Commercial loans require specific qualifying information in order for a borrower to become approved and for the commercial loan to be dispersed. The applicant must include a statement of why they wish to purchase the commercial loan and their source of loan repayment. Information that should be included on a commercial loans application comprise of financial statements, property evaluation, and a repayment projection. Extra information such as construction plans and building specifications should be included as they apply to the commercial loan need. Commercial loans are not offered by every lender and mortgage brokerage. Those that specialize in providing commercial loans can be found in the phone book or using an Internet search engine.
In order for a commercial loan application to be reviewed, it is necessary for the borrower to pay a non-refundable commercial loan fee. This fee allows the commercial loan lender to study the usually extensive proposal of the borrower. Another reason, however, is to discourage frivolous applications from being submitted for commercial loans. A commercial loan is considered any loan that is not classified as residential. The largest difference between commercial loans and residential loans are the repayment sources. The borrower's income and assets are reviewed for qualification when receiving a residential loan. Commercial loans require the income generated by the property to repay the loan.
Commercial loans are often given to borrowers with the intent of the property income paying off the loan, and sometimes the borrower is not held liable if the property fails to repay according to the loan agreement. The property itself provides the collateral for commercial loans, and if the loan is not repaid, then the property is sold or auctioned for repayment. A commercial lender will first evaluate the property to confirm its worth before even viewing the borrower's income generating plan for the property. If the property is not worth what the borrower needs to purchase and operate the business, then the commercial loan is denied.
Commercial loans are still very dependant on the borrowers credit score to determine the interest rate. The lower the borrowers credit score, the higher the commercial loans interest rate. The higher the borrowers credit score, the lower the commercial loans interest rate. One of the best ways to improve an individual's credit score quickly is to pay down the balances on credit cards until they fall below 20% of their credit limit. This can raise a credit score up to 30 points within a 30 day period of time. Ideally, a borrower would like to have no balance on the credit cards.