What Commercial Lenders Look For

Whether you are looking for a building to purchase or need to remodel your existing facility, there are times that you will need cash for the property that you lease. There are several criteria a bank will consider before they offer you a loan to pay for your expenses. Here are a few items that commercial lenders look for before they will give you money. 

Age Of the Lease

The length of the leases that you have with your tenants can be a deciding factor when you are asking for financing. When you do rent a space out, consider offering long-term agreements instead of a few months or years. If you have rapid turnover in your building, the bank will be less likely to grant you a commercial real estate loan. Review the contract that you have and decide whether it would be beneficial to amend the length of time listed on it. 

Where The Property Is

Financial institutions are more likely to give you money if your property is located in an urban or metropolitan area versus a rural setting. Facilities that are located in a city will attract tenants more frequently since their client base is larger in that area than if they were in a small town. As you look for commercial real estate to purchase, consider staying where the population is higher. This is also where you will have more luck finding someone to rent from you. 

The Type Of Tenants Who Are Leasing

When you apply for this type of financing, the lender will look at the history of the people who rent from you. They will analyze the length of time that someone has stayed in that location. If it seems that a space is open in your facility frequently, they will be concerned with the cash flow that you are getting from the property. This can directly affect your payment on your commercial real estate loan. They will also study any damage reports or renovations you have had to complete due to disruptive tenants. 

The Financials Of the Borrower

Another important factor that the lender will consider is your own financial records. They will look at the experience that you have managing property. They will analyze your credit rating as well as the financial documents that you provide with your application. They will search for assurance that you have a steady income from your commercial real estate and can repay your loan.