Get Fast Closings And No Prepayment Penalties On Your Commercial Loan When You Master These Simple Yet Effective Strategies

Commercial Mortgage Checklist

Are you ready to move into the commercial property marketplace? Are you already in the commercial arena but are looking to refinance your commercial loan? Getting yourself and your business ready to qualify for commercial financing is not an easy task. Lenders are very scrutinizing when dealing with approving commercial qualifying and refinancing loans. Make sure that you prepare yourself before ever stepping into a lender’s office by following these few steps.

First, get a copy of your credit report. Although there are options available for those with less than perfect credit, a good credit rating calms the fears of any lenders’ checkbook. This applies not only to your personal credit, but also the credit line of your business. Credit is often one of the first hurdles in the (re)financing process. Make sure that your business doesn’t stumble because of failure to meet the bank’s credit criteria.

Going hand in hand with the credit score is the DCR (debt coverage ratio). DCR is basically a comparison of debt per month to net income per month. It gives the lender a ratio stating the potential risk in lending as pertaining to your business’s cash flow. Take into account that your lender’s view on DCR is influenced by the type of commercial property you want to invest in. Low risk investment properties such as apartment complexes often have a different DCR than higher risk properties.

Next, make sure that you have sufficient collateral and monetary purchasing power. Your collateral generally needs to be at least as valuable in dollar amounts as the commercial loan you are seeking. Monetary purchasing power simply means that you and your business will need to be able to pay no less than 20% up front of the loan amount you are seeking. This is referred to as “loan-to-value” and it will differ depending on your commercial mortgage lender.

Although this list is not exhaustive, it is a great base for preparing you and your business for a commercial mortgage loan. Other factors that you will want to consider are the loan term lengths, the fair market value of the property, your projected cash flow for at least three quarters, and making sure you have documented copies of financial statements and tax information.

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Commercial Mortgage Checklist
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Your quick resource guide for everything you'll need on this site to successfully refinance your home mortgage. All the useful articles, tips, and resources and be found here.