Knowing the commercial lending process is crucial for any successful business owner. From commercial loan applications to the signing phase, these steps can be hard to manage. Luckily, this article will break down the commercial lending process.
So keep reading so you can start your business off on the right track!
Commercial Loan Application Process
Before you can get a commercial loan, you’ll need to have an initial assessment. This process can be long and requires certain documents. For example, financial statements from your personal or business accounts. This process may also include a credit check.
You may also need to prove the specific purpose of the loan. So, be ready to provide detailed information about your intended plan and current financial status.
Commercial Loan Review Phase
Once the required documents are submitted, the review phase begins. Be aware that some commercial loan lenders are picky. Therefore, they will heavily investigate your income statements, balance sheets, and cash flow.
During this phase, reputable lenders will be seeing what kind of interest rates and loan fees are right for you. These details are determined by your financial viability. And the chances of a full repayment.
Always remember that a loan officer can deny your application if they feel as if your finances are not in order. Overall, your financial statements should be an accurate representation of your current net worth.
Collateral Evaluation
Commercial loan requirements vary depending on the lender. However, most commercial loans are secured by collateral. This term refers to a form of protection for the lender if the borrower defaults on the loan.
During the commercial lending process, lenders will assess the value and quality of your collateral. Some forms of collateral include personal real estate and forms of liquid assets.
Credit Analysis
Any credible commercial lender will conduct a comprehensive credit analysis. This step involves reviewing credit history, payment patterns, and existing debt obligations.
This step usually disqualifies many candidates or gets you unfavorable loan terms. So ensure your credit history demonstrates you’re able to manage debt responsibly.
Loan Structuring and Terms
Another crucial step is the loan structure phase. This step will provide the necessary information on interest rates and loan fees.
Take careful consideration during this step, as this will provide valuable information. For example, the loan amount, interest rate, repayment schedule, and any associated fees.
When reviewing the loan structure, ensure it aligns with your financial capabilities. So don’t accept a loan offer that exceeds your financial needs or has high interest rates.
Overall, this step protects you from financial ruin. Therefore, carefully consider your options.
Approval and Funding
Lastly, the lender will decide on the approval of the commercial loan. Upon approval, the funding process begins. Finally, you should receive the agreed loan amount.
However, before finalizing your loan, ensure the terms are correct. More specifically, ensure that interest rates and pay-back dates are what you agreed upon. Doing so can reduce the chances of unknown hidden fees or other financial issues.
Commercial Lending Process Made Easy
The commercial loan process can be difficult, thankfully we make it easy. With over 15 years of experience, we’ll simplify the commercial lending process for you.
Take the next step and let us drive your business forward with our competitive rates and tailored loan offers. Contact us today to explore your options and propel your business to new heights.
