Part 2: Determine Whether or Not You’re Speaking with the right Lender Types
Investors and small business owners have a common need for commercial mortgage financing. Unfortunately, many find it difficult to get approved by their local bank.
However, if you’ve recently experienced this type of challenge, you can take steps to improve the chance of success on your next application. In part 1 of our series, we argued that the first step a prospective borrower should take after a bank denial is to determine the root cause of the rejection.
Once you understand why your request was rejected, the next step is to determine whether or not you can fix the problem in the near term. If not, you may need to expand your lender search to include more flexible, alternative lenders.
Taking the Second Step
Borrowers are typically able to correct many of the issues that keep them from securing commercial loans. But they may not have the time to do so.
For instance, a credit score can increase gradually as an investor lowers their debt and consistently pays their bills on time. But if that investor is trying to take advantage of a short-term real estate opportunity in their market, they may not be able to improve their credit situation fast enough.
In those cases, it might make more sense to accept a slightly higher interest rate and partner with a lender that accepts a lower minimum credit score.
On the other hand, some rejections can be remedied with a simple adjustment of the initial request. Perhaps a prospective borrower can lower their requested loan amount or adjust the terms to better fit a lender’s comfort zone.
Of course, many borrowers are rejected for reasons they can’t correct. Here are just a few examples:
- The real estate in question is not one of the bank’s eligible property types
- The borrower is an investor who cannot accurately prove their income through tax returns
- The borrower is trying to refinance a property they recently purchased
If your commercial loan request was rejected for one of those reasons, then you may need to adjust your search to include more alternative lenders like Commercial Direct.
Commercial Direct’s loan programs were designed with small business owners and investors in mind. The added flexibility applied to both borrowers and their properties can make a real difference for those credit-worthy individuals who still face rejection from traditional lenders.
If you’re currently struggling to work with banks, it might be time to consider a customized loan solution from Commercial Direct. Simply visit our Loan Customizer and begin designing the loan request that best meets your needs.