Learning to Think Like a Commercial Lender

Applying for a commercial mortgage can be very stressful. But there is a relatively easy way to eliminate a lot of the stress and improve your chances of getting approved by a commercial lender.

If you ask most people to select one word to describe a commercial lender, the word many would select is intimidating. But if you can learn to think more like a commercial lender then you will begin to understand the reasons behind many of the qualifications and processes that are making you nervous as you seek a commercial mortgage.

First, you need to understand that a commercial lender is forced to make a very important decision about your creditworthiness and sometimes with very little information. If your business is a startup or only a few years old then there is likely to be very little financial history to base the decision on. So the lender is going to want to learn as much as possible about the owner or owners and their finances. This is to extrapolate how the business will be managed and the finances handled based on your previous track record with your personal finances. The lender is not saying that they expect you to default on the loan they are just trying to gather information that will guide them in their decision making process.

Second, know that when a lender receives a professional packet of information containing all of the required documentation as well as additional supporting documents, they are impressed. This shows the lender that you have done your research and are prepared to move forward with the loan application. You have invested time and effort and are very serious about moving forward. All of this will give the lender a more favorable impression of you as a borrower.

Know the Market and Your Options

Lenders are in business to make money and they do that by charging you fees and interest. A good lender is always walking a fine line of meeting the customers’ needs but also making the margin that will make the business successful. Knowing the current structure and rates of your lenders competitors can help you to negotiate a more favorable loan. When you think like a lender, you are prepared to negotiate on the terms that will save you money but still allow the lender to make some money. And when you can quote another lenders rates, your lender will know that you have done your homework and are prepared to use another resource.

There are Always Two Sides

Understanding that there are always at the very least two ways of looking at a situation, you can be better prepared to negotiate the terms that you want and need. You also need to understand that a lender is never going to give up an opportunity to make money. It is simply good business for both parties to negotiate to a point of agreement. Being prepared and knowing what your lender is trying to achieve will offer you a better opportunity to get more favorable terms.

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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