etainer fees are "standard sideline to their main business
business practice" for some activities) will not charge a
(but not all) commercial retainer fee because in many/most
loan situations. It is instances they are legally
understandable that a commercial prevented from doing so by
borrower would rather not pay certain state and federal
such a fee, so it is important regulations (in other words, it
for a commercial borrower to is likely that they too would
understand when it is more likely charge a retainer fee if not
to be necessary. In fact a legally prohibited from doing so
business loan retainer will not because of prevailing residential
be necessary in many business loan compliance issues).
loan scenarios. This is
especially true of commercial So why wouldn’t a commercial
financing such as business cash borrower who doesn’t want to pay
advances that takes less time and a retainer fee simply work with
produces funding within just a someone who doesn’t charge a
few weeks. retainer fee? Many commercial
loan situations are too difficult
For more time-consuming for the average residential loan
commercial loan processes, it is advisor to handle successfully.
increasingly common for a Similar to a person seeking a
retainer fee to be paid during medical or legal specialist to
the preliminary stages. This is help them when confronted by a
especially true when working with serious medical or legal problem,
business loan consultants that most commercial borrowers have
specialize in commercial loans. come to realize that business
Most advisors who work with loan problems are frequently just
residential mortgage loans (and as serious and complex and
perform commercial loans as a deserving of a commercial loan
specialist. know this not because I have
performed a study of competing
It is in these situations when a commercial loan providers but
commercial borrower is working because it has been a common
with a business loan specialist occurrence for borrowers to
that a retainer fee should be inform me that almost everyone
viewed as "standard business else they contacted was cheaper.
practice" for more difficult and In the end, most of these
time-consuming commercial loans. borrowers still choose to deal
I have stated elsewhere that one with a highly-qualified
of the most important lessons to commercial loan specialist
be learned from a thorough because they ultimately realize
analysis of commercial financing that perhaps it is better to use
"trade-offs" is that the lowest the "best" business loan advisor
rate is ALMOST NEVER associated rather than the "cheapest"
with the best deal for the business loan advisor.
commercial borrower. A similar
observation based on over 25 The most typical range for
years of business loan commercial loan retainer fees is
experience: the lowest fees are $2500 to $10,000 (obviously a
also rarely associated with the wide range). There are various
best deal for the commercial reasons for a retainer fee and
borrower. here are three of them: (1) to
compensate the advisor for some
The fees charged by commercial of the initial loan processing;
loan specialists (including (2) to serve as a "good faith"
retainer fees when appropriate) deposit toward the overall
are almost always higher than commercial financing fees; (3) to
loan advisors who do not focus the borrower on working
specialize in business loans. I with one business loan advisor.
The third reason might be the the retainer fee!
most important of all. With
difficult commercial loans, it is As noted above, there are several
extremely counterproductive for a important issues to consider when
commercial borrower to be working a commercial loan involves a
with multiple business loan retainer fee. A recommended
advisors (regarding the same follow-up to this article
loan). Once a retainer fee has discusses business loan referral
been paid, a commercial borrower fees (
is likely to be more comfortable http://aexcommercialfinancing.com
in working solely with the ).
business loan advisor who
received the retainer fee, and ● Copyright 2005-2006 AEX
with difficult commercial loans, Commercial Financing Group, LLC
this unified approach is likely ● All Rights Reserved
to be more successful. It is this ●
success that ultimately justifies
About the Author:
Steve Bush is the Chief Executive Officer of AEX Commercial Financing Group, LLC and the publisher of The Commercial Real Estate Loans and Commercial Mortgages Guide and The Credit Card Receivables Guide. Contact: (888) 593-3951.
Read more articles by:
Stephen Bush
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