Owning the property out of which their business operates is a dream for many small business owners. It makes their lives much simpler and allows for greater control of their finances and business. Whether your borrower is looking to purchase the space they rent, expand their current operations or own an investment property, as a broker, you must understand what’s needed to get them the mortgage they require.
Here’s some information your lender will require:
In order to begin evaluating your borrower’s commercial mortgage request, your lender will need a recent credit report with tradelines. If you’re working with non-bankable borrowers, be sure to discuss any past financial challenges with them. Both you and the borrower should be able to explain your borrower’s story to the lender.
You lender will also need information about the commercial property your borrower is planning on purchasing. What kind of building is it? Where is it located? How large is the property? These are just some of the questions you’ll need to answer. You should also include recent interior and exterior photos of the property if you are able.
Be sure that you and your borrower are prepared to talk about the borrower’s plans for the commercial property they are purchasing. You should know what type of business or businesses will be operating from the building, as well as whether the property will be owner-occupied, purely investment or a combination of both. All of this will affect how the lender evaluates your borrower’s commercial mortgage request.
Proof of funds
Your lender will require proof that your borrower has the money to make the down payment on the commercial property, as well as where that money is coming from. Make sure that you submit all relevant financial documents.
Agreement of Sale
While you don’t always need to submit this document to get a conditional approval from a lender, the agreement of sale is necessary for the deal to move forward and close. The sooner you send it to your lender, the better. Make sure it is fully executed by all parties.
Purchasing a commercial property is a major step for any small business owner, and it’s your job as the broker to help them see the process through. Be sure that you have all of the necessary information accounted for when you submit the deal, and be prepared to go to bat for your borrower throughout the lending process. Being prepared will help the deal close faster and earn you additional income.