Commercial Loans
Many banks and lenders rarely have firm loan terms for commercial properties. While they can be negotiated, they also vary by bank. Here are some basic guidelines.
Loan’s purpose
How you plan to use your commercial loan can determine how your bank will assess its risk.
- Banks classify loans used to buy or refinance commercial property as low-risk investment loans because the property will be rented out or leased.
- Banks classify loans used to purchase or refinance a property that you will use for your own business as a medium-risk, owner-occupied loan.
- Banks classify loans used to fund the daily operations of your business as high-risk working capital loans.
Lenders try to avoid approving high-risk loans when possible.
Income Verification
Commercial loans have several ways you can verify your income.
- All your financial statements are required for full doc loans.
- For a lease doc loan, you need to prove that the income you receive from the lease is higher than the loan’s interest repayments.
- An accountant’s letter or bank statements are all that you need for a low doc loan.
- Higher-risk loan types, such as no doc or forecast loans, may be denied by the bank. However, some non-bank lenders may approve your application.
Mortgage Street is a specialist, non-bank lender who works closely with experienced mortgage brokers specialising in commercial loans. We can offer you loans with competitive pricing and flexible policies that fit your needs. You can even refinance your commercial loan later on down the road.
Working with a commercial mortgage broker is critical, especially if you consider applying for a low doc or no doc loan. Commercial mortgage brokers can help you find a loan that has the best terms and rates. They may also be able to improve your loan application and assess the security you are using.