As the Covid19 pandemic sets ablaze, various financial institutions, from large-scale enterprises to small local businesses, struggle to make ends meet. While some are making a resilient recovery, some are barely surviving. Small business loans are the viable avenues that can help your business grow, develop, and expand into new territories, enhancing your operations by allowing you to hire new people and much more. Commercial lending provides monetary assistance to your business by finding the “right” deal, managing the loan underwriting process, legal teams creating loan documents, and servicing the loans. The commercial underwriting is undertaken on the commercial lender’s implicit credit policies and guidelines. The commercial lender or the insurance company would underwrite each commercial mortgage request according to its merits. The lender often looks at the portfolio, determines the saturation level for the specific property type, and other related projects in the area, and either approves the commercial loan request or denies it. With transparency and access to data and great competition, the commercial loan underwriters compete for tiny and tinier margins to form upstage the competitors and capture the small balance loan market to generate greater volume and profits. Creating an easy infrastructure for potential borrowers to submit documents and receive approvals helps lenders acquire a competitive advantage.
How to secure a commercial loan?
Securing a commercial loan is not a cakewalk. To qualify for a commercial loan undertaking smoothly, here is an overview:
Screening the business loan qualifications
The borrower’s journey through the commercial loan underwriting process starts with a meeting or call with a loan representative. Depending upon the underwriter, inquiry regarding your business and other commercial undertakings. So, expect to answer a few questions to serve as an overview of your finances and objectives. You will be asked things like:
- What does your business do?
- How much funding do you require?
- How do you plan to utilize the loan funds?
- How is your credit score?
- What are your interest rates and repayment expectations?
Based on the information, you receive a recommendation as to whether you’re a good fit to apply for a business loan or not.
Completing the loan application
Once you get the conviction regarding the type of loan, enter the actual loan application and documentation phase. A little proactive planning and knowledge of financial goals make way for the smooth processing of the bill. Fill your application with self-reporting credentials like- credit score, tenure of business, or annual revenue of the business.
Providing documents for loan underwriting
The next step in the commercial underwriting process will be compiling the paperwork and documents for necessary undertakings. Lenders often use risk management software to help actively manage risk. The software approach and methodology take a proactive approach. The documentation requirements will vary among online lenders and traditional bank lenders.