HomeSTORE COMMERCIAL LOAN BROKERS

Commercial Real Estate Loans

Help For Small Business Owners-SOLUTIONS TO:

Mortgages By Property Type

Commercial Mortgage Broker Training

Commercial Mortgage Loans Misc

Commercial Loan Underwriting



Typical commercial real estate loan underwriting parameters come down to cashflow, loan to value, credit worthiness and property analysis.  Although the process to evaluate a potential commercial loan is basically the same from one bank the next, their various tolerances for risk is what separates one bank from the other. 

Commercial Underwriting - Loan to Value

 

Loan to value is simply the value of the subject property versus the loan amount.  I.e if the property is worth $2,000,000 and the loan amount is $1,500,000 the LTV is 75%.  This is a huge issue within commercial underwriting and a big separator between lending institutions.  Some lenders will get very aggressive with this, while other will be very conservative.

The property type has a major influence on loan to values that are offered on commercial loans.  For example restaurant loans will normally be capped at 65% while more general purpose properties such as retail will be limited to 75%.

Commercial underwriters will give more sway to buildings that are owner occupied vs being an investment properties.  Loan to value on purchase can go as high as 90% on owner occupants vs 75% on investments. 

Underwriting Commercial Cashflow

Cashflow is paramount to underwriting commercial loan requests.  Within the business the cashflow analysis is refereed to as the Debt Coverage Ratio.  For both owner occupied and investment deals underwriters normally want to see ratio's above a 1.25.  In other words, for every $1 of mortgage debt the property or business has to have $1.25 of net income to meet the mortgage payments. 

Debt coverages minimums vary from one lender to the next, property type and occupancy (investment or owner occ).  "Riskier" property types such as hotels or car washes will be required to have higher cash flow levels, ie DCR at or above 1.4. 

Credit Worthiness

The borrowers personal and business credit worthiness will be scrutinized.  Personal credit scores have become a bigger issues as the acceptance of the three bureau have become widespread.  D & B's as well as other measures are normally used to asses the creditworthiness of businesses that are involved. 

Property Analysis Commercial Underwriting

Fair market rent and fair market value is heavily measured.  Condition, age, appearance,  town population, market trends etc are examined while the commercial loan underwriting process is completed.   

 

 Commercial Lender List See Our Commercial Lender List  


















 

 

Other Related Commercial Loan Programs:

General Topics Related to Commercial Financing:


:: Top Funding Bank/Lender List :: SBA 7a Loan, SBA Commercial Loans :: SBA 504 Loans :: Fixed Rate Commercial Mortgage :: NNN Loans, Non Recourse Financing :: Hard Money Commercial Loans :: Commercial Hard Money Lender List :: Commercial Mortgage Refinance :: SBA Financing, Background :: Commercial Loan Applications :: Small Business Loan Help, Start Here :: Dealing With Bankers :: How To Research Banks :: Over Leveraged -High LTV :: General Purpose Property Loan :: Special Purpose Property Loans :: STORE Commercial Loan Broker :: Commercial Broker Fee Agreement :: Commercial Mortgage Book :: Commercial Loan Training Course :: Owner Occ Spreadsheet :: Commercial Loan News :: Resources Links :: Recently Closed Loans :: Newsletter :: Contact Us/ About Us ::

Follow jeffrauth on Twitter  


  bib80bg_1_.gif 

Commercial Finance Advisors, Inc.

261 E Maple Rd
Birmingham, Michigan 48009

 





© 2010 All Rights Reserved