If a commercial real estate lender has to foreclose on a property, it's usually a lot easier to manage the property if the property is located nearby. This is why lenders greatly prefer to make local commercial real estate loans, rather than commercial real estate loans in distant cities.

You can use this preference to your advantage by insisting that your local bank give you a better deal than the banks lending statewide or nationwide. Bottom line: You'll often get a lower interest rate from a bank down the street than from a bank located 200 miles away.

In addition, banks will often make riskier commercial real estate loans if the property is located just down the street. Let's suppose you have just gone through a divorce and your credit score is lousy. If so, the little bank located just two blocks from your office building is far more likely to approve a commercial real estate loan on your office building than some far away national lender.

Every business goes through ups and downs. If your business is losing money, before you apply to some expensive hard money lender for a commercial real estate loan, you should at least approach the bank located just down the street from your warehouse. Sometimes banks will make loans that are arguably hard money quality - if the the property is located close to the bank.

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