When it comes to applying for a small commercial mortgage, not all lending sources are the same. You’ll find that banks tend to have tighter lending criteria, but there are lenders who are willing to cut borrowers more slack than the banks.
These lenders understand the challenges that small business owners face on a daily basis and are willing to listen to their stories, working with them to find a financing solution. However, there are certain things that can cause any lender to turn tail and head for the hills. Here are four sure-fire examples that will lead you down the path to having your small commercial mortgage application turned down:
- Skipping payments while applying for a loan. Be current on your loan payments. Many lenders will listen to explanations regarding late payments in the past, but if you are currently behind on any loan payments, you’ll want to get those accounts current before applying for a loan. You do not want your lender to think that you don’t have enough money to pay the bills you currently have.
- Leaving your property a mess. Keep your property in good condition. If the front window of your building is broken – FIX IT. If your awning is ripped or your sign is missing letters or there is trash at your front door – FIX IT. Don’t give your lender the impression that you don’t care about your building. Pride of ownership is important.
- Having no proof of your income. There are lenders who will consider your request even if your tax returns aren’t pristine. However, all lenders want to know that you can pay the loan back. Understand how much money you bring in, and be able to document it. Can you offer 12 months bank statements to prove you’re making deposits? Do you have a detailed spreadsheet or receipts for cash sales?
- Having no reason for your loan. Lenders want to know how this loan is going to benefit you. Are you saving money? Will you make money? Be able to explain clearly how this money will benefit you and your business.
No lender would be willing to approve your application if these scenarios apply to you and your small commercial property. But if you demonstrate your willingness and diligence in the care and maintenance of your property and financial records, you’ll be be in a great position to avoid getting turned down on your commercial mortgage application, and well on your way to getting the money you need.