Working with commercial lenders can seem like a scary thing at first, but if you know how they evaluate your small business for approval, then it isn’t that bad. In fact, the entire process won’t be as stressful!

Commercial lenders take many pieces of information regarding your small business to find out the two main things they want to know for approval. First, they want to know if you are going to be able to repay the loan back and secondly, if you are not going to be able to make payments, what can be collected in return, which is known as collateral.

To start finding these answers, character is often times one of the biggest factors for loan approval. It really doesn’t matter if you have a great deal of cash. Your past financial history will actually say a lot about your character and ability to pay back the loan. Proving that you are able to manage your finances, like by making payments on time, then these are the things that commercial lenders will take into high consideration.

Credit score doesn’t always play a significant part in getting approved or denied, but it is a good idea to try and maintain a credit score of at least 670 to avoid reason for loan denial. A good credit score is going to help back up the fact that you are responsible for your finances.

Commercial lenders not only take credit score, but also collateral into consideration

If you are unable to make payments on your loan for some reason, then collateral is going to be used to repay the loan. Commercial lenders can get a better idea of the value of your assets by reviewing a balance sheet. This can help your small business show your assets and liabilities at an easy glance. Now keep in mind that it is beneficial to have a lot of assets as this will give more reason and a high chance of loan approval.

Detailed personal financial statements are also something commercial lenders are going to take a look at

Personal financial statements are going to come into play because it will give an idea of what type of personal assets you have. Sometimes collateral isn’t the only thing that is going to be used as repayment for a loan that has had missed payments. When obtaining a loan from the Small Business Administration, a personal guarantee requirement is popular. A personal guarantee requirement means that if your business is unable to make payments, then you are personally liable to repay the loan since your business is unable to.

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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