Sales of small commercial properties skyrocketed last year, according to Boxwood Means, with sales reaching a record level 11 months into 2015. A Scotsman Guide report states that sales of commercial and multifamily properties under $5 million totaled $82.4 million through November.
Purchasing the property from which they operate allows small business owners greater control over their financial situation, and now is a great time for brokers to focus on financing commercial purchases. Here’s the information you’ll need to submit a commercial mortgage purchase request to a lender:
Information about the property:
Collateral is an incredibly important piece of the lending puzzle, particularly for nontraditional commercial lenders. When submitting a commercial mortgage request, you need to include some information about your borrower’s property. Your lender will need to know the location, the size and the purpose of the property, as well as the purchase price. You should also include pictures of the property.
Your borrower’s credit report:
While commercial lenders who specialize in non-bankable borrowers will not have the same score requirements as the local bank, they will need to understand the borrower’s credit history in order to make a financing decision. Be sure to provide your lender with a recent, tri-merge credit report that includes trade lines.
The agreement of sale:
This document is necessary to get the deal moving forward. Send a copy as soon as possible, preferably with your initial submission, and make sure it has been executed by all relevant parties.
A summation of your borrower’s plans:
Your small-balance commercial lender will need to know your borrower’s plans for the business and the money. Include this information in the loan submission summary.
Proof of funds:
In order to approve a mortgage request for the purchase of a commercial property, the lender will need proof that your borrower has the money for the down payment, as well as where that money is coming from. Send over the relevant financial documents as early in the process as possible.
Purchasing a commercial property is an important step for small business owners across the country, so it’s important for broker to submit thorough and complete financing requests. Including the above information will allow your lender to evaluate your borrower’s situation properly and will make the process of underwriting and closing the loan simpler and faster.