Getting a Commercial Building Loan Through a Private Lender

You may consider contacting a private lender if you are in need of a commercial building loan and unable to secure funding through public sources. Private lenders, such as banks and private investment groups, have the money available to assist you in your building project. They can provide you with the amount that you need to construct or renovate your commercial building.

Here are a few steps that you should follow in order to obtain a loan from a private lender. This process can help you prepare for the lender’s requirements and position yourself in the best possible light in order to obtain the funding.

Step 1: Contact a Private Lender

The first step to obtaining a commercial building loan is by contacting a private lender. It is a good ideal to contact several lenders in your area as a way to compare rates and determine which one has the best loan terms. Your comparison should be based on loan interest rates, length of the loan, terms, conditions and any collateral requirements you may need to meet in order to qualify. Meet with at least three lenders for a broad selection of lenders to establish the best terms for your purposes.

Step 2: Present the Need for a Loan

After selecting the lender, you will need to establish a valid need for the loan. This is usually done during the application process. Bring any business plan or financial statements with you that can help you present your business need. For example, if you have new orders you must process, but do not have the space for it, present your lender with the purchase orders. Show how the commercial building loan will provide a benefit to your business and help increase your revenues.

Also, keep in mind that new building construction tends to have more value than renovating an older building. Renovation of old buildings is typically more expensive than using a new structure.

Step 3: Demonstrate Ability to Pay the Loan

Ultimately, the lender wants to be assured that you will be able to pay the loan. Your financial statements should also reflect a reasonable amount of income. Show the expected earnings, due to the proposed commercial building loan. Being able to demonstrate your ability to pay the loan will give the lender assurance that you are creditworthy and should lead to loan approval.

Preparing yourself before your select a lender and providing the necessary information are key in obtaining a business loan through a private lender. Take the time to do all of the necessary homework and be clear about any loan requirements before your complete the application. Following these steps should help you in the pursuit of your commercial building loan.