Commercial Lenders General Criteria
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Commercial Lenders General Criteria
Most commercial lenders have a similar criteria
Before agreeing upon a commercial mortgage the lender involved will want to be sure that your business is on a sound financial footing. Mortgage lenders have a general list of criteria that need to be met before any deal can be finalised – the main concerns being:
- You will be able to fully repay the money
- The value of the business property is enough to cover the amount borrowed if you were to default on the mortgage
When it comes to giving a value of your property do not over-estimate. A lender will almost certainly appoint a surveyor or property appraiser to inspect and estimate the value of the premises.
You will also be asked to provide information regarding your business and its financial performance, which will probably include the following:
- A profit-and-loss forecast for the next twelve months
- Business bank statements for the previous six months
- Current business performance indications
- Audited accounts for the last two years
- Asset and liability statements for each applicant
- CVs and/or profiles of each partner or director of your business
- A full business plan that reveals how the property will contribute to your cashflow and how you intend to repay the loan
If you are looking to buy a business and property combined, you will need to provide your lender with additional information, such as:
- Reasons for selling the business
- Business growth projections
- The credit status of the business
- Details of any personal investment involved
It is highly likely that you will need to find a deposit (usually between 20 and 30 per cent of the purchase price of the property for commercial mortgage loans), although some commercial mortgage lenders may be more flexible with their criteria, depending on the availability of security of other factors.
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