What Do Lenders Look For Before Granting a Commercial Loan?
If your business is depending on a commercial loan, know what lenders are looking for first. This can help you better prepare for the application process while also improving your odds of being approved.
What do lenders look for before granting a commercial loan?
Personal Financial Information
It probably comes as no surprise that banks and lenders will first look at a borrower’s finances, even if you are applying for a commercial loan. This can help to provide the lender with an idea of how you manage your financial affairs and to determine whether you will make the payments.
The lender may check your credit score, credit history, and legal history related to tax liens, court judgments, or evictions.
The lender may also take a closer look at the characteristics of the property that you want the loan to purchase. This is partly since the bank will gain ownership if you fail to make payments, so they must determine its value and worth as collateral.
Business Financial Information
For your existing business, some of the things that a bank or lender will want to look at include the following:
Ledgers and books
Hard money lenders may have less rigid requirements regarding documentation when making loans.
Improve Your Chances of Approval
There are ways for business owners and entrepreneurs to enhance their applications and improve their odds of being approved for a commercial loan. Some tips include:
Pay off debt.
Enlist a cosigner or an investor.
Make a bigger down payment.
Buy a less expensive property.
Business owners with spotty credit may want to use these tips to boost their application status and improve chances of approval.
Want to learn more about alternatives to traditional lending institutions? Talk to the money professionals at TCF Capital today.