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August 9th, 2007, 04:30 PM #1Business Asset Based Lending and Commissions
I know we have some well educated folks here in terms of legal knowledge, so I wanted to pose this question here before I engaged our attorney.
Is it legal for a firm that does asset based lending for business purposes (I'm not talking about predatory consumer lending) to pay a commission on those types of products to folks without any kind of a license?
I can't find any sort of indication anywhere that it isn't, and I trust the merchant in question implicitly, but I always like to double check on these things....
Thanks in advance, and I'm just looking for advice. You don't need to preface it with a disclaimer. You'll have no liability
August 9th, 2007, 09:56 PM #2
Commercial lending, is a different type of lending from consumer lending. To my knowledge, no state regulates commercial lending in as much as licensure.
The issue becomes 'what is commercial' for the purposes of the loan security. If it is office equipment and real estate that is clearly commercial in nature then it would be considered a commercial loan. Office Equipment will normall be done through a UCC loan. Real Estate would be handle through a mortgage. Generally not more than 10 years in length. (and usually an A.R.M.)
If it is an apartment building with 4 units or less, even if it is used for rental purposes, it would fall under residential lending by most guidelines.
I'm not a lawyer, I don't even play one on tv. I was involved in the sale and management of residential and commercial real estate for 9 years. Then I spent 9 years in various sales and management positions in financing residential and commercial properties. The biggest hurdle most true commercial borrowers will face is minimum loan amounts. Generally anything less than $200 - 300k is not profitable for the lender and so the rates appear to be higher than borrowers think they should be.
Be careful when dealing with brokers who 'also can help' with commercial financing. While there are no laws requiring any special license, it is a very difficult type of lending, that is best handled by those who specialize in it.
August 10th, 2007, 09:02 AM #3
In this particular case, it involves the financing of tractors, as in OTR tractors to owner/operators. Which I guess also begs the questions that if they are using their SSN, is it commercial or personal.
Definitely asking our attorney
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