Whether you are refinancing an auto repair business you already own or purchasing an auto repair property, a commercial lender will want to see some basic information so they can determine if you qualify for a commercial loan. This basic information includes the following items:
- Know your credit score and understand your credit report. You can get a financial institution or a commercial mortgage broker to pull your credit when applying for a commercial loan. Many borrowers are going to online websites and paying a small fee to pull their own credit report. Your credit report is one of the most important tools used in making lending decisions. Be prepared to discuss any account delinquencies, past bankruptcies, or financial “bumps” you may have experienced.
- What’s your capacity to pay? A commercial lender wants to see a snapshot of how you will manage your new commercial mortgage payment. A great way to communicate this information to a lender is by completing a form to record relevant financial information about your current financial situation. You can complete a Personal Financial Statement or a 1003 Residential Loan Application. Either one of these forms will tell a commercial lender information about you, your employment, your income, your assets and liabilities, and the real estate you own.
- Know the facts about the property you are pledging as collateral.
- How have you managed past financial obligations and responsibilities?
If this commercial loan is for a refinance, a lender will want to know how you are going to use the money they are going to lend you so, prepare a detailed list of the loan proceeds.
If this is a purchase of an auto repair property find out everything you can about the property. Some information you may want to obtain is:
- Does the property, or has it ever, have underground fuel tanks which may cause environmental concerns?
- Is this a current business that you are purchasing, or are you moving your auto repair business into, a new location? If it is a new business you are purchasing you may want to investigate a lender who will not only finance the real estate but the purchase of the business as well.
- Have an accountant or financial advisor prepare financial statements on the business so a commercial lender can see the profitability of the business.
- Prepare a resume on your experience in the auto repair business that details your experience in auto repair and running a business.
- How many employees/mechanics work at the auto repair?
- How many cars per weeks does the business service?
- What is the average repair cost per vehicle?
- How do you market yourself to get new customers?
In the end, when you present a full and complete package to the commercial lender, it shows the lender you are serious and have done your research.