Commercial Loan Process - 4-EZ Steps

Commercial Loan

Overview  >>>  4-EZ Steps  >>>  Guidelines

  1. Obtain Letter of Interest (LOI) / Conditional Approval

    The commercial property (or multifamily 5 units or more) must be able to service the debt, so it is critical to get the LOI at the very beginning of the process. The process of obtaining the LOI will determine whether the commercial property supports the desired loan amount. In order to obtain and LOI, the following items will be required by the lender:

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    • Loan application (i.e. 1003 Form) (downloadable form)
      The shorter residential for is acceptable to get the LOI, but most lenders will require that a full commercial loan application be submitted after the LOI is granted.

    • Current rent roll, if applicable. (downloadable form)

    • Operating history for 2006, 2007 and 2008 year-to-date. (downloadable form)

    • Tri-merge credit report (authorization form is included the 1003 Forms above)

    For commercial property purchases, in lieu of current rent roll and operating history lenders often accept a current information sheet (e.g. commercial profile form used by the larger commercial brokerages) on the property prepared by the listing agent. The information must be "real" numbers NOT projected.


  2. Underwriting Package

    While gathering items in Step 1, a commercial document package is started, which includes: tax returns, bank statements, pay check stubs, preliminary title report, escrow, etc. If stating income, tax returns and pay check stubs can be omitted. At this stage pictures of the subject property are needed. Lenders typically require photos of the front, back, street scenes and any other visual of importance.


  3. Commercial Loan Package is Submitted to Lender

    Once the LOI is received back signed by borrower along with a check for the appraisal, the rate is locked (if needed), the signed LOI, check and items from Step 2 are submitted to Lender. The commercial appraisal is then ordered and Lender will provide a "Needs List" of outstanding items. Commercial appraisals run from $1,500 to $3,000. Some lenders credit back the appraisal in closing or give a $1,500 credit depending on the tightness of the commercial market.


  4. Underwriting

    Once all of the information is received, the file will be sent to Underwriting. Files are generally underwritten on a "first in first out" (FIFO) basis. The sooner conditions are submitted the faster the turnaround time on the file.