Most Common Reasons Your Loan may Get Declined and How to Prevent It

October 27, 2017

Business

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Many components can contribute to a declined loan requested from a small business or owner of commercial real estate (CRE). Businesses may have challenges obtaining working capital or stuck in an unstable financing structure. Some common issues found when pursuing financing for a business are:

A business’s loan application is declined due to lack of income, credit of the principal, low appraisal values, and many more.
The bank calls in a business loan due and there is limited time to find another loan.
The bank restricts access to loans by implementing stricter loan terms or higher rates.
A business’s present loan situation limits the company from gaining access to further funding to support their own growth or to assist in paying ever-increasing bills.
Brief business complications make it difficult for the company to uphold loan contracts forcing the bank to put the company into workout.

It can be difficult for small businesses to find the right source to provide sufficient financing for their company or commercial real estate. Many companies fall short of conventional bank lending requirements and need other ways to fund their loan needs.

5 Tips to Help You Obtain Financing for your Business of CRE
With so many loan variables from traditional bank lending, it is essential to have creative methods for managing your transactions. Here are five steps to help you innovatively obtain financing for your loan:

Establish your purpose. What is your goal for the transaction? Is it to take out another lender? Get a lower rate? Get a longer term? Provide a working capital? If your purpose includes multiple goals, determine your priorities and start there.
Find a loan expert. It is important to find an expert with multiple lending relationships and not just a single bank or program.
Have the right documentation. Be prepared present the right credentials to underwrite your loan.
Be available. Recognize that you need to be available to discuss and coordinate layouts for your finances with your loan expert as often as possible.
Be patient. Know that your loan expert works for you! But they need time to negotiate multiple aspects of your transaction with many departments before they can close your loan.

Finding a loan expert with extensive knowledge and experience will help make you get the most out of your loan. An accomplished mortgage broker can help you with relationships and connections you didn’t know you needed. These brokers work regularly with lenders and underwriters that you need to help provide your financing. This will give you an advantage because your broker knows what lenders are looking for and can give you a running start on your finances. You should consider relying on a commercial mortgage broker to most efficiently utilize your loan opportunities and experience.