As a warehouse owner, there may be a time when you need to obtain additional financing by applying for a warehouse loan. Financial institutions like APEX Mortgage Corp. offer a variety of warehouse lending services to help you achieve the financial assistance you are seeking. Here are five great tips for getting a warehouse loan approved by your commercial lender.
5 Tips for Getting A Loan Approved by a Warehouse Lender
Your chances for loan approval often start way before you request a warehouse loan. You’ll see that only one of these tips has to do with the actual loan application. All other factors must be attended to regularly before you even consider applying for a warehouse loan. Follow these tips and you should be in good shape—whenever and wherever you apply for a loan.
- Keep good financial records. Keep an accurate income statement that shows how much money comes in and how much money goes out each year. Bank-type lenders will review three years of tax returns before approving your warehouse loan. Some lenders may not care about how much you report to the government, but all lenders will care about whether you have enough money to repay the loan. Records should be clear and accurate and contain as much financial history as possible to convince the lender that you can pay back the warehouse loan.
- Keep your personal credit clean. Business records are not the only records you must keep. A warehouse lender WILL review your personal credit, so make sure to keep your personal credit clean as well. Now is not the time to forget to pay your small credit card bill on time. If possible, make all of your accounts current before applying for a warehouse loan. Obtain a copy of your personal credit report before you apply and be prepared to discuss all aspects of your personal credit profile.
- Keep good records of all property improvements you’ve done. Warehouse lenders want to know how much money you’ve invested in your building before considering your loan. Be prepared for questions. Don’t get caught saying, “I think I’ve put about $35,000 into the building for various things over the past 4 or 5 years.” Be more accurate – provide the total amount you spent and a detailed list of improvements and their costs. Make sure you include cancelled checks, invoices and receipts.
- Clearly identify and document why you are requesting the loan. Lenders want to know how you will benefit from any warehouse loan. You must have a clear reason for the request. Provide as much detail as you can regarding how much money you need and why. A warehouse lender will also want to know how you will make money with their money. Here’s an example:
My warehouse loan of $250,000 will help me as follows: I need:
- $50,000 to payoff various business debt
- $125,000 to payoff my first mortgage
- $30,000 to purchase inventory for an upcoming job order
- $20,000 to upgrade my specific piece of equipment
- $25,000 to have as a surplus for any unexpected cash needs
The new equipment and inventory purchase should increase my profit by $40,000, and the debt consolidation will save me $1,200 per month.
- Show pride of ownership. Keep your building well-maintained. A clean and well-kept business property makes a good, trusting impression. A lender does not want to see trash lying around, cracks in the concrete floor, broken windows or a façade in disrepair. Lenders may easily assume if you’re careless with your property, you’ll be careless with the money they loan you.
ANY QUESTIONS? If you have any questions about warehouse lending services or would like to apply for a loan through APEX Mortgage Corporation, call us at 1-800-262-2739 or apply online HERE. Remember, APEX says “Yes!” when other banks say “No.