Commercial Loans – How to Prepare for The Application Process?

Applying for a commercial loan can be daunting, even for experienced entrepreneurs. It requires a lot of documents and can take a long time to go through the approval process, depending on the type of loan. Although there are multiple quick loan alternatives, like hard-money loans (which can be approved in 24 hours), most loans take several weeks to get approved. Here’s what most lenders require if you want a real estate loan for businesses:

  • business tax returns
  • detailed books, records, and financial reports
  • details regarding collateral – typically fixed assets
  • third-party appraisal reports of the property
  • a detailed business plan
  • a minimum of the last three months of bank statements

Improving Your Chances of Getting Approved

Lenders pay attention to a lot of metrics to determine your chance of getting approved for a real estate loan for businesses. Many companies with poor credit face more obstacles when getting this type of loan. Other problems, like poor cash flow or previous defaults, may also stop you from getting approved. Here’s how to improve your chances of getting the money you need for your new real estate project:

  • pay off your existing debt and stop taking on other types of debt; this will improve your credit score
  • bring additional collateral if possible
  • add a partner or another investor as a cosigner
  • be willing to pay a larger down payment or a higher interest rate
  • create a better business plan
  • ask for less money – select a cheaper investment/property

Where To Go If You Want a Commercial Real Estate Loan?

So, where can you find the best commercial real estate loan offers? Here is a list including some of the most reliable providers:


Banks offer various commercial real estate loans for almost any type of property or investment. Typically, the loan size is capped at a maximum of $5 million.

Pros – banks provide a large variety of financial products, good interest rates, are very convenient, there are multiple discounts for existing clients, and there are various long-term financing options;

Cons – you will need extensive documentation, the approval process is slow, and you need a good credit score.

Commercial Lenders

There are many commercial lenders on the market that provide a variety of commercial loans to small and medium-sized businesses.

Pros – they are less rigid and faster than banks; the fees and the closing costs tend to be lower;

Cons – the interest rates are higher than banks, the loan cannot exceed ten years, and most provide only short-term loans.

SBA 7(a) Loans

These loans are backed by the federal government and are very attractive for business owners.

Pros – very competitive rates, terms up to 25 years, maximum loan amount of $5 million

Cons – long approval time, requires high credit scores.

Hard Money Lenders

These loans are designed for companies that cannot get other types of loans. They are based only on the value of the property.

Pros – you don’t need a good credit score, fast approvals

Cons – very high-interest rates, only short-term financing

Applying for a commercial real estate loan is easier than ever! Let us help you find the best deal for your next project, create an amazing business plan, and get the cash you need! Contact Urban Bay Financial to learn more about commercial real estate loans!