Things become much simpler for small business owners when they have some extra cash to cover expenses. Your borrower might want to take advantage of a great inventory deal for their business, or cover their bills while waiting for receivables. Whatever the reason, it’s important for commercial mortgage brokers to understand what information is needed to get the lending process started and to help their borrowers obtain the working capital loan they require. Here’s what you should discuss with your borrower before submitting the scenario to a small-balance commercial mortgage lender:
Your borrower’s credit history:
Unlike traditional lending institutions, small-balance commercial lenders are willing to work with borrowers who have a less-than-perfect credit history. You’ll need to be ready to discuss your borrower’s credit history and have explanations for line items that show delinquencies. If the lender requires a borrower interview, make sure to prepare your borrower properly.
If you want a commercial mortgage lender to consider your borrower’s request for financing, you’ll need to provide them with some information about the commercial property. Your lender will need to know the size and location of the property. Generally, your borrower must own their property to obtain this type of loan, so you should ask them when the property was purchased and what they paid for it. If possible, include photos of the property.
Your borrower’s goals:
Small-balance commercial lenders will need to know how your borrower plans to use the funds they provide. Include details of your borrower’s plans for the working capital loan in your executive loan summary.
Your borrower’s ability to pay:
Just like any other lender, a small-balance commercial lender will need to be sure your borrower can make their monthly payments. To illustrate your borrower’s capacity to repay the loan, include all relevant financial information, such as income and expense reports.
In order to get your borrower the funding they need, it’s crucial for you to have all the necessary information before submitting a working capital loan scenario to a lender. Be sure to discuss your borrower’s credit history and their plans for the proceeds, as well as their property and their ability to repay the mortgage so that the lending process can begin without a hitch.