Commercial Loan Retainer Fees

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Retainer fees are “standard business practice” for some (but not all) commercial loan situations. It makes sense that a commercial borrower would not pay such a fee, so it is important for a commercial borrower to understand when it is more likely to be required. In fact, in many business loan scenarios, a business loan retainer may not be necessary. This is especially true for commercial financing such as business cash advances which take less time and generate funds within a few days.

For commercial loan processes that take longer, it is common to pay a retainer fee during the initial stages. This is especially true when working with business loan advisors who specialize in commercial loans. Most advisors who work with residential mortgage loans (and also execute commercial loans as a sideline to their main business activities) will not charge a retainer fee because in many/most cases they are legally required to do so by certain state and federal regulations. formally prevented from doing so (in other words, it is likely that they will also charge a retainer fee) if not legally prohibited from doing so due to prevailing residential loan compliance issues.

So why wouldn’t a commercial borrower who doesn’t want to pay retainer fees simply work with someone who doesn’t charge retainer fees? Many commercial loan situations are too difficult for the average residential loan advisor to handle successfully. Similar to someone seeking a more expensive medical or legal expert to help them when faced with a serious medical or legal problem, most commercial borrowers have realized that business loan problems are often just as serious and complex. and qualifies as a commercial credit specialist. ,

It is in these situations when a commercial borrower is working with a business loan specialist that a retainer fee should be viewed as a “standard business practice” for more difficult and time-consuming commercial loans. I have said elsewhere that one of the most important lessons to be learned from a thorough analysis of commercial financing “trade-offs” is that the lowest rate Almost no Connected to the best deal for the commercial borrower. A similar overview based on over 25 years of business lending experience: Even the lowest fees are rarely associated with the best deal for the commercial borrower.,

The fees charged by business loan specialists (including retainer fees when appropriate) are almost always higher than those of loan counselors who do not specialize in business loans. In the end, most of these borrowers still choose to deal with a highly qualified commercial loan specialist because they ultimately feel that perhaps It is better to use the “best” business loan advisor rather than the “cheapest” business loan advisor.,

The most typical range for commercial loan retainer fees is $2500 to $10,000 (Obviously a wide range). There are many reasons for retainer fees and here are three of them: (1) to compensate the advisor for certain initial loan processing; (2) to serve as a “goodwill” deposit toward the overall commercial financing fee; and (3) to focus the borrower on working with a business loan advisor. The third reason may be the most important. With hard commercial loans, it is highly counterproductive for a commercial borrower to work with more than one commercial loan advisor (with respect to the same loan). Once the retainer fee is paid, a commercial borrower is likely to be more comfortable working solely with a business loan advisor who receives the retainer fee, and with hard commercial loans, this integrated approach more likely to be successful. It is the success that ultimately justifies the retainer fee.

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