Four Factors to Prepare You For Commercial Lending Opportunities

Your day of reckoning is here – the day you decided your sweat and skills deserve more than a handful of corporate peanuts. The day you ventured out.

However, you thought that having a business plan was the difficult passage because now you’re standing dead confused in the myriad of countless applications of commercial loans.

Don’t be. Just give careful considerations to the following four factors to sail through your commercial lending options.

Credit Score

The credibility of your credit score will endorse the potential of your start-up. In the absence of a business history, a solid credit score will escalate your commercial lending prospects, as it will help the lender assess your grip on handling financial matters. Unless you’re looking at institutions offering various types of commercial real estate loans, a credit score of 700 & above puts you in a position where you can expect favorable terms from your lender. Alternatively, you have the option of hard money lenders if you have an average credit score.

Length of Business

Conventional commercial lending institutions would like to see you do business for a year to assess your cash flows before extending you a loan. However, an alternative lender would be satisfied with a couple of months of business operations. They usually are online lenders, who would use software to evaluate your financials, and sync with your accounts and will deploy sophisticated algorithms to underwrite your loan proposal swiftly.

Revenue

The business plan and license are in place, and you are legally allowed to make the world a better place with your products and services. However, merely wishing so will not seal the day. Even an alternative lender would want to see your business operating and generating revenue continuously for a few months.

Collateral

Conventional lenders will always ask for a collateral before extending a loan. The collateral could be home equity, investment bonds, or other valuable possessions. However, the process is cumbersome, and the criteria is tough for a small business owner like you.

You can rely on a hard money lender for your business’s initial capital needs if you owe real estate. Otherwise, use your goodwill for private money until your business is mature enough to qualify for commercial loans.

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.