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Tags: finance, commercial loans, getting a commercial loan
 If you’re thinking of investing in commercial real estate or operating a business you have many things to look into. Getting the financing is one of them. Whatever you’re reason is you will need to acquire financing. Even if you have the resources you may either not want, or not be able to pay for everything out of your own pocket.
If you are planning to go into this endeavor you will need to familiarize yourself with the commercial lending process so that you know the things to look out for in getting a commercial loan. Since it is quite competitive lenders want to make sure you’re the right person to lend their money to.
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So when you approach them you need to have everything ready in terms of documentation and planning, along with the attitude to sell your project with them. One of the things lenders look for when processing commercial loan applications is the size of your down payment. This is the same with any kind of loan process; the size of your down payment dictates your rates and monthly payments.
In this case you may be required to make a 10% to 30% down payment so you had better prepare your funds for that contingency. At the same time you need to have great credit scores if you want to get a good commercial loan. If you have poor or bad credit lenders may not be willing to lend you money even if the enterprise is a good project.
Before you apply for a commercial loan you need to check your credit report. Make sure you have no late or delinquent payments and dispute anything that’s out of the ordinary. Before you apply try to get your credit score up as much as you can. The higher your FICO score the better your chances in getting your loan application approved.
And don’t disregard experience. Lenders willing to give out a commercial loan to a business such as yourself not only looks at credit scores and down payments, they also look at your experience in running such an endeavor. Lenders want assurances that you will be able to survive in the field so you can pay back what you owe them.
For example if you don’t know anything about computers and will be running a computer center why would lenders even lend you money? Because of your inexperience, they will have no guarantees that you won’t go belly up and default on your commercial loan days or even weeks after your opening? That can be offset somewhat by a good business plan.
By having a good business plan you can show your lenders that regardless of how much experience you have, you understand how to run the enterprise, make it succeed and make money out of it. It also shows that come what may you are ready and prepared to tackle the issues and events that may arise in the management of said business.
On top of that you need to show that you can have positive cash flow. Continuity is also a good thing, especially if you’re buying into an existing business. The more people who work for you who know how it is run the better your commercial loan application approval will be.
Doing your due diligence is very important. Look at other banks and financial institutions and look into their commercial loan terms so you can comparison shop for a good deal. Since this may be a complicated transaction I recommend getting a lawyer who’s experienced in negotiating real estate loans so that you get a good deal and not be sold anything you’re not willing to get.
If you want go to a lender you already know but don’t disregard others. Check with the Small Business Administration—they also have loans available and it may be the better deal for you.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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