In some ways, commercial loans can be easier to get than residential loans. But there's no doubt that they're also more time- and money-intensive than a traditional mortgage. Just like working for yourself requires more commitment than working for others, a business loan requires a real commitment.
Here are 5 really good ways to mess up your commercial deal.
1) Failing to budget: A commercial loan on a property is going to require an appraisal, and these appraisals can run into big money. $2,500-$3,000 is a realistic budget for a commercial deal. In addition, many lenders are going to require a commitment fee. Get a strong sense of what kind of expenses are going to be required before you proceed with your loan.
2) Failing to pull the trigger: Procrastination kills more deals than anything else. If you're refinancing because you need money, then get the money while it's on the table. Credit scores can drop, sellers can change their minds, lenders can pull programs... very few good things come with waiting in today's environment.
3) Not getting buy-in from partners: If you have partners in your LLC or property with a 10% share or better, chances are good you're going to need them in this with you. They'll also have to consent to a credit report pull, submitting their tax returns, and all the steps you're talking to get this done.
4) Not having your ducks in a row. Your loan officer should work with you on this, but the information you're going to have to provide will be considerable. This usually includes at a minimum two years of business and personal returns, a year to date financial statement, a copy of your LLC's charter, and often a rent roll, business plan, or other documents that show how you're going to be able to pay off this loan.
5) Get going too late: Some commercial loans close and fund in a week. Most, however, take a lot longer. From the time you get your underwriting approval to the time when the loan gets done, you should budget about 6 weeks for the whole process. Obviously, if you need the money in two weeks, you're starting late.
What it all boils down to, as usual in business: be more honest, budget more time, and don't procrastinate.