Business Loans

Why hire a professional to structure your business loan?

As commercial funding experts we often talk about the value of having a professional structure the loan.  What exactly is “structuring the loan” and why does it matter?

Structuring the loan is a part of preparing the loan package to be reviewed by the lender.  When a borrower goes into a bank to discuss a loan, the loan officer will ask many questions and request many documents.  The borrower then brings or emails the required information to the loan officer.  If the loan officer simply forwards this information to the underwriter, it is up to the underwriter to analyze the numbers and try to figure out if the loan makes sense.  “Structuring the loan” is what experienced, professional financial loan experts do to show the underwriter why the loan makes perfect sense.

We analyze the numbers and provide the lender with the critical ratios so they can make a decision without having to dig through the documents to see what is there.  We know what numbers are significant to the lenders that we have working relationships with.  We know how to put the assets together to show the full value of the deal.  We know how to show them what they need to know, saving time for the lender, and saving time for the borrower.

Structuring the loan is also critical in getting the loan amount requested.  Lenders base their decisions on LTVs, loan to values.  By understanding the entire project and the goals, we are able to incorporate assets, equity, cross collateralize if necessary, to provide a lower risk scenario which is more desirable to the lender.

Structuring the loan is one element of preparing the loan package.  Structuring is very important to the lender and will determine whether the loan is approved or declined.  It is worth paying an expert to do the structuring if you are serious about getting your loan.

All the time business owners call us for a loan and they need the money right now, this week.  Commercial loans do not happen that fast.  Yes, a hard money loan can happen in less than 30 days if all the documents are complete and ready for submission the day of the first phone call.  This is rarely the case.

Sometimes it takes business owners several weeks just to gather their financial documents and tax returns.  (Lenders require a solid business plan, including projections of revenue for the next few years.)  If an appraisal is required, that takes a minimum of three weeks and up to six weeks to complete.  All these items must be complete before a decision can be made by a lender.  Only then does the countdown to closing begin.

So, as a business owner, please be aware that a commercial loan takes at least 60 days to close, often longer.  Plan accordingly and call sooner rather than later.  Don’t put it off always plan for your business.

Author: Ken Garratt

Ken Garratt is Marketing & Sales Manager and he writes for www.fundingapproval.com When Banks say, “NO” call a commercial broker.

How To Qualify For A Business Loan

Before you apply for a business loan you need to make your business look like a very sound investment. Here are a few ideas to help you qualify more easily.

Qualifying for a business loan is not as easy as it was even one year ago. This is because most lending institutions have increased the requirements for businesses requesting a loan. The recent slowdown in our economy has forced banks to re-examine their lending practices as many businesses are experiencing lower profits. So when you are looking for a loan for your business it is important that you have everything in order so you will have the best chance to be approved.

One of the first things that you need to look at before going to a lending institution is whether or not you have a good business plan together. Having a business plan drawn up for your company is a great way to show the bank that you have carefully considered your request. This will show the bank where your business is currently and where you hope it will go once you have been approved for a loan. There are many professional writers that work as freelancers that have the expertise in this area that you can hire if you are uncertain about your ability to convey your thoughts on paper.

The next thing to do before you go to a lender is to look at your company’s financials. Clear as many debts as you possibly can. For example, if you use a credit card start paying it off monthly or if you have a vehicle loan with just a few payments left on it you might want to consider paying it off. This will help your income to debt ratio and make your business a more attractive prospect.

Once you have done that, you should look at all the officer’s credit reports. Every officer of the company will have a credit history run on them because they will be personally guaranteeing the loan. So make sure that the person income to debt ratio is good and clean up any bad marks against your credit.

When you have all of that together you are now ready to go to the lending institution. With the situation the way it is currently it would be wise to start with the bank you already have a relationship with. This is especially true if you have a community or local bank. They make their decisions based on the local area unlike the larger national banks. If your company is turned down don’t take it personally but consider your other options.

There are other places to gain access to a loan. You need to keep your eyes openFree Articles, when the private market tightens the amount of money they are willing to lend oftentimes you can more easily qualify for an SBA loan. So if your bank says no don’t give up to easily especially if all of your financials are strong. So when you are looking for a business loan make sure that you have your company looking the best that it can financially and present the lenders with a solid business plan.

Author: Craig Thornburrow

Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on a small business loan and home business loan at http://www.businessloansadvice.com