Sick Of All Of The Commercial Loan Closing Headaches?

Whether you're a broker, borrower, developer, or any other role on a project, everyone can agree that the commercial loan process can create some SEVERE headaches.

Here at Principle Commercial Corporation (PCC), our Account Executives (AE's) want to ensure that your deal is closed fast with as little stress as possible. Here are some useful tips that our AE's have compiled to help simplify the commercial loan process.

Whether you're a first time borrower or an experienced broker, many of our clients ask:

"Why does a commercial deal sometimes take 30 days or more to close?"

Typically, the answer has to do with a lack of preparation. If you follow these tips, PCC can typically close your deal in anywhere from 20-45 days, depending on a variety of factors.

Tip number one: Supply all requested documentation AS SOON AS POSSIBLE. This is key to ensuring that an underwriter has all the information necessary to close your deal in a timely fashion.

Here are some other tips that will make the process stress-free for you, as well as our Underwriting team:

• Have your past 2 years (at least) worth of tax returns (personal and business) filed and completed. Be prepared to provide your AE with this information.
• Give your AE a copy of year-to-date financial statements (both personal and business)
• Be prepared to supply extensive information about the physical property including: square footage, usage information, photos (if possible), site plan and/or property survey.
• Complete a year-to-date income/expense report.
• Be prepared to supply a complete and accurate rent roll (where applicable)
• Summary of current financing including: current lender, balance, interest rate, payment, maturity date, etc. (where applicable)
• If you are purchasing a commercial real estate property, make sure that the sales contract is valid and will remain valid through the date of the loan closing.
• When applying to refinance your commercial mortgage make sure you have your payoff statements, property survey, title policy, and appraisal readily available.
• When applying for refinance, please also provide a trailing 12 month Profit & Loss Statement on your property
• Supply your AE with the past 3 months worth of bank statements for your business.
• Prior to applying for a commercial loan, pull your own credit report and clear up any discrepancies. If there are any major blemishes on the report, provide a supplemental statement to your AE with your loan package. Addressing and resolving these issues early can often mean the difference between a closed deal and one that falls through after months of headaches.
• Inform your lawyer and accountant that you're applying for a commercial loan so that they can prepare all of the necessary business documentation. Make sure you give them plenty of time to supply these documents.
• Never order your own appraisal of a property you're looking to buy. This is often seen as a conflict of interest by the borrower because it may be seen as attempting to influence the property's value.
• Don't over-estimate the numbers when determining your property's value. Exaggerating any of these numbers will create more problems than it's worth. Being honest about the property's value will ensure that your loan request doesn't get caught up in underwriting for weeks.
• Don't exaggerate, or lie, about ANYTHING in your commercial loan application. Again, this simply creates more headaches that it's worth. Being upfront and honest about a property's value, your credit history, or even the amount of a down payment will simply the loan process for everyone involved.

Following these tips will simplify the loan process for nearly any type of commercial property and ensure a quick and stress free loan closing for all parties involved.

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By Martin Hayes Published: 12/5/2007