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Business Commercial Loan | Top 5 Business Commercial Loan Mistakes

Obtaining a business commercial loan is something that rarely happens overnight without help. Commercial loans represent significant investments, and while lenders are always looking for excellent properties to fund, they are also more hesitant to provide funding unless they’re confident in the loan will be successfully paid back.

In this new economy, where a business commercial loan is now more difficult to find, it’s important that you avoid any mistakes that could prevent you from obtaining that funding. Assuming you already have a property, you’ve negotiated a good deal, and you have the capital for the down payment, the following are some of the problems that could cause your loan to fall apart.

Business Commercial Loan Mistakes

  • Forgetting the Business Plan – The property you’re purchasing is not just a property. It’s also a business. Lenders want to see that you have a genuine, well thought out business plan so that they know you’re going to pour your blood and sweat into the project. They want to know that it’s more than just a property to you, and a well thought out business plan provides that information.
  • Not Inspecting the Full Property – The property itself can derail your entire deal. If lenders see anything on your property – from construction to “look” to a history of termites, etc. – they may not want to fund it – especially if that information wasn’t known and disclosed beforehand.
  • Demanding Terms/Over-negotiating – There was once a time when lenders were fighting for your business, not the other way around. But at the moment, lenders are pretty strict about what they provide and what they’re willing to fund. You can negotiate your loan, but over-negotiating – especially with private lenders – can be problematic and cause the loan to fall through.
  • Failing to Prove Profitability – Business commercial loans are only going to be provided to those that can prove they’ll be able to turn a profit after everything is completed. You’ll need to prove a net operating income with a ratio of above 1.2 to 1.3 or more revenue to expenses, and to do that you’ll need to make sure you’re accounting for every possible expense. If banks find any problems, they may refuse your loan.
  • Refusing Help (For First Time Loans) – If you’re new to investing in commercial properties, the market can be confusing and difficult to navigate. There is nothing wrong with seeking help from a service that will help you understand your loan and how to complete it.

At CRE Lender, we know that the most important part of your loan is you. You’re the reason that the investment is important, because it’s your investment, and that’s why we make it our goal to educate about commercial mortgages and connect you to those that understand the field.

If you’re interested in getting started with a commercial mortgage, make sure you sign up with CRE Lender today and have us point you in the right direction of your next mistake free affordable business commercial loan. 

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