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