Securing any type of real estate or business loan is a process that can take some time to complete especially if your approaching the wrong lender. Lending institution call for all types of personal and business documentation to ensure you qualify and are able to sustain the loan payments. For a faster and smoother loan process, it is essential to first have everything that a lender may ask for, ready before you apply. Every lender has different requirements and check lists to complete an application but below is a checklist of the items you may need for your loan and should have prepared before applying. (Not to worry as we also have No Doc loans.)
What You Will Need for a Real Estate or Business Loan Application
Business Plan/Executive Summary
If you are applying for a real estate loan or a business loan, it is important to organize your request and expectations in the form of a business plan or executive summary. The business plan or executive summary can be as simple as one page which shows the lender that you are organized, have thought about the loan, and have outlined both short-term and long-term goals. You plan should also discuss how you plan to achieve these goals.
In your business plan, discuss your target market, the business model that you use for marketing, budgeting, competition, financial projections, and the executive team along with their duties. Include every needed so the lender understands your strengths and your loan requests.
Be prepared to provide your general information such as name, physical and mailing address, social security number and your telephone number. You may also be asked how many years you have lived at this address, and possibly former addresses up to ten years. You may be asked to provide a photo copy of your driver’s license, passport, or even your social security card to be included with your application. Not all lenders require the last two items, but some do.
Gather the basic information about your business. Have your business location, the tax ID number, and the number of employees. You may also be asked to provide a lease agreement if you’re leasing the space. If you’re in the process of purchasing the space, you may need to supply documentation of the sale and/or any purchase agreements along with any documents you may already have on the property.
Some lenders request information about the formation and development of your business. It is important to have your business formation docs, by laws, and/or your organizations operating agreement. This may also include business licenses, permits, contracts and agreements with other businesses, previous records of bankruptcy, or records of any legal claims pending, if applicable .
NAICS and SIC Industry Codes
For Corporate and Business loan you may also be required to provide the SIC and NAICS industry code that indicates the primary activity of your business. This is used by lenders to assess the level of risk assigned to your business. For example, businesses in higher risk categories may pay higher interest rates for a loan. NAICS and SIC industry codes may be found online.
Lenders will request both personal and business credit reports. While they will usually pull their own reports, it is important to obtain them in advance to check for any errors or omissions. By getting your credit report ahead of time, you can know where you stand, and you can address any problems in advance before applying.
When applying for a real estate loan especially a commercial loan and even a business loan , lenders may request a resume that details your business history and experience. At times you can simply provide a Bio of the principles which summarizes experience and any positive attributes that support your real estate or business functions. If you have a management team, it is important to include their resumes as well to demonstrate to the lender that you have a support team to ensure success and therefore limit the lenders risk.
Income Tax Returns
Lenders may request your personal and business tax returns for the past three years. Some lenders may accept two years and others non as they have a No Doc loan program. The tax returns provide the lender a good idea of your overall business performance. If you are the owner of 20 percent or more of the business, you are required to submit your personal tax returns, and you may be asked to supply tax returns for any others who have interest of 20 percent or more in the corporation.
Bank Statements for Your Business
Gather bank statements for your business for up to the last twelve months. These allow the lender to assess the cash flow of your business throughout the past year. If there are any inconsistencies, be prepared to answer any questions the lender may have. Some lenders may only ask for 3 months and others no bank statements at all. The requirements will depend on the loan you are requesting and the loan programs available.
P&L Statement and Year’s Balance Sheet
The profit and loss statement and balance sheet should be included as a part of the business plan for your company. Your lender may request these documents. They will detail operating expenses, business debt, revenue, accounts payable and accounts receivable. This may even be used instead of your most recent tax returns if you have not filed as of yet. Be prepared to answer any questions that the lender may have about these figures.
Whether you loan is for real estate which will be the collateral or the loan does not involve collateral, a lender may still require collateral to secure your loan. Know your collateral. Be prepared to identify the value of your real estate holdings and all business assets. They should be included in a real estate owned schedule or collateral statement that is to be submitted along with your business loan. If the loan request is not a business loan, be prepared to supply a personal statement of collateral that shows the value of your personal assets in addition to real estate assets. This information will usually be requested on a personal financial form provided by the lender if needed for the specific loan request.
Documentation of Existing Debt
Lenders consider any existing debt while determining loan eligibility. The amount of your existing debt could affect interest rates or even eligibility for getting a loan altogether. Depending on the limitations and underwriting guidelines debt to income ratios may be important. Have a list of all existing creditors along with names, amount owed, interest rates you pay, payment amounts, and balances owed.
In some cases, obtaining personal or business loans can seem like a long, drawn-out process, but going into the application process prepared can make a difference. Call us at (800) 611-2747 or send us a quick email at email@example.com and we will assist you along the way.
Each lender has their own requirements and we will ensure to create a loan specific for your situation. We look forward to speaking with you regarding your real estate purchase or refinance, structured business loan, and/or line of credit request. We make sure you receive the capital you need to succeed. We don’t provide denials only solutions. Call us today to have a free consultation. No dreams deferred, we are “AS IS” Loans.