Commercial Property Loan – How To Get It Approved?
When applying for a commercial property loan, there are certain things you need to do right to have a better chance. If the right things are not done, then getting approval will be difficult. The following are areas the potential lender will look at before approving your loan.
Your credit score
This is perhaps the most important consideration before a loan is approved. But for commercial property loan, this might not be the most important consideration. However, your score still needs to be high to improve your chance of receiving approval for a commercial loan. Generally, if your score falls below 600, your lender will be more inquisitive to know why it’s low. Borrowers would want to minimize their risks as much as possible, and if they come across someone with a low credit score, they would want to be very careful.
Your net worth is your assets minus your liabilities. This will determine the amount of loan you can raise. Usually, lenders will only approve a loan if your net worth is equal or more than the loan amount. So, it’s important to know your net worth because it will give you an idea of the loan amount you might be able to raise.
You need to have some cash available for down payment and reserve some for emergencies. Most lenders would see this as encouraging because they like it when you still have some liquidity left for some deductibles.
Your overall cash flow need to be high in order to be considered for commercial property loan. Whether you are a W2 employee or self employed, the lender will want to make sure you have consistent cash flow. If they find out you are having issues with financial commitments on the property or your lines of property, your chances of getting approved will be hampered.
These are the most important things lenders always try to focus on when giving out commercial property loan. Once you have kept these areas in order, then it won’t be too challenging to get a loan approval.