A commercial property loan can make refinancing or purchasing a new working space a lot easier. However, the entire process of having the application accepted is obscure, at best, for a lot of business owners.

There are many things that are taken into consideration by lenders, be it federal (banks) or private (investors, private lenders). In the remainder of this article, we will take a look at some of the most important things you need to have and prove in order to get a commercial property loan without too much hassle.

Lenders will look at:

  • Security

This is one of those loans that can be a little bit riskier because of what it is at stake. A commercial property loan is always fixed on any space besides your house. Your office, residential space or warehouse can qualify for security. This way, lenders ensure they will be able to get their money back should you default on the loan.

Before you decide on what space to use as security, think about how big you want the loan to be. The size of the space will impact the size of the loan directly. The bigger the space the loan is secured on, the more money you can borrow from that certain lender.

  • The Purpose of the Loan

There are four main types of commercial property loans: for working capital, for refinancing a leased property, for investments and for any other commercial purposes that do not fall in the former three categories.

Some of these are riskier for the lenders. Working capital and refinancing, for instance, are red-light purposes for lenders and this might affect how quickly you will get the commercial property loan you’ve applied for.

  • Proof of Income

This does not apply only to a commercial property loan. You will have to prove your income for any other type of loan you’ll ever consider getting. There are many options in this section, tailored for various circumstances. These are:

  1. Full documentation (the lenders will ask for your complete financial history)
  2. Low documentation (a statement from your bank will do)
  3. Lease documentation (when the lease provides more income than the monthly repayments)
  4. Forecasts (when the loan will increase the profits of your company)
  5. No documentation (no proof that you can afford the loan whatsoever).


  • A GSA (General Security Agreement)

If you don’t have enough equity in the property you’ve secured the commercial property loan on, lenders will ask for a GSA. This serves as a guarantee that they will get their money back in case of missed repayments or default.

Important Things to Know

  • Talk to the right lender

In order to raise your chances of getting your commercial property loan application approved, it is essential to choose the right lender. Moreover, going to a lender that has experience with loans that involve property and security might significantly improve your chances. Do some research and compare some of the offers you come across. Since every applicant is different, work carefully with your lender and try to agree on the best deal for your needs.

When you talk to your lender or fill the application given to you, it would be a good idea to present the facts in a light that would make the bank more interested. For example, highlight your good credit score.

  • Be open to suggestions

However, if your application is still not approved, do not give up and have another talk with your lender. It is important to understand the reasons for the denial and try, if possible, to fix them. Another good idea would be to offer your lender more information and build yourself a stronger case. Finding common grounds could be the key to getting your loan approved. Maybe the amount of money you are asking for is considered by the lender too big, so being open to suggestions might help.

  • Watch out for the extra costs

While negotiating the terms of your loan, pay attention to the interest rates; how high they are and if they will vary. Also, with a commercial property loan, there might be additional costs depending on the location of your property or its condition, for example.

Final Thoughts

A commercial property loan does not seem as easy to get now, does it? The process is quite complicated and long-lasting because this type of loan is no joke. It is a very serious thing that can get you into all sorts of trouble if not given the proper amount of attention.

Business Loans is a hub where many people find a solution to their problems. With us, you can also discover how to make a successful application for all existing types of loans. If you have any difficulties in getting yours, contact us for a free assessment and a suitable solution to your problems.

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