| It is important to understand the process behind | | | | review your credit reports, collateral documentation, as |
| commercial loan processing to gain an insight into how | | | | well as your income information. Some additional |
| a financing institution assesses and decides on | | | | documentation may be requested in order to support |
| whether or not a loan is granted. While commercial | | | | the information in your loan application so that all details |
| loans provide an attractive source of income in terms | | | | may be properly assessed and verified. |
| of interest, lenders exercise a lot of care in evaluating | | | | Loan Underwriting |
| borrowers to ensure that funds lent out are recovered | | | | Once all documentary attachments are deemed |
| along with the earnings. | | | | satisfactory, your loan application will then be submitted |
| Applying for a Loan | | | | to a loan underwriter or a loan committee. They will |
| Lenders basically pre-qualify potential borrowers by | | | | review, assess, and eventually decide whether your |
| assessing their background and capacity to pay. The | | | | loan will be approved. |
| process starts by initial gathering of background and | | | | At this time a processor will present you with a letter |
| personal information such as purpose for the loan, your | | | | of intent or term sheet for signing. This document |
| income and existing debts. To formalize and | | | | includes the amount of financing, terms of payment, |
| commence the loan process, you must then fill-up and | | | | type of security or collateral, and other key terms. The |
| complete a loan application form. | | | | decision to approve or reject is usually made within |
| Requirements to Expect | | | | five days. Expect some requests for you to provide |
| Take note of the documentary requirements that will | | | | additional documentation during this underwriting |
| go with your loan application. This may require some | | | | process. |
| consideration and time to gather. A business loan for | | | | You will be required to sign the letter of intent and |
| example, may require a business profile that gives a | | | | along with it, you may be asked to give a check to |
| general background of your business. In addition, a | | | | serve as a deposit, and to pay for some third-party |
| business plan that clearly describes how your business | | | | reports used in the underwriting process such as |
| will be run and how it is projected to perform financially | | | | appraisals. |
| will be required. | | | | Finally Getting Your Loan |
| Standard requirements for different loan types will | | | | Once all the conditions and requirements are satisfied, |
| include personal financial statements listing all personal | | | | the loan application package is resubmitted to the loan |
| assets, liabilities, as well as your personal tax return for | | | | committee for final approval. Upon loan approval, you |
| the past three years. Another fundamental | | | | will be required to sign the final loan documents. If you |
| requirement is collateral. Collateral for a loan may | | | | have a closing agent (an attorney or escrow company |
| include assets such as real estate and stocks or | | | | representative for example), they will receive the |
| bonds, hard goods such as equipment, and other | | | | closing documents and coordinate the signing of all |
| personal assets and guarantees. This is meant to give | | | | necessary papers. They will also coordinate the |
| the lender some guarantee that you will be committed | | | | transfer of funds, record the deed transfer and |
| to seeing your loan repaid. It also offers assurance that | | | | mortgage, and order title insurance. |
| should you fail to meet your loan obligations, they can | | | | With all requirements met and all closing documents in |
| recover from your assets the money that they have | | | | order, your loan can finally be released! This can be |
| lent out. | | | | done in several ways - electronic wire transfer to your |
| Processing Your Application | | | | designated account, or issuance of a cashier's check |
| A loan officer will review your application and | | | | or draft in your name. |
| documentary attachments. Your loan officer will | | | | |