It is important to know what you are getting into with every business choice that you make. And that is certainly true when you are applying for a commercial mortgage.
Maintaining a professional image is critical in business. You need to project success and confidence even when you are experiencing questions internally. Crossing into the world of commercial real estate can be intimidating but if you do some research and carefully prepare yourself, your documents and your request then you can exude confidence even when submitting your first application. That professionalism and preparation could be all that stands between you and your first commercial mortgage.
Getting a loan for a commercial property is much more difficult than getting a personal mortgage. This makes sense to a point because the dollar amount is substantially greater but there are also additional risk factors for the lender. Unlike a personal mortgage, a loan on a commercial property is not usually backed or guaranteed by the federal government. So this means that the lender is taking a greater risk on every commercial loan that it processes. In order to ensure that they are lending to quality borrowers, they will often want detailed information about your management team and their hands on experience in the business world. They want to verify that the business is in competent hands and that skills are in place to continue to grow a successful business.
Management staff and skills will only get you so far on a loan application. The lender is also going to want to see detailed financial records for the company that date back 3 – 5 years if possible. These can include cash flow reports, leases, financial statements and tax documents. In addition, they are likely to request financial documents from all of the business owners. This can be tax documents, statements of financial assets and net worth information about large outstanding personal debts.
As you might have guessed, you will also need to have good personal credit as a business owner to get commercial or business credit. All of the owners of the business should have a credit score of 680 at the very least and a score of 700 or better is going to be very helpful. Having your personal finances in order and the documents prepared will help to reduce the time for the initial approval and will help you to present that professional image that lenders are looking for in a borrower.
Completing a commercial loan application is much like creating any other presentation for a client. You are introducing your business, highlighting your successes and verifying your credibility in the business world. You need to be prepared and professional to convince the lender of your creditworthiness. In addition, you need to demonstrate that your team of professionals can handle any situation that could arise to ensure that you are successful and can meet all of your obligations where this business agreement, the loan, is concerned. Strong preparation will ensure the success of your loan application and your businesses future.
Dennis Dahlberg Broker/RI/CEO
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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