As more parents return to the workforce, the demand for child care has increased, giving more entrepreneurs the option of starting or improving a day care facility. Whether you’re purchasing or refinancing a day care facility, there will be some basic information that a commercial mortgage lender will need to get started. It’s best to have and understand these things before getting started with a day care building mortgage:
- Your credit score. It’s important to know your credit score and understand your credit report when you apply for a commercial mortgage, as it’s a very important tool for lenders. You can give the mortgage lender permission to pull your credit report, but many borrowers choose to pay a small fee and handle it themselves through an online credit report service. Be sure to give the lender an up-to-date credit report, as you want them to have as much information as possible when evaluating your situation. Be prepared to discuss any account delinquencies, past bankruptcies, or financial “bumps” you may have experienced.
- Your capacity to pay. It’s important to a commercial mortgage lender that you’re able to make your monthly payments. Recording relevant financial information about your day care business is a great way to give your lender an idea of your ability to pay. You can fill out a 1003 Application or Personal Financial Statement; both of these forms will provide a lender with the financial information that they need.
- Know your property and your business. It’s best to know the facts about the property you’re pledging as collateral. How big is your facility? How many kids are enrolled in your program? How many day care employees do you have? Do you have a valid license to conduct business? Does your day care building comply with your State and local fire and safety regulations? This information will help a commercial mortgage lender to assess your situation.
- Be prepared to discuss past financial obligations. A commercial mortgage lender will want to know how you’ve handled past business mortgages and loans. If you’ve had some trouble in the past, be prepared to discuss the situation with the commercial lender.
Finally, be prepared to discuss the use of the loan proceeds in detail. Whether you plan to purchase the day care building, use the funds to pay off delinquent real estate taxes, purchase 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.