Good afternoon all! I hope you're well. We're enjoying gorgeously sunny weather here right now. I may be biased but this is one of the most beautiful spots on earth when the weather is nice.
I wanted to update you on the commercial loan market. A lot of people may think that the commercial loan market is dead or non-existent right now. And while it's true it's challenging to get a commercial loan these days, the market is anything but dead.
Here at the Legacy Group we are looking at commercial deals every day. It's a new part of our business but it's being spearheaded by a very experienced banker. Here is what we're seeing. Although loan-to-values are conservative (most are going to be in the 75% range if not less. The exception would be an SBA 504 loan where financing may be available up to 90%), it's possible to get approved these days. We recently took on a refinance of an industrial property that was a referral from a bank. That's right. Not all banks have the capacity or interest in certain commercial loans.
So what is involved on a commercial loan these days? Quite a bit more than a conventional loan in most cases. Here's a good checklist:
1) Three year's personal and three year's corporate tax returns
2) Rent rolls and/or leases for the property if applicable
3) Last two month's bank statements
4) Personal financial statement
5) Written explanation of the purchase or refinance
6) Credit report. Although commercial loans are scored differently than residential loans in most cases, make sure your credit is decent and accurate.
7) Current profit and loss statement and balance sheet for the business
The biggest thing I see is a person may give up as there is more required to complete a commercial loan. Factor in a more expensive appraisal (often can approach several thousand dollars) and a longer closing time (allow at least 60 days) and a lot of patience is required.
So why would someone be interested in a commercial loan? I once heard from a businessman I knew that buying his own building was the single greatest busines decision he ever made. Plus, if you occupy at least 51% of the building you may qualify for an SBA loan with as little as 10% down.
The above is a great summary to help get you started if you're interested in a commercial loan. If you need more information, feel free to
Have a great day!
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