Obtaining commercial financing requires you to learn an entirely new world of finance. Information learned in the world of personal finance is not going to cut it. Here are some tips and advice to help you out.
The tax return tells everything and the underwriter is going to want to see it. Actually, the last two years. The returns need to be signed by you, even if they are copies. If you filed an extension, include it with the documents submitted.
Be prepared for the cost of the loan. The loan to value of most commercial loans is rarely more than 75 percent in the best of cases. This means you are required to come up with a down payment of 25 percent and the money for closing.
If you are refinancing a property loan, make sure you have the critical documents the lender is going to want to see - the payoff amount, the survey and title. Ask to see if the lender will require the original appraisal as well.
If you are making real estate investments, a good attorney is worth his or her weight in gold. You want an attorney that specializes in real estate. They will advocate your position and can make all the difference in keeping you out of a bad spot.
Lend once, lend twice. This is a general rule you should definitely consider following. Specifically, a lender that finances you once will do it again so long as you have stayed up on your repayment obligations.
Lots of cash flow is tempting to certain lenders. If you have a lot of transactions leading to big cash flow, commercial retail banks will bend over backwards to get the account. This includes financing your commercial loans.
If your are borrowing money as a corporation or limited liability company, make sure you have a certification of active status from the Secretary of State. It can take months to get this from some states, so plan ahead.
Don't be a deer in the headlights. Commercial loans are fluid, flexible financing situations. This is not like getting a loan on a home. Practically everything is negotiable, so get in there and strike the best deal you can. The lender is expecting you to do so.
Don't assume your personal resources will be around. You are going to need to have your CPA and lawyer around to answer questions and make documentary statements. Make sure they are in town and not on vacation. Murphy's law!
Be very conservative on the value of any commercial property you are buying. The negotiated price is not the value as far as the lender is concerned. Make sure you don't buy a property that you can't get sufficient financing for.
