Preparing for a Bridge Loan: Everything You’ll Need
Whether you intend to run a restaurant, open a storefront or provide some other type of service, running a business requires property for you to work in. Securing commercial real estate financing is often harder than receiving financing for a residential property but it is not impossible. If you have everything you need before you apply for a bridge loan, you are more likely to be approved.
Begin by researching your potential lender. You’ll want a solid understanding of the lender’s criteria for approving a loan, its related fees, current investment interests and most recent approvals. If you can’t find the information on your own, it is perfectly acceptable to call the company and ask. If possible, work with a company that specializes in providing bridge loans for commercial properties.
Next, you need to research your potential property. If it has a lien or pending foreclosures on it, you aren’t likely to be approved for a loan. Once you determine whether it has liens or foreclosures, the property must go through the proper valuation process. This means a reputable appraiser should provide a full inspection and provide all information under a strict code of ethics. He or she should let you know if there are any environmental issues such as toxic mold that requires remediation efforts. If your appraiser does provide you with such information, your ethical responsibility is to alert the lender to the issue.
When speaking to the lender, you must provide a detailed description of the property. If you intend to put up collateral property for commercial real estate financing, you must also provide a detailed description of the collateral property. Its value is more important than your personal credit when applying for a hard money loan.
Additionally, you must provide a thorough outline of how you intend to use the financing if you receive it. You should also include information about how you intend to repay the loan. Don’t forget to factor the interest rate and repayment time into your equation. Be sure to mention any assets as well as any existing or potential business partners.
Finally, give your potential lender a financial analysis. Include your company budget, current market trends, equity and financial projections. The lender wants to see that you can guarantee repayment if it puts its money into your property.
Because it is important to write detailed and professional plans when seeking commercial real estate financing, consider hiring a professional to help you create your plan. This will make it much more likely that your loan request is approved.