Applying for a commercial loan doesn’t have to be a daunting task. With the right amount of preparation, you will be surprised how easy it can be to finally have your business backed by a commercial loan. To help you get started in preparation, here are some tips on how to get your commercial loan application approved.
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The first thing that you need to know is that lenders conduct pre-qualifying of potential borrowers. This is to evaluate the applicant’s financial history, credibility, and income. Some factors that they take into consideration are the purpose for the loan and existing debt. Once this step is done, the applicant can now submit an application form.
Just like any other applications, you will have to do some paper work and documentation to prove that you are worthy of their time. An example of paper work that you need to keep in mind is presenting a business plan that includes projected earnings and profit. Personal tax returns, liabilities, and personal financial statements also need to be prepared so they have the documentation needed as basis of your income and creditworthiness.
After the application, the lender will have to review the applying your credit history, income, and collateral. Most of the time, collaterals that can be used in a commercial loan include bonds, real estate, stocks, as well as other high and guaranteed items. It is a requirement to have collateral since this can boost the lenders confidence that you have the means to repay in case you are not able to meet the loan obligations.
Once checking of credit history has been completed, your loan application will be forwarded to a loan committee or a loan underwriter. Their main purpose is to review whether they have to approve or deny the loan according to the submitted information.
After considering your application, the processor will present you a letter of intent or term sheet which needs to be approved as well as signed. This set of documents is where you’ll find the terms of the loan, which includes the type of collateral applied to the loan, the total amount to be financed, and the repayment terms. This way, both parties can be ensured that they agreed on the same terms and conditions.
For any inquiries about commercial loans, don’t hesitate to check out Capitalize. Visit their website and learn why a lot of businesses in Singapore trust their company.
