Business Commercial Financing Loan-Your Net Worth Impacts Your Loan

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What do lenders look for when underwriting a business commercial financing loan?
Many people believe when you apply for a loan for commercial property that the underwriting analysis is solely based on the strength of the real estate. Well, you couldn’t be more wrong.
Commercial lenders also looks at the strength of the borrower. One of the credit analysis the commercial lender performs is an evaluation of your personal net worth. Personal net worth is established by determining between the total value of all your assets minus the entirety of all your liabilities. Analyzing a borrower’s personal net worth begins with reviewing three years of personal financial statements that include your balance sheet and your income statement. In assessing your personal networth, the lender will also ask for supporting schedules and other documentation like your credit report.
Your personal financials will show the details of the equity values of your properties and balances of your liquid assets that are stated on your primary balance sheet . The credit report will show the particularities of the liabilities that are listed on your balance sheet. The commercial lender will review your credit report not only to determine debt ratio and quality of your credit but to also compare your list of creditors to your balance sheet. If there are any debts missing from your balance sheet, the commercial mortgage lender will add the debtors from your credit report to your financial statement so they can come up with your net worth.
Commercial lenders prefer your balance sheets to be audited by a certified public accountant. The reason commercial lenders favor your financial statements to be audited is that borrowers typically exaggerate the value of their assets. If you do provide an unaudited balance sheet, be aware that the lender will very likely adjust the total worth of all your assets down to a more sensible number.
Please be aware that If you decide to omit critical financial information to the lender, the lender will most likely loose interest in your commercial loan application.
Click on the YouTube Link NOW to find how your net worth impacts the amount of your loan for commercial property.
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Author: admin

Here’s A Little Bit About Me. 20+ years in the finance industry, I rose to the level of Assistant V.P. with Chase Manhattan. While working for Chase, I decided that I wanted to have residual income without having to quit my job. I bought my first apartment building in 1996, three days before my wedding.

In 2001, I decided I would leave the corporate world and work for myself in a net branch environment.

My passions are helping people get commercial mortgage loans. I also am passionate about investing, working out and being with my family and friends.