Commercial Loan DocumentationBanker Resource
August 28, 2012 — 1,420 views
Much like applying for a home loan, securing a commercial loan can be a long and drawn out process that involves plenty of critical documents. Companies looking to lease funds for a corporate property, financial processes or even start-up capital need to be well-versed in commercial loan documentation.
If you are a banking or lending professional in charge of purchasing or loan operations, consider some of the following documents you must fill out to successfully apply for a commercial loan.
Rent roll or schedule of lease - This document outlines specific dates when particular payments are due, such as up-front down payments and closing costs at the termination of a loan.
Tax returns - The guarantor must provide a three-year history of tax returns leading up to the current timeframe of the loan, including personal statements, residential loan applications or any other related financial documents.
Purchasing contract - If the loan is being taken out in the expectation of purchasing something like a corporate office, a contract must be created to document the intricacies of the sale. Important information like asking price, interest rates and outside guarantees should be included.
Credit reports - While this normally falls within the lender's responsibility, a company should have a back-up credit check on record in case a current one is unavailable.
Appraisal - A company will need all of its current assets valued by an official appraiser, and the resulting information must be officially recorded in a notarized document.
Insurance and payoff information - All companies should have some form of financial insurance, so data on a respective carrier and corporate plan must be available. Any slush payoffs should also be explicitly documented.
Pay stubs - An individual will need the past 30 days of pay stubs, while a corporation must provide the total pay stubs of all applicable employees, whether full-time, part-time or freelance.
Hire a professional
When applying for a commercial loan, the best practice is to hire a lawyer, attorney or other financial professional to draft up the majority of these documents for you. As these professionals are experts in the field of negotiation, they will be able to construct the terms of the loan in a way that is most advantageous to you and your company. As long as you make sure to obtain all of the documents outlined above, you should have no problem securing a hefty financial loan.