Monday, September 3, 2007

How to make your loan a slam-dunk

I recently got some feedback from a friend of mine on this post. He was urging me to be more positive.

Okay -- I am positive that I want your loan to close.

Well, that's probably not the kind of positivity he was talking about. So from the other end, here's what you can do to make sure your loan goes through.

1) Always be completely upfront. If there's anything about your deal that might be a little off, disclose it immediately. If, for instance, you own a building under one LLC, and you own another LLC that's paying a lease to the first LLC, that may or may not be an issue. Disclose it at the start of the process.

2) Be ready with the data. Any commercial lender I work with is going to want the same kinds of things: rent rolls, P&L statements, tax returns, Phase 1 reports, etc. You don't have to wait until you have every single piece of paper ready, but be prepared to get it. If you don't have the data easily available, that's going to be an issue -- one you should disclose early to your loan officer.

3) Explore a variety of options. Compare a lease versus ownership. Compare a refinance to a non-collateralized loan. Think hard before taking a loan with a lock-out or a pre-pay. Sometimes those are good loans, other times they aren't. This is your business, and its whole future could ride on making the right choice here.

4) Crouching Tiger, Hidden Dragon. If you didn't see that movie, the title was a reference to a continuing theme in Chinese martial arts... waiting for the opening and then moving without hesitation once it shows itself. As I wrote before, the number one deal killer I've seen is a reluctance to move on a deal when it's on the table.

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