Even if you have a solid business plan, a great credit score and squeaky clean credit history and collateral to boot, getting commercial mortgages loans can still be a lengthy and complex process. If you take some things into consideration before applying, you can avoid some of the pitfalls that companies make which ultimately may make the difference between getting approved for a loan… or not.
Before seeking a loan, you should know that during the underwriting process you will be subjected to thorough financial examination. You should have all financial records in order – such as bank statements, recent credit report, tax returns, business balance sheets and more – before applying for a loan. Some banks and lenders may also request that you complete a revenue and expense projection report. Having this information completed prior to application, will make the process go more smoothly.
In addition to business records, as the business owner you may be asked to show personal statements as well in order to receive a commercial mortgages loan. Banks and lenders will want to know as much about your personal financial background as possible before deciding if they want to give you a loan. They will want to review your personal credit score and history, and could also ask to see your personal tax returns or other important financial information.
Another way to prepare is to consider whether or not you have and/or will need to utilize collateral in order to secure your loan. Collateral, or assets from your company or personal use, can be used to secure a loan in the case of not so great credit history or other examples. The lender needs to know that if you are unable to repay the loan, he will not lose out. With collateral, you guarantee repayment and if you cannot repay with cash, the lender has the right to seize your assets as agreed upon in the contract.
You’ve heard how important location, location, location is in residential real estate, right? Well, preparation, preparation, preparation is just as important when it comes to commercial lending. The better prepared you are, the better off you will be – and less stressed too!
You may be an expert in your line of business, but if you aren’t keen on preparing a business plan or the like, it’s not a bad idea to bring in an expert to help you prepare to put your best foot forward when it comes to securing a loan. The more prepared, the less hassle you’ll encounter. But remember, lenders and banks aren’t trying to cause you grief – they simply need to protect themselves and ensure you have the ability to pay back the loan they are laying on the line for you.
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.