Information needed for preliminary review:

□       3 years personal tax returns
□       Personal financial statement
□       Credit report for each borrower
□       3 years business tax returns
□       2007 year end business financial statement (balance sheet, P&L)
□       2008 year to date business financial statement (balance sheet, P&L)

Information needed for a Letter of Interest:

□       Business debt schedule (if available)
□       Purchase agreement (if a purchase)
□       Proof of down payment if a purchase (bank statements, 1031 statement, etc.)
□       Loan payoff statement (if a refinance)
□       3-4 property photos
□       Brief business history bio
□       Brief borrower bio/resume
□       4506-t form – both for the business and personal tax returns for 3 years
□       Franchise agreement (if available)
□       Gas supplier/vendor agreement (if available)
□       Environmental reports and information (if available)

** For greater expediency, these documents are to best prepared by an Accountant or CPA.

When you submit your business loan application, it may seem like it disappears into a black hole. But understanding how the commercial loan processing system works can help reduce your anxiety.

The Process

1. While some lenders like to prequalify potential borrowers to determine how much they can afford. This will also give you and your lender an opportunity to see which loan program would be most appropriate for your needs.

 2. The lender will gather basic information, such as your income and existing debts. To initiate the loan process, you must then complete and submit a loan application.

3. Once your application is received, a loan officer or processor will review your credit reports, the amount of available collateral, and your income.

4. Your loan officer will determine if any additional documentation is required, such as personal financial statements. If you are purchasing real estate, you may also need to submit preliminary environmental reports, area maps, title reports, property appraisals, and lease summaries.

5. After your commercial loan package is submitted to the decision makers — either a loan committee or underwriter — the processor will present you with a “Letter of intent” or “term sheet”. This is a formal document intended to ensure that all parties involved (the lender and your company) are on the same page. The letter of intent may include the names of involved parties, amount of financing, type of security (collateral), and other key terms. Decisions are usually made in one to five days.

6. During the underwriting process, you may need to furnish additional documentation.

7. After all third-party reports are successfully completed and underwriting conditions are satisfied, the final loan package is resubmitted to the loan committee for final approval.

8. At this point the lender will issue a final full loan commitment. If your loan is approved, your closing agent, who may a title company, or escrow company representative, will receive closing documents.

9. Your closing agent will record or file deed transfers and mortgages, order title insurance, coordinate the exchange of funds, and arrange for you to sign the loan documents. Closing can take place within days of approval or underwriting.

10. At the closing, the lender funds the loan with a cashier's check, draft, or electronic wire transfer.

A commercial mortgage is a long-term commitment and, like a residential mortgage, will need to be paid off over a period of 15 years or more. However, if you don't make the repayments on time you will accrue additional interest and, if you continue to default on payments, the property can be repossessed.

In most cases you will need to have access to around 20-30% of the purchase price as a deposit. If this isn't an option, however, you could consider a 100% commercial mortgage (see below for further details on this type of mortgage). The lender will want firm assurances that you can meet the required mortgage repayments.

The amount that can be raised for a commercial mortgage is dependent on the total value of the property, the deposit you have available and the maximum loan-to-value ratio (LTV) that the lender is willing to provide. On average, the LTV is 70% of the market valuation. However, some specialist commercial property lenders will lend up to 85%.

Even applicants with a less than perfect credit history can still qualify to raise finance to purchase a commercial property. Provided any adverse credit issues have been satisfied, and your current business is healthy and able to prove loan payment affordability, raising a commercial mortgage can still be a viable option

Raising commercial finance can often be time consuming and, depending on how complicated your situation is, on average it can take anywhere from a few weeks to several months to complete the commercial mortgage process. However, complex cases can take much longer due to the number of variables involved.

Closing Costs Explained:

Origination Fees & Discount Points
The origination fee is charged for the lender's work in evaluating and
preparing your mortgage loan. Discount points are a fee you can pay to
"buy" a lower interest rate – the more points paid, the lower the
rate. One point equals one percent of the loan amount. For example,
one point on a $300,000 loan would be $3,000. In some cases -
especially with refinances – you can add the points to your loan
amount, thus not having to pay points out of your pocket.

Appraisal Fee
This fee pays for an independent appraisal of the property you want to
purchase/ refinance. Capital Banker requires this opinion or estimate
of the market value of the subject property for the loan.

Credit Report:
A credit score number is often called a FICO score. The score distills
all of the information in your credit report, using a formula to
calculate a single number that indicates your credit worthiness.

Underwriting and Documents Fees
Lenders must underwrite your file in order to see if it meets their
lending requirements and the requirements of the companies who
ultimately purchase loans for investment purposes.  They then must
produce a viable set of loan documents meeting strict Federal and
State laws.

Processing Fee
This fee is for setting up your file, all internal work and for
procuring all documentation required to make your loan viable for the
lender criteria, and for following up to be sure your loan funds at
the proper loan amount, fees and closing date.

Title and Escrow fees
These fees may vary by jurisdiction; often includes the cost of title
insurance or title search and attorney's title opinion; may cover
premiums for Capital Banker's policy (insuring that its mortgage is a
first lien on the property) and a separate policy insuring the buyer's
title.

Transfer Tax
Transfer taxes are state and local taxes that are assessed on real
property when ownership of the property is transferred between
parties. Documentary stamps are purchased covering such charges and
are place on the deed.

Property Survey
The surveyor determines whether the subject property is within the
property borders, whether there are any encroachments on the property
by neighbors and the extent to which any easements on the property may
affect legal title.

Prepaid Interest
The interest on your loan calculated on a per day basis and paid in
advance from the day of your loan closing through the last day of the
month in which your closing takes place. This enables Capital Banker
to make payments for your loan due on the 1st of the month.

Insurance: Property Owners & Hazard
A form or protection against physical damage to the subject property
by fire, wind, vandalism and other causes. Capital Banker will expect
you to have a policy in effect at closing.

First of all, decide whether you want to apply and negotiate directly with the lenders yourself or if you would prefer an independent intermediary— i.e. Capital Banker to represent you. If possible, prepare your current accounts or a comprehensive business plan. These will help you to qualify for the best rates and terms.