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Impact of Bad Credit on Commercial Loans

The impact of bad credit scores on commercial loans has never been so severe. And we’re not just saying that so you read this article. As the commercial secondary market continues to take a beating and local banks that still lend off of their balance sheet cherry pick deals, borrowers credit score are an all too easy lending criteria to “pick on”.

Unlike a lot of the components in commercial underwriting, the borrower’s credit score is simple to calculate and very easy to categories. Compared to predicting future business trend, or calculating property valuing in a declining market for example, figuring out the borrower’s credit score only take a few minutes. If the score is outside guidelines, it’s a dead file. For example the vast majority of banks simply will not look at deals where the borrowers score is below a 680 now. A year ago 620 was questionable, maybe even “looked down” on, but still doable.

Improving ones score should be a huge priority for all borrowers. Much has been written on the topic (which we discuss on our website) but whatever strategy the borrower uses, if they decide to do it on their own or hire a firm to handle it for them, it should be taken very seriously.

For commercial loans with bad credit that do close, the borrower is now paying a huge price for the lenders leniency. Rates are often 2% – 8% higher than on typical bank loans. Prepayment penalties are often very high and restrictive as some lenders within this arena charge interest lock outs and the like. Loan programs are often shorter as well and many lender including the government’s Small Business Administration charge high fees. For example the SBA 7a program, which is their most popular commercial mortgage, charges 2.75% on the front of the loan… And that’s the governments program!

Bottom line – borrowers will save 10′s of thousands of dollars by rising that score and 10′s of thousands on transaction costs by not having to refinance out of short term loans that they where forced into due to personal credit scores. If you are in a position where you know you have to refinance your existing loan, perhaps it is ballooning or your existing bank is pressuring you to leave, get started on improving your score immediately as the impact of bad credit on your commercial loans is just too serious in this market.

Commercial Loan Brokers – How to Not Succeed

We get roughly 5 calls a day from commercial loan brokers. Most of these calls are a complete waste of time for us as the broker has little or no control of the file and has not seen a single documentation on the deal. They have no idea if it’s really doable or not. The broker is almost always trying to get an idea if the loan is fundable, what the restrictions are and of course what the rates and fees would be on the proposed loan.

The conversation is normally the same. After the commercial loan broker fires off their initial question I ask something like “what’s the NOI?” or “how has the gross income trends been over the last 3 years?” after an awkward silence I ask “have you seen the borrowers tax returns?” The answer is almost always no. At that point it’s clear to me that they have and I have a very small chance of closing that loan.

As a commercial loan broker myself I understand the “rub”. Borrowers don’t want to give up their info/documentation and or invest time with a broker unless that get solid, quick answers. In addition many borrowers are simply fishing for information and are really “using” the commercial broker as a “free consultant”. Not to sound too cynical but I really believe that.

Brokers don’t want to let the deal slip through their fingers and start working on the file. The hope is that they’ll call the borrower back, with some quotes or potential loan structure and at that point the borrower will feel comfortable with them, and then send in their tax returns. Of course this is the wrong way to broker commercial loans and will eat at the broker’s time, energy and cash.

Somehow or someway the commercial broker has to convince the borrower that they know what they are doing and that they need documentation now – not later. All quotes structures etc are for the most part meaningless if you don’t really understand what you are working with.

I’m sure there are many ways to convince the borrower to send in the required paperwork. For us, it’s a matter of knowing the details of the type of loan they are requesting. Simply by asking a lot of questions with the intent of discovering potential deal killers the borrowers gets the feeling that 1. we know what we are doing and 2. That we don’t want to work on the file unless we think we can get it done.

Do Nutritional Supplements Work? Some Surprising Facts

Some big, unfounded rumors are circulating about nutritional supplements.And they’re circulating under the guise of science and experience. But instead of helping you make wiser choices for your health, they do the opposite. They make it harder.Because these false tales ignore volumes of research and several thousands of years of human healing practices using food, herbs and minerals.What fallacies am I talking about?A December 2013 editorial published in The Annals Of Internal Medicine, titled “Enough Is Enough: Stop Wasting Money on Vitamin and Mineral Supplements” concluded:”We believe that the case is closed- supplementing the diet of well-nourished adults with (most) mineral or vitamin supplements has no clear benefit and might even be harmful. These vitamins should not be used for chronic disease prevention. Enough is enough.”[1]Now here’s the thing… I agree we need to pay attention to results of the studies the authors referred to when they came to this conclusion. This editorial refers to several recent studies. Each of these studies underscores some important reasons why nutritional supplements don’t work in specific situations.But other than that, they’re dead wrong.Because if anything these studies only highlight the mistakes people and doctors make when it comes to using supplements. Simply put, when people choose poor quality supplements and use the wrong supplement for the wrong reasons, supplements don’t do much good.In contrast, as hundreds of people who have consulted with me as a doctor have discovered, when you choose the right, high quality supplement for the right health concern, you’ll see the benefits.The key is to make knowledgeable choices.A single article is too limited to cover 40 plus years of knowledge I draw from in recommending supplements to my patients. But I can offer some basic guidelines that will help you make better choices when you use supplements.Here’s what you need to look out for in order to ensure the nutritional supplements you use work.Get The Right Dose Of NutritionThree of the studies the editorial team used to make their case showed multivitamins did little to change the risk of brain problems, cardiovascular issues after a heart attack or overall health risks for older people.I wasn’t surprised by this.In trying to cover the whole spectrum of nutrition without overdoing it in any one area, multivitamins usually only offer a small percentage of the nutrients you need to take care of a specific health concern. And often enough they include nutrients you don’t even need depending on how you eat.For example, most multivitamins contain 400 IU or less of vitamin D. While this is the official recommended daily allowance for vitamin D, most holistic doctors would consider this a drop in the bucket when it comes to raising your blood vitamin D levels.I have my patients get blood tests to assess vitamin D levels and then recommend supplements accordingly. Often enough, I recommend at least 1000 IU – sometimes as much as 5000 IU – to get them to healthy vitamin D levels in the blood.Multivitamins provide a baseline for nutrition. Not strategic intervention that can really make a difference.And this brings me to the next issue…Choose The Best Nutritional Supplements For Your Specific NeedsJust because vitamin A supplementation worked for your neighbor, doesn’t mean it will work for you.Perhaps you eat lots of winter squash and chlorella, rich in this vitamin. You don’t need a supplement.Not everyone needs the same amount of supplementation.Supplementation works best when it’s tailored to your individual health concerns, eating habits, lifestyle and genetic makeup. When adding supplements to your diet, start with you – with what you’re struggling with and what you know are your weak points.This is why studies involving people without any nutritional deficiencies to assess the effectiveness of supplements may have had less significant results.It’s also why multivitamins have limited effectiveness. The higher quality ones may give you a nice nutritional base. But they do little to offer you the strategic nutrition that thousands of studies have shown can make a difference with specific health concerns.But it doesn’t matter what dose of supplement you choose, if you don’t pay attention to this next issue, you won’t get what you need…Choose Natural SupplementsSynthetic versions of vitamins can not only be less effective, they can be dangerous. As the Annals of Internal Medicine editorial team correctly pointed out, some research has shown that vitamin A supplementation can in fact increase your risk of lung cancer.However, if you get the precursor for vitamin A that’s found in chlorella and other whole foods – beta carotene – you don’t have to worry. Unlike with vitamin A, your body only converts the beta-carotene it needs and gets rid of the rest.Natural substances are hard to mimic in a chemistry lab. We may do a pretty good job, but several different vitamin studies have shown that synthetic forms of vitamins – like the ones used in several vitamin A and E studies – can disrupt the way your body uses nutrition.But even if you go natural, you still need to pay keen attention to the next criterion…Make Quality A PriorityListen, do you think some wilted spinach that’s been sitting in your fridge for 2 weeks will give you the same nourishment as that spinach picked from your garden minutes ago? Of course not!So why would you assume all supplement ingredients are of the same quality?Sure they may be natural ingredients. But natural doesn’t necessarily mean quality.Plenty of manufacturers scoot by with ingredients your body can’t use – or contain little concentration of the active compounds you’re seeking. Multivitamins are particularly notorious in this area. If you pick one up at random from the local pharmacy, I can just about guarantee that many of the nutrients in the multivitamin you selected will be hard for your body to use and offer limited benefits.For example, calcium carbonate – found in many multivitamins as well as calcium supplements – is much harder for your body to breakdown and absorb than calcium citrate.[2]When it comes to botanical supplements, their quality depends heavily on how they were sourced and processed. For example, if eleuthero root is harvested in the winter months, when much of the plant’s energy is stored in its roots, you’ll get a much higher concentration of active ingredients, eleutherosides. However, not every eleuthero producer takes care to harvest at this time, leading to a range of potency when it comes to eleuthero supplements on the market.However, as good as a high quality extract or isolated ingredient is, rarely can they compete with the best form of supplementation.The Best Nutritional Supplements Are Made With Whole FoodsWhile we’ve discovered some applications for isolated vitamins and plant compounds… and while I sometimes suggest my patients use certain extracts or isolated vitamins… when it comes down to it, nothing beats the complex chemistry of food for giving your body the best nutrition.Nutrients found in food work together to nourish you in incredibly complex ways. It’s like a symphony with hundreds of players. And often enough, when we try to isolate nutrients, we miss out on powerful health benefits.For example, when it comes to the supplement, eleuthero, scientists have found that some of the isolated compounds, eleutherosides, seem to increase immune health. But they also found that none of the isolated eleutherosides worked as well for strengthening your immune health as taking whole eleuthero.[3]3 Tips For Finding Nutritional Supplements That WorkAs a doctor who’s witnessed hundreds of people recovering excellent health thanks to the use of nutritional supplements, I know this widely publicized editorial from the Annals of Internal Medicine has the potential to cause tremendous damage. By referring to a few non-representative and poorly designed studies to condemn nutritional supplements as a whole, the authors have robbed people of health options that can make all the difference.But I also understand the need, highlighted by the studies referred to in the editorial, for better understanding of how to choose and use supplements more effectively.Here are a few suggestions:

Do your research. Go beyond the headlines and ask questions. Get information that addresses all the questions I raised in this post. Learn more about the health concern you have, the nutrient you’re considering using and the company that produces supplements that provide this nutrition.

When in doubt, consult with a professional like a holistic doctor. As part of our professional work, we keep up with the research. In addition, we have our years of practice to draw on in seeing how supplements work on a case by case basis. A holistic doctor can help you determine the quality of a supplement. And they can help you decide if it’s the right one for your needs.

Consider using supplements that have already gone through rigorous quality assessments. For example, supplement distribution companies like Emerson Ecologics set high standards for the supplements they carry in order to help practitioners like me make good choices more easily. While you will need an official practitioner recommendation for purchasing from them, you will know that the supplements they carry are well vetted.
Become The Expert: Know The Best Supplements For YouThe most important thing you can do to use supplements effectively is to know yourself. Get to know your body and note how supplements work for you.And keep this in mind: Studies are important. But they also only capture a snapshot of the reality. Your unique biochemistry may not fit into this.Because of this, you can know better than any doctor or researcher what supplement works for you. When it comes down to it, no one else can do as good a job as you in making the final decision about which are the best nutritional supplements for you.While professionals like me can help you with guidance and advice, you need to be the expert when it comes to your health.Sources:[1] Eliseo Guallar, MD et al. Enough Is Enough: Stop Wasting Money on Vitamin and Mineral Supplements. Ann Intern Med. 2013;159(12):850-851-851[2] Dietary Supplement Fact Sheet: Calcium. Office Of Dietary Supplements.[3] Steinmann GG et al. Immunopharmacological in vitro effects of Eleutherococcus senticosus extracts. Arzneimittelforschung. 2001 Jan;51(1):76-83.