Commercial Lending

Commercial lending is a strange beast in the world of non-depository lender licensing.  Unlike consumer mortgage license and consumer loan licensing, commercial lending licensing is not uniformly regulated throughout the country. Some states have general “lender” licensing laws which may include commercial lending along with other types of lending, other states have specific commercial lender and/or broker licensing laws (mortgage and non-mortgage), other states yet may include commercial mortgage loan activity within the scope of a real estate broker license, and in still other states, commercial lending may not require a license at all.

RISKS OF UNLICENSED COMMERCIAL LENDING

The biggest mistake commercial lenders and broker make is to assume that a commercial lending license does not exist in a state before commencing business activities in that state — or in proceeding with a business transaction without a license for the reason that it “only involves one deal”.

I receive a hand full of calls each year from commercial lenders and brokers who tell me that they had worked on a major commercial loan for 6 months, only to have the closing agent ask, before disbursement: “one last thing, can I please have a copy of your state license”.  In the case of a lender, the deal might not close at all (or it may close at the future risk of the lender) and, in the case of a broker, the broker commission instantly vaporizes.

The financial loss from a lack of a license is only part of the story.  If a state regulator catches wind of the fact that your company had been lending in their state without a license, they will pursue regulatory enforcement actions against your company, which may include administrative fines of tens of thousands, or hundreds of thousands of dollars (or more), administrative orders, and possibly criminal penalties.

What is the chance that any of this could happen?  It only takes one borrower inquiry as to whether your company is licensed, one borrower complaint after the deal has closed, one previously-unlicensed competitor which had been penalized by a state regulator and which is now trying to make sure that its competitors are punished as well, or one competitor which followed the law and obtained its own license and which is now on a crusade to “level the playing field”.  All of this can easily be avoided by obtaining the proper state licensing.

Vestevich & Associates, P.C. can assist your company with its commercial lending licensing in any state.  Our lawyers provide professional assistance in every phase of the commercial lending licensing process, and in working with licensing regulators in all 50 states.

Your commercial lending licenses are your company’s single, most important asset.  Trust the law firm of Vestevich & Associates, P.C. to assist your company with all of its licensing matters.