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Volume 6, Issue 1 February, 2016
February 09, 2016

Here is your latest issue of BM$ Success Newsletter – the companion newsletter to the "Business-Money-Source" website. This month’s survival tip consists of explaining the facts of acquiring commercial, international and large project projects loans and clearing up some of the misconceptions associated with these kinds of business loans.

Cold Hard Facts About Commercial, International and Large Project Loans

Business Money Source receives many business loan requests for commercial, international and large project loans. Many of these requests begin as sound business propositions. However, the loan process often does not proceed beyond the point where the funding source notifies the loan seeker that he/she will have to bear the costs of performing due diligence on the loan evaluation.

What Stops The Funding Process Before It Begins?

Commercial lending offered by private funding sources is more open and less regulated than conventional small business capital lending. It is also a more complicated process than getting working capital for your small business. Since, you the loan seeker, is asking strangers to risk their money on your project, the lenders/investors expect you to come into the transaction with a strong financial statement, experience in the related business and collateral to secure the loan.

There is often a lack of understanding on the part of the loan seeker of why the funding source is requiring the payment of certain fees before the loan is closed. This newsletter will address this issue.

Many Loan Seekers Do Not Know The Difference Between Up-Front Fees And Legitimate Processing Costs

There is an understandable reluctance to paying so-called up-front fees. In fact, loan seekers are warned to be careful about paying fees before they get the loan. An up-front fee is a payment that is requested by lender or loan broker with a promise that you will get the loan. No lender or broker can guarantee that you will get the loan until the due diligence is performed and all details are known about your loan proposal. If a lender or broker tells you that you will get the loan when they have only seen your loan proposal or executive summary, it is most likely a setup for an Advance Fee Scam. You will not get the loan once the fee is paid. This is illegal in most countries but still many dishonest people do it and many loan seekers are cheated out of substantial sums of money.

Some Loan Seekers Simply Cannot Afford To Pay The Due Diligence Costs Or They Are Trying To Bluff Their Way Into Getting A Multi-million Dollar Loan.

All up-front fees are not advance fee scams but are legitimate costs incurred in processing your loan application. The loan seeker must be realistic here. No lender or investor, public or private is going to hand over 1, 5, 10, 20 or $25 million without a thorough vetting process of you and your loan proposal. This vetting process is called due diligence.

This investigation and evaluation of your loan application may often require travel to your project site, meetings, appraisals, permits, legal fees, etc. Third parties, such as appraisers, accountants, architects, consultants, engineers, lawyers, surveyors, and government officials are needed to accomplish these tasks. Each one of these professionals has to be paid for their work at the time the work is completed.

The lenders/investors are not going to pay these costs for you or roll them into the loan amount. If due diligence costs are incurred, and they must likely will; you, the loan seeker, is expected to be financially capable to pay them in order for the lending process to continue.

Why Can’t The Loan Seeker Pay The Due Diligence Fees At The Close Of The Loan?

Look at it from the lender/investors' perspective. If they review hundreds of loan proposals each year and the cost of evaluating those proposals ranged from $5,000 - $50,000 per deal, you can see that bearing those costs could not be sustained by any lender/investor. This aspect of commercial (business) loan processing is different from working capital loan processing where the lender is often willing to include the relatively small due diligence costs in the total loan amount. This is confusing to some people who are not familiar with commercial lenders/investors and they are surprised when they are asked to pay due diligence fees before they loan is closed.

This is where Business Funding Consultant services like those provided by Business Money Source are valuable to you, the loan seeker. Business Money Source works on your behalf to help you make the best decision in working with a viable and ethical funding source.

The Cold Hard Fact of Commercial, Large Project And International Lending

The cold hard fact of commercial, large project and international loans is that if you are serious about getting funding for your project, you must be willing and able to undertake the due diligence costs of evaluating your loan proposal.

The good news is that most lenders/investors won’t ask you for payment of these fees unless they are reasonably sure that your project is one they will fund. If lenders/investors are interested in your project, they will issue you a Letter-of-Intent (LOI), which spells out the loan amount, interest rate and terms and conditions under which you will be awarded the loan.

There is funding available for your project but you must understand the requirements of the funding source and comply with those requirements in order for your loan application to have a successful conclusion.

I hope this helps clarify some of the misconceptions that some have of the commercial lending process.

Please Use The Following Links To Get Started In Funding Your Business Or Project

Click on links or copy and paste into your web browser.

For commercial and large project loans:

For international business and project loans:

For other business loans:

Let us know what topics you would like to see covered in BM$ Success Newsletter.

I look forward to assisting you in acquiring the business financing that you seeking.


Jim Bullock, Managing Member

Business Money Source, LLC

(804) 396-3040

Fax: (804) 781-4971

Twitter: bizmoneysource

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(804) 396-3040

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Twitter: @bizmoneysource

Disclaimer: The content contained in the BM$ Success Newsletter is provided for informational purposes only. It is incumbent upon the user of the information to seek appropriate financial and/or legal counsel before entering into any financial transaction. Business-Money-Source, LLC nor its' principals are in no way liable for your financial transactions. See the “Disclaimer” and "Terms of Use and Privacy Policy" pages on the Business Money Source website for further explanation.

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