Becoming a Model Borrower for Commercial Real Estate Loans

When you are applying for commercial real estate loans there are certain criteria that all lenders are looking for. Meeting those guidelines will greatly improve your ability to get approved for a loan.

When you are applying for commercial real estate loans you will find that there are certain criteria that all conventional lenders are looking for in a borrower. And if you are lacking in any of these areas then you are far less likely to be approved for the loan that you are requesting. But investing a little bit of time and planning can allow you to become the model borrower that all lenders are searching for. This can allow you to qualify for a loan from multiple lenders and will ultimately allow you to negotiate a far better interest rate and terms for your loan.

Commercial real estate loans require a great deal of paperwork and documentation. Having your documents compiled into a professional presentation packet will instantly demonstrate to all lenders that you are well prepared for the application process and that you have completed your research and understand the qualifications and requirements for commercial real estate loans. The addition of a loan application summary letter will allow the lender to quickly access the packet and know that all of the needed information is there and how it will be presented in the packet.

Understanding your assets and managing them to be as advantageous as possible is just smart business. This means that you want to have your equipment and technology current as much as possible. This is an indication for lenders about how well you are maintaining your assets to help you continue to grow and be successful. It is also beneficial when a lender is looking at your assets to estimate a valuation of your business.

Manage Your Cash Flow Proactively

All lenders are going to be very interested in your cash flow. This is the money that you will have on hand to repay the loan that you are requesting. If you know that you have a slow season each year then avoid applying for a loan during that time period. You will also want to demonstrate that you have sufficient cash reserves to cover your expenses during an upcoming slow season. Bolstering cash reserves can be attained by aggressively following up with customers who have past due accounts, reducing the amount of inventory that you are carrying or even finding creative cost cutting methods within your business. But having strong cash flow and good cash reserves are certain to make the lenders more comfortable with your ability to repay a loan.

No Business is Perfect

There is never a perfect borrower but striving to present the best application possible is a wise business decision. Taking the time to streamline your business and become as efficient as possible is not only valuable when applying for a loan but also whenever you feel that there is a slow season approaching. Making a good first impression and presenting an application that meets all of the initial qualification criteria of a lender will make the application process faster and less stressful.

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.

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