through standard channels such as banks and lending institutions. Hard money loans are obtained mostly through private lenders.

Traditional loans

Traditional loan lenders want to know their money is protected. This allows for a loan that is more conducive to watching out for the bank rather than taking the buyer’s needs into consideration. The lender puts the buyer through hoops in order to verify his capability to repay the loan. Extensive income verification is needed, including copies of tax returns, in addition to requiring the buyer to sign IRS form 4506. This form allows the lender to directly contact the IRS to obtain knowledge of the buyer’s tax history.

The commercial lender will nonchalantly tell the buyer that form 4506 is simply a routine request, or a small detail needed to complete the loan process. It is usually requested just prior to the final closing, so the buyer is blindsided. In all actuality, the use of this form can have a long lasting adverse affect on the commercial buyer’s financial concerns.

Commercial borrowers are often shocked when they discover, well after closing, that the traditional lender has created certain requisites within the loan contract allowing for a financial audit whenever they desire. If, for some reason, any reason, the audit does not meet with the lender’s satisfaction they simply recall the loan; leaving the borrower up the proverbial creek without a paddle.

Hard money loan

In use for over 50 years, the non-conventional hard money loan is not made through traditional lenders such as banks. Usually these loans hold the first lien on a commercial property, and occasionally a second lien known as mezzanine financing. Completed more quickly than a traditional loan, hard money loans are widely used when conventional financing is not an option.

For the most part, hard money loans require an interest rate from 4-8% above prime, and have higher fees and shorter terms. With this said, since hard money loans offer interest only terms, the payments are often lower than a fully reimbursed, lower interest loan. The following is a list of common reasons to use a hard money loan.

• Low credit scores
• Need to obtain a loan quickly
• Aggressive loan to value ratios
• Foreclosure
• Bankruptcy
• Special Purpose Properties
• Tax Liens
• Losses
• Negative net worth
• Less than a year in business
• Environmental requirements.

With the average cost of a four-year education topping at $100,000 a family can have multiple student loans to meet the costs of higher education. Over time, the amount of money a family owes in student loans can escalate. When you calculate the interest added to the average student loan, the final amount to pay back could be too much. A cost-effective measure to pay back the money borrowed is to have consolidated loans.

A consolidated student loan works similar to a debt consolidated loan. It is basically an opportunity to refinance your existing student loans. The reason people consider consolidated loans vary. A consolidated loan generally results in a lower interest rate and lower payments. This is just one attractive feature of consolidated loans. If you have your student loans consolidated and make your payments on time, your lender will likely reduce your interest rate. When choosing your method of payment, automatic debit may grant you another reduction in interest. When you sign up for automatic debit the lender will automatically request the payment amount from a checking or savings account, or a debit or credit card. Lenders reward individuals who sign up for automatic debit because it usually means they can expect to receive payment.

Just possessing a student loan doesn’t automatically qualify you for consolidation. The main criteria for consolidated loans include the following:

• The student loans are eligible for consolidation
• The individual is not currently a student, or if so is attending school on a less than half-time basis
• The individual is currently repaying the student loans they are considering for consolidation, or they are in the grace period.

Of these criteria, the last two are the easiest to determine. Whether or not a student loan is eligible for consolidation may not be that easy to determine. A loan eligible for a federal consolidated student loan is eligible as long as it is underwritten by the federal government. This covers most federal loans, including Federal Stafford Loan, Federal Perkins Loan, Federal Supplemental Loan for Students (SLS), and Federal Parent Loans for Undergraduate Students (PLUS).

A question that many people ask about consolidation loans is, “Can I refinance my consolidated student loan?” The answer depends on the lender, but in most cases it’s “yes” as long as the loans you want to refinance are subsequent to the already consolidated student loan. Most people want to refinance a consolidated student loan because they marry someone who also has a student loan. Another reason to consider refinancing is if you continue your studies and obtain another student loan. Refinancing a student loan already consolidated is no different than consolidated student loans. When considering the refinance of a student loan already consolidated, you should also shop around for the best interest rate.

The good news about the interest rate for consolidated loans is that they are based on an average of your existing student loans. When you consolidate student loans you can expect at least a 50% or higher cost savings. How high of a cost savings you receive is based on how long you want to extend your payments. Most consolidated student loans are extended for a period of 30 years. If you do not want to incur such a long-term debt, consolidating your student loans may not be suitable for you.