How to Win a Commercial Real Estate Loan?
“The loan sanctioning authorities usually want a sound business plan and genuine tax returns from your side. ”
You have applied for a commercial real estate loan and it gets rejected. What a waste of time and energy! Intelligent players in the field always have an emergency plan ready for such a scenario. But such contingency plans are the prerogative of only a selected few.
Actually what happens is that the loan sanctioning authorities usually want a sound business plan and genuine tax returns from your side. Usually, tax returns for the past 3 years are taken into account for this purpose.
Such rejections are all the more common in small business category. Small businesses are of so many types that sometimes their plans don’t fit into the rules and regulations of the loan sanctioning authorities. This alone becomes a big rejection factor.
So what to do if you need a loan for your special purpose? The answer is the private (non–traditional) payers in the loan market. Don’t beseech the tradition loan givers when you can persuade the non-traditional ones to give loans for our special needs. Be it a funeral home, a gas station, a church or the like, you are very less likely to meet frustration in the non-traditional lending market.
Similarly, you can steer clear of the formality of tax returns by availing the ‘Stated Income Commercial Loans’. These are the loans that require absolutely no income proofs, tax returns or other such documents.
These again are prevalent in the non-traditional lending market. However, you can get only a limited sum amounting to a couple of million bucks by way of this method. This option is advantageous for the truly small players in the business field.
In the same way, requirement of a collateral is also a big hurdle in the availability of such commercial loans. I don’t understand as to why lenders tend to ‘cross collateralize’ different assets.
Personal and business assets should be viewed separately but unfortunately this is not the standard practice. You would have to spend a lot of time searching before you arrive at a lender who does not believe in this kind of ‘cross collateralization’.
In addition to the methods discussed above, you can also take counsel from cash management experts for tailor made solutions to your problems and convert your rejected loan into an actuality.
Author - DeeKay
Tags - Finance, Economy
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