Five Steps to a Successful Commercial Loan Workout

It is very easy to get a commercial loan these days, but attaining a good interest rate for the same is where the problem lies. For all the commercial property owners who are unable to get refinancing or are facing a foreclosure that may terminate the business, the best way to handle the situation is using a commercial loan. This will help you do the following things:

  • Hold off payments
  • Reduce interest as well as principal amount
  • Avoid a foreclosure
  • Postpone balloon payment by extending the reset period/maturity date
  • Make use of temporary interest only payments

The Five Steps for Commercial Loan Workout

  1. Required Paperwork – The needed papers are collected from commercial property owners which include copies of the mortgage note, rent roll, rental agreements, and copies of bills from the last year.
  2. Research Analysis – A financial picture of your situation is needed before the process starts. All the lender is worried about is mainly your capability to pay each month. Other factors, such as current market value, recent comparable sales, and rental rates are also considered.
  3. Lend Submittal –As soon as the confirmation of delivery is received from the lender, the submission package is forwarded to a workout specialist. If the receipt is not confirmed by the lender,there is a chance that your file is stuck somewhere in the mail room.
  4. Negotiation Process – After the package is reviewed by the workout administrator, they make a loan modification offer. Other parties, as well as the property owners, will make counter offers till the agreement is set in fixed terms. The entire process takes about 2-3 months to finish.
  5. Final Approval – A proposal is presented to the commercial property owner as soon as the lender approves the latest restructured mortgage loans. A few things, such as low-interest rates, postponement of payments, greater cash inflow, extended maturity date, and reduction of principal. The final step is that the altered loan papers are signed by both parties and the changes are made official.

Going through all of the above-mentioned steps is easily made possible by, so waste no more time and save your business.