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getting a commercial loan can be quite daunting, especially if you aren’t sure
what you’re getting yourself into. People always assume that it’s the same as
the process you go through to get personal loans. But it is quite a different
process all together.
Waiting can be frustrating, there is lots
of paperwork coming and going and it’s a long time before you can get your loan
approved.
One common way to do it is to use a
broker. So read this:-
When you submit your loan application,
the reviewer, who is usually called a loan officer, will check all the
paperwork you have submitted. He will check your credit history, income
statement and collateral. If you need to submit additional paperwork the loan
officer will let you know, you will then have to resubmit the application.
Usually loan applicants have to provide
extra information when it comes to certain types of loans such as, a loan for
purchasing commercial real-estate. For this you will need to submit things like
area environmental reports, area maps and appraisals.
When all the necessary paperwork is
gathered together in a loan packet, it is sent to a number of leading
institutions, who will check the documents and decide if they should be
approved.
This process can be made easier if you
use a broker. A broker may be able to make things proceed more speedily for
you. You application will then be checked by loan committees or underwriters.
They will provide you (the applicant) with a letter.
This is called the ‘letter of intent’ it
is just a preliminary-document which helps you (the applicant) and the
potential money lender to decide what exactly is desired by both parties. This
is an underwriting process. Extra paperwork might be needed, but it depends on
the situation. It usually takes about a week for the decision to be made.
The underwriter is always the best person
to contact when you need to negotiate important offers and terms. Things like,
interest rates and the repayment period.
After the money lenders make their offer,
you will need to go through the offers and choose the one which is the most
attractive in regards to your business. Once you have chosen an offer that you
like, you will need to sign your name to the ‘letter-of-intent’ from the bank
you have decided on. Extra fees and deposits may also be necessary to finish
the process of your loan application.
If your loan has been approved a closing
agent takes over and guides you through the many necessary formalities in order
to close the deal. Once all the paperwork is finished, you’ll get your loan
money as a check or it will be made over by direct debit, depending on what you
have agreed on.
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