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Friday, July 11, 2008

Daily Observation - E=Experience not Expense

Since I miss-typed last night the "E" for experience rather than expense I will spend tonight’s blog on experience. Experience today is more important than ever before. Experience used to only pertain to SBA Loans and not to commercial loans at all. Well all that has really changed. NON-SBA Loans are now requiring the experience factor as well now.

What am I talking about?

Well for example you want financing on an apartment, if you have never owned an apartment that is now a major flaw in your application. Lenders want to make sure that you have the experience in the investment that you are trying to finance. Another example is for a development deal, it used to be sufficient if the master developer had a team of sophisticated professionals, and they would be able to procure financing for their development.

Today if the master developer has not done many similar projects the lenders are not interested in talking with them, at all. Another example was that Self-Storage facilities were being bought by anyone who had the capital to put down and lenders were financing them one after another with no experience.

Today without direct Self-Storage facility ownership experience it is very difficult to get a loan approved. My last example is that we have a client that owns a mobile home park and was looking for additional financing. The lender came back and asked what other experience in mobile home parks the client has. I know by now you are seeing the picture.

I apologize about the previous version that went out. Microsoft updated the computer and somehow remembered the draft copy of this e-mail.

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