For those seeking commercial finance; finding the right lender, the right agreement and obtaining the ideal sum can be a difficult task. With bank and high street lending still struggling to improve, the worry of hidden charges, fee hikes and unsettling theories of a triple dip recession; it is not surprising why many small and medium businesses are led to believe that obtaining a commercial finance loan is impossible.
Albeit, there remains a difficult barrier between business owners and lenders; obtaining finance is not an impossible feat; even for those who may have suffered previous loan rejection, bankruptcy, arrears or county court judgements. The commercial mortgage broker is the alternative lender which has proven its capability, strength and trustworthiness to be considered the ultimate source of finance.
In comparison to banks and the high street lender; the commercial mortgage broker is willing to work for of any sized business, of any background and facing any struggle; in order to procure the ideal financial agreement.
Is your business in need of commercial finance? Have you faced previous rejection or any other financial difficulties? Than research your options and ensure you remain aware of the criteria imposed by the alternative business lender in a bid to improve your chances of obtaining that desirable commercial finance.
Requirements will naturally vary from lender to lender however; the commonly agreed criteria and information requested during the commercial mortgage application process may include the following;
- Personal Bank Statements (Length determined by lender)
- Business Bank Statements (Length determined by lender)
- Credited Accounts (Length determined by lender)
- Cash Flow Projections
- Business Plan
- Credit Score- This is a numerical figure that will indicate the credit worthiness and risk level of the borrower. A poor credit score may make obtaining commercial finance, greatly difficult however; although some lenders will demand a clean credit score, others are willing to assist those who have adverse credit.
- CCJ’s- Tough economic times will no doubt have left many small and medium businesses with county court judgements. For many lenders, business owners who have CCJ’s of less than £1,000 or CCJ’s that are twelve months apart and can provide a worthy explanation, may still be viable for a commercial loan.
- Bankruptcy- Bankruptcy will declare a borrower as far too much of a risk for any lender however, if a minimum of three years has passed since the bankruptcy declaration; than a commercial loan application may still be processed.
- Other Financial Agreements- Does the borrower have other financial agreements including loans and mortgages? If so, lenders may demand to see whether payments have been made on time.
- Business History- Lenders may ask for details of previous business experience. Should the borrower have been previously associated with a company that has suffered financial strain, than the possibility of obtaining commercial finance may decrease.
- Guarantee- The lender may ask for some sort of personal guarantee from the borrower, to secure the loan payment.
- Debt Service Coverage Ratio- The lender may need to determine the DSCR of the borrower in order to determine whether the business in question can support the loan repayments.
The above are a few of the common loan criteria that is used to determine the risk level and worthiness of a commercial mortgage application however, the exact requirements will vary from lender to lender.
For those considering commercial finance, yet unsure whether an adverse credit history and adverse commercial background may hinder any opportunity; it is wise to research a range of commercial mortgage brokers, the specific lending criteria of each and the capability your business may have of obtaining commercial credit.
For those who have suffered previous financial difficulty and application rejection; all is not lost. In the hands of the right lender, even the most struggling business can receive the financial support required to ensure a successful commercial year.