Have you ever met someone who seemed to live a charmed life? No matter what this person did, the situation would always turn out in his favor, and you wondered what he was doing differently from you. So he got the girl you always secretly loved, they live in a beautiful house you could never afford, and they drive fancy cars, and everything he touches seems to turn to gold. What are you doing wrong? Chances are it’s not so much what you’re doing wrong as what he’s doing right. He has been able to grow his commercial businesses because he knows the pitfalls of applying for a commercial construction loan and he can avoid them.
1. You have always worked with lenders who have not required you to have a specific business plan. You know it’s easier to buy commercial real estate if you have some freedom to handle transactions as opportunities arise.
2. Never use personal property as collateral for business loans. It keeps your personal finances and business accounts completely separate.
3. Avoid balloon payment loans while choosing those lenders that will give you long-term options with more favorable terms.
4. You know that if you’ve had a bad year and your most recent tax returns don’t show a favorable balance between money earned and money spent, you should get your loan through an established income lender. That way your tax records will not be required.
5. You know the types of businesses you’re most likely to get real estate loans for and target those. Lenders like to finance real estate acquisitions of apartments, retail stores, and office buildings. They are less likely to help you if you are trying to build or buy something like a funeral home, church, or assisted living facility.
6. You never take out a larger business loan than you really need to buy the property you’re looking for, because you know that lenders don’t favor loans that exceed the price of the property.
7. Choose a lender that does not require asset sourcing and preparation. What this means is that the lender will want documentation of where the down payment came from and will require that you hold the funds in a specific account for up to 6 months.
Using a little financial savvy can help you turn your business dealings around to the point where you’re living that lovely life you’ve dreamed of. Research the pros and cons of applying for business loans before contacting a financial institution about the money you need.