There is nothing more frustrating to a commercial loan broker than to tell a client that their loan has not been approved or that it was approved with terms I felt were not sufficient for the person’s borrowing power. Below is a list of items that I strongly recommend every borrower take into consideration when applying for their next commercial loan. By spending the time and extra effort accumulating the below information, you can literally save thousands of dollars in interest on your next loan.

Bank Statements - Almost every lender will ask for 3-6 months of business bank statements. This is not only to look at the amount of revenue coming in but the lender is also looking for auto deductions from MCA loans, (Merchant Cash Advances) other commercial payments, etc. If you have limited revenue coming into your business account then offer your personal statements as well that may show an additional income to the household via a spouse, pension, disability, etc. You want to show as much income as possible. In addition, if there are any NSF charges explain the reason as a lender takes these very seriously.

Tax Returns – Depending on the size of the loan or how long you have been in business, not all lenders will request a tax return. That does NOT mean that it won’t lend more credibility to your file however. INCLUDE IT!

Credit Report – Most borrowers know it they have good credit or not. If you have a nagging issue with your credit from a medical payment, school loan or anything disputed then let the Broker know upfront! There are many scenarios where credit reports are incorrect but they do affect your score and a lender’s evaluation of you. Offer the information to your Broker in case they don’t ask you for detail.

Home Ownership – Lenders tend to give a tremendous amount of credit to a borrower that owns a home. The majority of the time a mortgage will show up on a credit report but there are many borrowers that have homes paid off or are on a private contract. Be sure to offer that information if you are not asked. Showing proof of homeownership can be the difference between qualifying for a loan or being turned down so this is information a lender must-have.

Include Your Spouse – It is not uncommon for an applicant to be 100% owner of their business whether a sole proprietorship, LLC, or Corporation. All lenders are gauging the level of risk of their investment being paid back so if a spouse has solid credit then adding them as a PG (personal guarantor) can often tip a lender's decision to approve a loan or to improve the terms if there was only one PG.

Bankruptcy – Lenders will consider loaning after bankruptcy (BK) but the information is needed. Why the BK? Medical? Divorce? Recession? A lender is interested in the story. Chapter 7? Chapter 13? Chapter 9.11.12,15? Credit reports don’t give the detail. Offer the explanation as it could make a big difference in a lender's mind.

Time in Business (TIB) – Next to personal credit, TIB is the most critical factor a lender considers. The longer a business has existed the better the chance they will be in business for the years they are expected to pay off their obligations. Frequently a business begins as a sole proprietor then becomes a Limited Liability Company or Incorporates. Make sure you keep records (taxes, biz licenses, bank statements) that show when you first opened your business. The difference in obtaining financing for a business under 2 years and a business of 3,5,10 etc. saves many thousands of dollars over the course of a loan.

I hope the above information helps you obtain the best possible terms for your next commercial loan!

Tim