Congratulations! You think you’ve found a 100% lender for your dream project. This is going to change your life! But what if they can’t deliver? Or worse – what if it’s a scam? Here are 6 things to consider when you perform your due diligence and vet a commercial lender
1) Trust in the possibilities –I hear it all the time. “There’s no such thing as 100% financing. It’s a scam.” Not according to my funding source, who has been providing up to 100% financing for projects over $5 million USD since 1988 and provides references, summaries of closed loans, and excellent Better Business Bureau and Dunn and Bradstreet credibility ratings. But, the longer someone has been looking for funding, it seems the more jaded they become. I’ve found if you expect it NOT to be true, nothing anyone says will convince you otherwise. And you might just miss out on a very good thing, which is funding for a project that could change your life.
2) But don’t be too trusting – The fact is, there are a lot of scams out there. If it sounds too good to be true, it just might be. Do your due diligence, and don’t take anyone’s word for anything.
“Trust, but Verify.” Old Russian proverb, often quoted by former US President Ronald Reagan.
3) Do your Due Diligence - While it’s true scammers and thieves can be very sophisticated and can fool even those of us who’ve been around the block a few times, performing routine due diligence can eliminate many potential scams, thereby protecting you and your interests. Some questions to ask are:
a) Experience – How long have they been in business? How many projects have they funded?
b) References – Get them and contact them.
c) Ratings by impartial third party organizations, such as Better Business Bureau and Dunn and Bradstreet. Beware of organizations that charge a membership fee and provide a rating only for their members.
d) Information about loans they’ve funded – Enough to allow you to get a good sense of what they fund, but not too much that you worry about the privacy of your information after you share it with them.
e) Google them – But take what you find with a grain of salt. Anyone can post anything on the internet with no proof, no recourse, and no accountability. One or two bad postings can be a disgruntled former employee, or someone claiming fraud when the fact is their project wasn’t viable enough to qualify for funding. Do the same due diligence on the poster of the complaint as you do on the business you are investigating.
4) Recognize you will need to do your due diligence over time - Due Diligence requires time and a deepening of the relationship. Just like you wouldn’t share all the information about your project until you know you are interested in the loan program, a funding source won’t share all their information with you until they are interested in your project. Take it slowly. Also, realize that some information may not be available to you. Ever. Privacy laws, as well as SEC requirements and organizational rules and responsibilities to their investors and shareholders, mean some things may not be available to you. Assess the information you do have to determine if you feel comfortable moving forward or if you need more information.
“No legacy is so rich as honesty.” Shakespeare
5) Be Logical –
a) Is it too good to be true? How many legitimate businesses are offering 2%, non-recourse loans that require no documentation? I haven’t found any, and I don’t think they’d stay in business long if they did.
b) Are you dealing with a professional? Are their messages rife with spelling and grammatical errors?
c) Are they using scare or high-pressure tactics to get an immediate committal instead of allowing you to do your due diligence?
d) Do they disappear when you start asking questions? Give them time to respond – we’re all busy – but if you haven’t heard from them in a week, and they stop answering your phone calls or emails, I’d cross them off your list.
6) Trust your gut – If you’ve asked all your questions, and gotten all the answers they can provide, yet it still just doesn’t feel right, move on. Even if it’s a legitimate lender, there’s probably something about this program that isn’t right for you or your project now. Listen to your instincts. If you still haven’t found funding in a few months you can always revisit this lender then and rethink the situation.
WorldWideCommercialFunding.com provides up to 100% financing for US and International Business Ventures and Commercial Real Estate Transactions over $5 million USD while charging no application fee. www.WorldWideCommercialFunding.com
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