Commercial Real Estate Loans: Approaching the Commercial Lender

You’re searching for commercial real estate financing - what’s the best approach to take in contacting lenders?

1. The loan amount and terms you’ll obtain will vary greatly, depending on different property characteristics.

When you contact the commercial lender, try to have as much of the following information as possible available:

1)      The sales price or estimated value of the property

2)      The loan amount desired

3)      The property type, including approximate age of the improvements, square footage, lot size, and in the case of apartment buildings, the number, size, and types of apartments, who pays utilities, and what the parking arrangements are.  In the case of commercial properties, the tenancy, and when leases expire.  If the building is occupied by, or being purchased by an “owner user” type of business/borrower, try to find out what the same space would rent for on the open market.

4)      The income, and what expenses the owner pays. 

5)      The borrower’s credit, overall financial situation, and other properties owned. 

Lenders are interested in how much other property your borrower owns, and what, if any, experience your borrower has in managing the type of property being purchased.

6)      If the property is owned by an LLC, Corporation, or other entity, be ready to

provide basic information about the financial standing of that entity, as well

7)      If possible, try to find out what properties are adjacent to the subject property.  This can be helpful in identifying possible environmental concerns.  (Relating to chemical seepage from adjacent properties.)

With this information, the lender can indicate if the loan request fits their lending criteria, and if so, what other information is required.  In many cases, the loan officer will prefer to drive by the property before any more information is gathered, and sometimes before loan terms are even quoted. 

Want to get the commercial loan officer on your side right from the start?  Of course! 

Try this:  Take some digital photographs of the front, rear (if possible) and sides of the building.  Then, take a photo of what’s on either side of, across the street from, and in back of the building.  Type up a brief two page narrative description of the property and your loan request.  This gives the loan officer a simple description of the property, the  borrowers situation, and the need for financing.  You can even provide rent rolls on apartments and information about leases and expiration dates on commercial buildings. 

E-mail this information to the lender, requesting a response.  Providing this information

1. Not only will the lender see that you know what you’re doing, you’ll get a faster, more accurate response to your request.

As you work repeatedly with the same lenders, you’ll learn what type of information they  require to consider a loan request.  Building relationships with your commercial lenders will be a great help in closing commercial loans.  You’ll find that many commercial loan officers have a significant say in the final approval of your loan request.