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Formulating a Commercial Loan Request
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Formulating a Commercial Loan Request

The following headings are the typical sub-headings we like to see in a commercial loan request, which help to describe and explain key elements of the loan.

Loan Amount:

How much does the borrower need?

Does the size of the commercial loan make sense? Is the amount sufficient to really work in the long run for the borrower’s purpose? Is it too much relative to the security in place?

Source and Uses of Funds:

How will the commercial loan be used? How much borrower equity is there? How will it be used?

Term:

How long are the funds to be borrowed for?

Amortization:

Will there be principal repayments or will the commercial loan be interest only?

Security:

What is the security being offered?

A full description of the land and buildings that includes all of the salient information, namely: location; size of lot; age of building(s); size of building(s) (net rentable area and gross floor area if available); type of building; uses; tenant mix; market factors; accessibility; type of construction; any special characteristics.

Is there sufficient value? Will there be enough income to pay the commercial mortgage payments? If not, is there a way to make the commercial loan work by including collateral security? We help our borrowers create value – usually there are points in the process where the value is not yet realized – using collateral security is one way to bridge those gaps in time.

Borrower/Guarantor Details:

Who are the Borrowers and or Guarantors? What experience do they bring to this project? Any prior relevant experience should be described in detail.

Exit Strategy:

How will the commercial loan be repaid?

Coming to a full understanding of the deal quickly.

Understanding what the borrower needs and what will work best in the long run for all the parties involved means we have to conduct comprehensive due diligence that is sufficiently detailed to answer all questions that may arise. This will include a detailed review of borrower financial statements (3 years), operating statements on the property (3 years) and a careful evaluation of any proforma assumptions that may have to be relied on in the case of new development projects.

Typically this process takes a couple of weeks upon receipt of the information, so timely turn around is dependent on getting the information assembled quickly.
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