Commercial Mortgage Disapprovals – Five Major Reasons for disapproval
Commercial mortgage is perhaps the most commonly availed loan scheme when it comes to entrepreneurs who are trying to expand their business. Also the process getting a commercial mortgage is comparatively easier than other commercial loans and the major reason is the fact that the property that is purchased is provided as the collateral. Also there are numerous banks and other non banking organisations that offer commercial mortgages to the customers. But in many cases the applications are rejected by the bank officials and the reasons for this are many. Some are:
The bank might not be convinced with your strategy:
Since the loan’s repayment depends hugely on the profits that the company makes, the bank will only lend the money to those companies that have a very well thought out business strategy. This strategy need to be provided to the bank officials as well. in some cases, the entrepreneur will have to personally convince the officials about the effectiveness of the strategy.
The tax statements of the customer might not be perfect:
The bank would only lend the money to those customers whose tax statements are perfect. So if the officials find a particular tax paper missing, then there is a chance the whole application gets rejected. So make sure that all the papers are presented promptly.
Your kind of business might not be the one that the bank specialises in:
Certain banks are known to provide loans to particular types of businesses. And hence all the other kinds of businesses would be turned when it comes to lending money. So the customer should make sure that the bank that he or she approaches is the right one.
The bank may not allow for a refinancing:
The client may need additional funds and hence he may apply for refinancing the existing mortgage. But some banks may reject this until the clear picture of the business is provided to the bank
Lack of collateral:
You will need to provide enough collateral in order to get a particular amount of money. There will be guidelines that limit the maximum amount that can be lend on a particular asset.