How to Speed Up Your Commercial Mortgage Application
Many business owners consider a commercial mortgage a step to boosting their business. Expanding or owning is the next stage and a measure of business success. If you have a commercial mortgage, you can buy the property your company is based in, renovate it and otherwise make it more profitable. Once you have paid off the commercial mortgage, the premises is yours to do what you like with. You might want to rent parts of it out to other companies or sell it eventually. With a rental, you cannot do anything like that.
Getting a commercial mortgage loan can however be trickier than getting a residential mortgage. If a lender is going to make a business loan, they will want to be assured that you are going to be able to repay it. They will also want to examine your business plan, see where the property fits into it and decide whether it will be a good investment. If you have a brand new business, your business plan needs to be especially good to convince the lender that you will put the loan to good use and you know what you are doing.
A commercial mortgage is like a commercial loan, meaning the loan is secured by the premises you are borrowing the money to purchase. If you cannot repay in a timely way, the lender can legally seize control of your premises and sell them to recoup the loan money. They would rather not have to go through that process so lenders tend to be cautious when deciding whether or not to grant a mortgage. If you are refused by one lender, this does not mean you cannot improve your supporting materials or try another.
Personal credit ratings are not enough to recommend your company for a business mortgage. The lenders will instead look at other factors of your company. They might look at some or all of the following before their verdict:
- The business record of the location you want to buy
- Your business assets
- Your personal experience in this and other businesses
- The knowledge and skills of your management team
Your ability to generate income. In an existing company, the lender will ask to see profit and loss statements and cash flow statements. If your business is new, the lender will want a full business plan with projected profit and loss statements and an in depth analysis of your business marke
There are many different issues that might crop up in a commercial building sale so it is prudent to give yourself enough time for all the formalities when applying for commercial mortgages. You should take the time to prepare your supporting materials which include accounts statements, your CV and those of all the managers, a business plan and the history of the premises you plan to buy. Be aware that it might take a while to get a yes or a no.
This will avoid delays once the commercial mortgage process is in progress. If you want to find a mortgage to buy the premises, be aware that there are lots of types available for you to choose from. Talk to your accountant to find out more about the pros and cons of each different type of commercial mortgage and choose the one that best suits the needs of you and your company. Alternatively, consult an independent commercial mortgage broker who can compare the market against your business and borrowing needs. You can find a database of brokers at nacfb.org.
Take as much time as you need to prepare your supporting materials. If you can present everything at once, the lender will look favorably upon this, as it indicates you are organised, now what you are doing and you don’t have to keep them waiting while you get your supporting materials ready.
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