How to get a commercial loan

It all starts with a decision to get a commercial loan. Once you decided to get a loan there are 10 steps you need to take before the loan escrow is started. Some of the steps are very short and will take only minutes, some will take days or even weeks based on the size and nature of the loan.
1. Prepare a short executive summary of your commercial loan request.
There are hundreds of different types of commercial properties e.g. apartment building, hospital, gas station etc. There are different sizes of loan and different conditions. All in all there are unlimited possible loan scenarios. Each scenario may require slightly different approach and documentation; fortunately you need not worry about it. As you continue through the 10 steps, described here, your particular loan scenario will be unfolded and only the information demanded by the lender will have to be supplied. The first step is a short executive summary that covers 5 essential elements which are commonly needed by any lender.
A. Brief information about the property
Address: (at least City and state if you like to keep confidential at that stage)
Type of property: Gas station, mall, hotel what ever
Estimated value: if you have specific information like appraisal done recently you can mention it. (Note: if you already have a website with information and pictures about your property you can include a link to it but do not try to create it. It is not essential to the loan). This entire step (step #1) should take you 3-10 minutes. Enter what you know.
B. General information about your financial condition
Your credit: good? Bad? Etc. How much is your net worth and what is your gross/net yearly income. What is the existing financing on the property? What is the current rate? When the loan is due?
C. What kind of loan do you wish to get?
Loan amount you need and any special condition if any that must be met (e.g. No prepayment penalty after 2 years etc., but do not request any specific rate or terms you will get these from the lenders at later steps.
D. Short description of your request
The entire purpose of step #1 is to have lenders contacting you. Step #1 is kind of executive summary (or “loan résumé”). Make sure to include some compelling information about your property and or yourself to entice the reader (lender) to contact you. Keep it short, yet inviting enough and clear enough. The executive summary should be written in such a way that it will grab the lender attention when he glance at it and prompt him to contact you it immediately.
E. Information on how the lender can reach you. In step 2 you will find and distribute the executive summary to potential lenders so make sure to include your return email and optionally phone number. (If you prefer not to give out your regular email get a separate email address at newmail@yahoo.com or newmail@gmail.com exclusively for the purpose of the loan.)
Keep the executive summary brief. The lenders need to be able to look at it and contact you without spending too much time reading through it. Additional information will be certainly required at step 5 but for now, what you have entered is the best way to start. If you need help writing up your executive summary or help in monitoring and doing all the steps 1-10 correctly and quickly you can use the Free software, loan control center at http://www.lendinguniverse.com website. It is 100% FREE and all your data is protected.

2. Search for commercial lenders
After preparing the short executive summary of your commercial loan in step #1 you are ready to look for lenders. The rule is to try and get as many qualified lenders as you can possibly handle (without losing your mind). Do not be satisfied with a single lender’s quote. It might be that the first offer is the best one but you won’t know it until you speak with few lenders.
Here are the most promising lenders sources:
A. Your existing lender- For sure e contacts your existing lender and tell him about your intention to obtain a new loan. Email him your executive summary. If your lender still lending he will jump on the opportunity and will give you an offer.
B. Old lenders and brokers you know from the past- Contact old brokers and lenders email them your request. (The lenders can also receive your communication and provide quotes via loan control center they may be already members or can easily ad freely become members.)
C. Family and friends and business associates’ referrals- ask around especially people who own similar properties. They will be happy to give you some referrals if they had good experience with lenders. When you get lenders name call the person and either email or fax your request to him.
D. Internet search- That will net you many new lenders. You can check the main banks websites like bankofamerica.com, wellsfargo.com and the main lenders in your town. Also google “commercial lenders in My City Name “, “Commercial loans My City Name ” and ” My City Name Commercial lenders” . You should also search with the specific of your type of property e.g. if your property is gas station search “gas station lenders My City/State Name” and “gas station loans name of your city/state”. When you find a suitable lender go to it website find it email address and email your loan request. It can be a waste of time filling out lenders forms, it can take you days. Instead look for the main email address and email your request to the company. Step #1 covers all the important data any lender needs and good lenders will respond to it quickly.

3. Keep track of your activities- Keep record of all your email you send out and all the responses you are getting back from the lenders. It is relatively easy to remember 2-3 lenders but when you have to deal with 4, 5 and even 10 different lenders and when each proposed 1-6 programs it become impossible to track the results unless you keep some kind of a spread sheet. You can use the control center at lendinguniverse.com it keeps records of all lenders, all offers and all communications between you and the loan officers, processors etc.
4. Establish Communication with lenders- Best communication is done face to face. It is not possible in most cases. Second best is by phone. Talk to the lenders. Emails are great for transferring documents and quotes. Emails can be used for simple questions but for more complicated questions it is better to use the telephone. Always insist on quotes being done by email or through the control center
5. Answer questions – at this steps you find exactly what you need to show in order to obtain your particular loan. This is the step when you give complete information about the property and complete information about your financial condition. Keep track on what you give out. Don’t be surprise when some lenders ask for some documents other do not request. Almost in all cases tax return P&L and bank information will be required. Based on lenders responses you will get a better idea on what kind of loan you can get and what conditions are need to be met. (The control center at www.lendingunverse.com can keep your tax return and other information so you do need to upload it to each individual lender but, with your permission, make it accessible to lenders of your choice. It can also keep appraisal reports and other lengthy reports that ordinarily cannot be email because of being too big for email delivery. This service is 100% free). The appraised value will have strong bearing on the final approval. It can make or kill deals. In many cases it is easy to get done based on income and recent sales. Sometimes it is very hard to ascertain value before the appraisal is done. The appraisal can be the wild card for high LTV loans and you should discuss it with loan officer at length.

6. Get loan quotes and LOIs- When lenders have enough data the lenders will issue you quotes and LOIs. Insist on quotes being in writing. Do not pay any attention to verbal quotes and be very skeptical of quotes coming back too quickly and without lenders full understanding of your loan request. Also insist on lenders conditions in writing. No lender gives any commitment at this step. Commitment comes only after an appraisal is done and the lender verified all your information. Many lenders ask for money prior to issuing a commitment letter. Try to avoid it and do not give any money until step 8 is completed
7. Compare quotes and conditions- The control center help you sort out and compare commercial loans offers. In addition to interest rate terms and prepayment penalties you should watch out for the conditions. If a condition is impossible to fulfill ask the lender to remove it or re-quote the rate and terms without it.
8. Conduct due diligent on the most promising lenders- At this point you will have a fairly good idea who can do your loan. Many lenders will be eliminated in steps 5-7. Now it is your turn to find out about the qualification of the runner up lenders. Get references from people who dealt with the lender in the past. Also try to get the identity of the actual investor. Keep in mind that the loan officer you have been talking with can be very friendly but he may not know the company lending ability at any time and he is not the one who decides your loan. You particularly want to find out what loans the lender funded in the past 1-3 months. An important factor is the property value. Appraisal is ordered only after an LOI is signed. Get the lender opinion of value on what the appraised value should be as it will have strong bearing on the final approval. It can make or kill deals. It is therefore very important to get the lenders opinion on the value prior to signing the LOI. The appraisal can be the wild card for high LTV loans and you should discuss it with loan officer at length.
9. Negotiate for optimum terms- If you have 2 or 3 lenders at that step you can try and negotiate with each one a better rate/terms or condition removal. There are many books written on the subject of negotiations. The best negotiation is done when you have knowledge. When you know the rules you are case over the situation. Every loan can be negotiated, sometimes very little sometimes to large degree. This step depends also on general market condition the eagerness of the loan officer and the lenders and your ability to communicate with the knowledge of your situation.
10. Proceed with the winning lender but keep the runner up on standby. – A loan is not done until it is funded recorded and closed. Lenders can go out of business or change their mind or just be too slow for your needs. Keep good communication with all the runner ups- you may need to switch lenders and as bad as it sound at least you will not have start at step #1 but back at step #9

The subject of commercial loans is large and this article does not try to replace the vast knowledge about commercial lending nor does it give any legal advice or opinion about any particular lender, program or qualification. Lendinguniverse.com is neither a broker nor a lender it provides services to borrowers, brokers, lenders and service providers with the intention of making commercial lending more efficient to all parties involved.