When applying for commercial mortgage financing, it’s critical you understand the role of the lender and their decision-making process. There are many factors involved, and in this post we’ll explore a few of the factors your lender might consider when making their approval decision.
Your lender will look at your credit history and determine whether or not you're a suitable loan applicant given your past financial decisions. They will pull your credit report, which will highlight your credit score and any potential issues that other lenders have experienced in lending to you. The score within your credit report relates to your risk as a client. The higher the score, the lower the risk to the lending institution.
Income and Employment History
Your income and your employment history are key factors when determining your ability to repay the loan extended to you. When reviewing commercial loans, lenders will often take into consideration your business's current income and its growth in the past year. The lender might also ask to see projections for the coming years to make a more effective lending decision.
Beyond your income and your past employment history, lenders will also review your current available capital. That is the amount available to you currently in the form of savings, existing loans, and investments that can become liquid if the loan had to be repaid. The lender will look to these assets in case you lose your business, or your employment position becomes changes during the lending term.
How do you plan to utilize the money loaned to you by the lender? Will you be investing in new equipment for the company or new real estate opportunities in the local marketplace? The lender will likely ask how you plan to allocate the additional resources and the impact you hope these resources will have on your business in the years ahead.
Our experienced team has the expertise to help you navigate the commercial real estate marketplace and connect you with lenders willing to allocate the available capital to your investment. To learn more about our services, please call today.