Seven Words to Describe Commercial Mortgage Loans

Because there are very few reliable signs indicating that commercial mortgage options are improving, business borrowers should be developing strategies for dealing with the serious ongoing commercial banking problems impacting their ability to obtain commercial real estate financing. These efforts should be facilitated by concise and candid explanations about lenders, and this report provides several short and straightforward descriptions using seven words to explain commercial real estate loans. We adopted a similar approach in related commercial finance articles that include "six words describing small business financing" as part of our detailed assessment of the troubling signs that small businesses are continuing to confront one of the most negative commercial lending environments during the past sixty years.

The first illustration of seven words to describe commercial real estate financing is "commercial loans are getting harder to find". Hearing a bank say that they can help with commercial property loans or any other form of small business financing is not sufficient by itself. The true test is to find banks that are routinely providing commercial mortgage options to small businesses. It is disappointing but nevertheless common for commercial bankers to state that they are lending normally when in fact they are not.

As a second seven-word description, "business financing is the next big problem" indicates growing commercial property loan concerns on several levels. Residential mortgage financing problems (the first big problem for banks) have not yet been successfully put to rest by far too many banks. The likelihood that commercial real estate loans will become an even more serious problem is supported by decreasing business property values, declining sales and depleted bank resources. Banks are continuing to fail at a record rate, and further bank bailouts related to commercial property loans are highly unlikely.

"Contingency planning is critical for commercial mortgages" is our third group of seven words describing commercial real estate loans. This approach to business planning has always been an invaluable tool to help businesses plan in advance what to do if something goes wrong. During the past two years it has become more clear to small business owners that a similar contingency planning perspective is equally valuable for improving commercial mortgage options. If a commercial borrower has a small business loan that their current bank can recall with very little advance notice, this strategic thinking is especially critical. With commercial property loans for small businesses, such a possibility is particularly common.

As our final seven words describing commercial real estate financing, "borrowers need a healthy amount of skepticism". This is true even if a small business owner believes that they have no current worries involving commercial mortgage options. It might be helpful to recall that banks were almost universally less than accurate and candid in describing their problems with residential mortgages. This observation should then be considered in combination with the increasing number of banks which are reducing or eliminating commercial loan programs for small businesses while simultaneously reporting that they are lending normally to businesses. A prudent commercial borrower unfortunately has little choice but to be skeptical of commercial banks for the foreseeable future.

A review of commercial financing reports such as "six more words about working capital" and "seven words describing merchant cash advance options" should also contribute to a more complete understanding of the practical small business finance options necessary to cope with one of the most chaotic commercial banking climates seen in decades. Small business owners will generally need to plan ahead and be more aggressive in their efforts to successfully locate reliable business financing alternatives because effective and practical commercial mortgage options seem to be declining. By describing commercial real estate loan difficulties in seven words, this report was intentionally structured to produce a concise overview of pertinent commercial real estate finance issues.


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Stephen Bush has provided candid advice to business owners for 30 years and is a working capital loans expert. AEX Commercial Financing Group offers small business financing and commercial real estate loans