VIR Lays Down Tips to Secure a Commercial Real Estate Loan

Toronto, Canada, 2021-Nov-23 — /EPR Network/ — One of the most intimidating tasks is to ask for a commercial real estate loan. The result of the purchase is heavily affected by what the bank will say. Their yes or no is what decides their fate. But there’s no need to feel dejected. You can still improve your chances with a few critical steps. All you need to do is to think about it from the point of view of your banker. Question yourself about what will prompt them to extend the loan to you. When you do your homework before you meet your banker, it will automatically create a good impression on them.

Given below are some vital measures that have the potential to secure you a commercial real estate loan.

Showcase profitability – ensure that your business’s finances are in order. The most significant factor for availing of financing is possessing and expanding a profitable company. An organization showing no scope for profitability cannot hope to get financing. You need to showcase a good profit record. To improve your business’s profitability, first, evaluate it. Compare the gross profit margin and operating margin to the successful companies in your domain. Assess the profitability of diverse spheres of your business, like individual jobs, locations, services, and products. Only when you demonstrate a robust profit will the banks be interested in aiding you with financing.

Evaluate the needs of your space – Badly thought-out real estate requirements and needs will only push away your bankers from helping you. To prevent this scenario, assess your budget, location, and space needs. Find out if you want to purchase or lease and the manner in which you will be accommodating the forecasted growth. Most businesses fail to do adequate planning before investing in real estate. They often overlook future expansion.

When you are budgeting, consider the purchase price as well as the extra expenditure related to the property. If you overlook renovations, production downtime, due diligence costs, legal fee, and the like, it will only come as an unpleasant surprise later on.

Pay attention to your property – Apart from your business’s financial condition, the type of building, its age, condition, and resale prospects also determine whether you’ll be able to avail financing or not. If you don’t have a good property, it can lead to a very bad impression on the bank. If you don’t have a property yet, banks may agree to an initial meeting to provide you with some idea of the amount of financing they can give you. But this option can only work for those who have a good relationship with their banker.

Prepare all your documents – After you have decided about the property, get your documents in order. You’ll be needing them to show to the bank. These should consist of a fully updated financial statement and a robust business plan. You should also have all the information about the property on which you’ve set your eyes. Apart from that, you should possess an experienced and skilled management team. In a way, the whole process is akin to making yourself ready for an important interview. Everything depends on the first impression. So, always be well-prepared.

Discuss with your banker before bidding on the property – It’s important to conduct a meeting with your banker before you bid on a particular property. It’s particularly true for those who are new to the domain of commercial real estate brokerage Toronto. You can gain the advice of banks regarding their condition for financing. It can comprise of acquiring building and environmental conditions assessment, title research and an appraisal. It’s a wise idea to utilize approved professionals for this type of due diligence. Every bank has its own set of such professionals. If you happen to use some other person, it may be possible that your transaction will get delayed.

Buying a commercial property to enhance a present facility or develop a new one is not an insignificant commitment on your part. Your business’s access to a commercial real estate loan depends on various factors described above. It’s always a good idea to seek the advice of those experienced in this field to make a sound decision.