Qualifying for a Commercial Loan
Qualifying for a Commercial Loan: It’s easy for some, but a little complicated for most. There are 3 things that you should prepare yourself for before applying for a Commercial Loan:
- CASH: As the saying goes, “Cash is King”! Depending on the type of loan, you want to have at least 20-30% of liquid assets readily available. More times than not, Lenders do not do 100% financing and they want you to have some “skin in the game”, so having liquidity is key.
- COLLATERAL: Collateral is defined as, “something that is pledged for security..” Do you own a house, any rental property or raw land? That’s something the Lender will definitely look at when analyzing your assets and liabilities. Typically, these things may be put up as security for the Lender when deciding in offering you a Commercial loan.
- CREDIT: If you don’t know what credit is, you probably shouldn’t even consider applying for a Commercial loan (just kidding). Credit is something that almost everyone has and it’s a rating that demonstrates our ability to pay something back. A score is given to each consumer, which is in the range of 300 – 850. The higher it is, the better. Depending on the type of loan you pursue, certain credit parameters need to be met.
Are there occasions where you can still get financing by not having one or all of these things? Of course! However, being prepared to tackle financing never hurts you or your dreams!