In a time where many families need both parents to work outside the home, child care is in demand. Despite this, if your borrower is a small business owner looking to start your own day care, expand their current business or make improvements to their existing property; it can be difficult to obtain a small-balance commercial mortgage from a traditional source. Fortunately, there are small-balance commercial lenders who are willing to lend commercial property owners the funds they need to meet their business goals. As a commercial mortgage broker, it’s up to you to get to know your lenders and what they need to evaluate your borrower’s day care mortgage request. Here are the basics most lenders will need to get started:
When you submit your borrower’s financing request for their day care, it’s important to include a recent credit report with trade lines and scores. These reports will allow the lender to fully understand your borrower’s credit history. Keep in mind that most free credit reports tend to be difficult for lenders to read and that the scores tend to be higher than the standard Experian and Trans Union scores that lenders use to evaluate a potential deal.
You also need to know the facts about the property your borrower is pledging as collateral. How big is their facility? How many children are enrolled at the day care? How many employees do they have? Are they licensed to operate a day care at their facility? Does their day care building comply with your state and local fire and safety regulations? This information will help a commercial mortgage lender to assess your borrower’s situation.
Capacity to pay:
Commercial mortgage lenders need to know that potential borrowers will be able to make their monthly payments. Submitting relevant financial information about your borrower’s day care business is necessary to give your lender an idea of your ability to pay. Completing a 1003 with your borrower will serve as their application as well as a source of information about their finances.
Use of proceeds:
Finally, be prepared to discuss the use of the loan proceeds in detail. Whether your borrower plans to purchase a day care building, buy new play equipment, or make day care building repairs, the more information you present to the commercial mortgage lender, the easier it is for them to get you the financing that you need.
Getting your borrower a small-balance commercial mortgage for a day care building can be easy, as long as you choose the right kind of lender and provide the information they will need to make their decision. Providing your lender with the above information will make it much simpler for your borrower to get the day care building mortgage they need and for you to increase your income by closing these loans.