By now, you have probably done more than your share of research on commercial lenders and what they have to offer; but, chances are you still are hundred percent clear on their criteria or how one lender’s criteria is truly different than the next. Well, the good news is that you have come to the right place for some insight on commercial lenders and their criteria.
If this is your first time deviling into the world of commercial lenders, you may not know where to begin, which is perfectly okay. You need to start somewhere just like every other commercial investor or borrow before you. Consequently, the best place to start, after narrowing down your particular niche, is with your top lenders’ criteria.
At first glance, you will quickly be able to see that most lenders have basic or standard lending criteria. In other words, much like other lenders, these particular lenders are looking for two specific things. The first thing is the ability or rather the likelihood a borrower will be able to repay the loan. Secondly, most lenders want to ensure that they will be able to recover the entire amount of the loan. This means lenders look to see if you can repay everything including interests, associated costs and even fees due to a default on the loan.
Outside of these two things, a lender of commercial financing may seek to add a few more things to their criteria. This is where you start to see a difference between lenders. Moreover, it is usually these additional criteria that will sway you in one lender’s direction versus another’s. With that being said, you should always strive to meet your lender’s basic or standard criteria first and foremost. This will allow you to worry about the finer details and effectively evaluate your various lenders.
Now that you know, you can only truly be prepared for two basic requirements without doing further research; it may help to know that any other additional criteria are heavily regulated. This means that there are legal requirements and compliance standards in place to ensure that you, the borrower or investor, are not at the mercy of your future lender. For instance, all lenders, whether commercial or not, tend to require your standard property documents, detailed financial documentation, and clear planning for closing fees or additional costs. Nevertheless, it is important to note that no two lenders criteria will be the same and there is no set standard for documenting commercial financing. Thus, you really need to do your research as well as compare and contrasts additional criteria.
Therefore, at the end of the day, all these above expectations matter. However, you still need to make it a point to take some of the focus off your top lender choices and their criteria, so that you can put some of that focus on your business plan and/or end-goals. In doing so, you will, once and for all be able to justify meeting one particular set of criteria versus another set.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.