Once you have decided that you are going to pursue a commercial real estate loan, the hard work begins. A sure-fire way to ensure that the process goes as smoothly as possible is to do as much preparation as you possibly can before you begin submitting applications.

It is true that every lending agency might have slightly different requirements when it comes to loan applications and the information that they need from potential borrowers, however, you can be sure that the more information you have already prepared and on hand, the more smoothly your loan application process will run.

There are a number of ways that you can prepare for a commercial real estate loan. First, is to know your timeframe. If you enter the application process with an understanding that it will not be quick, you are much less likely to face frustration. Plan well in advance so that you are not in a panic. Not only will this help reduce the stress level of the application process, but it will also help you shop around for the best loan for you and your business needs.

Another way to prepare for the process of applying for a loan is to get your business documentation in order. This means tax information, balance sheets and cash flow. A good rule of thumb for these documents is to go back 5 years. If you have not been in business that long, don’t worry, but if you have get all of that documentation in line and become familiar with it yourself. It isn’t enough to just have it in a file. You must understand what is contained in those reports, what it indicates about your business and how it is going to affect your commercial real estate loan. In addition, be aware that certain lenders require on-going reporting from their borrowers, so keeping excellent financial records will not be just a onetime project for you.

In addition, it is also a good idea to compile and prepare your personal financial statements in the same way. Many commercial lenders require the disclosure of personal financial information in addition to that of the business. Such information might include your assets, bank statements, personal tax documents from previous years and other documentation that would be used to determine your financial responsibility and your proclivity to repay loans.

Is there a way to shorten the commercial real estate loan process?

Any shortcut that you attempt to take in qualifying for and obtaining a commercial real estate loan is only going to come back to haunt you later. I could result in higher interest rates or terms that are unfavorable to you. It is a time-consuming process, but in the end, you will be glad that you were prepared and did not try to rush things along. And feel free to ask questions ahead of time. Lenders are not secretive about what they require in applications and what sort of documentation you will need to provide for them. Anything that you can do ahead of time to get ready for this process will help to make it smoother.

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.