As a commercial loan broker I communicate with ambitious commercial developers on a regular basis. Oftentimes I'm shocked by their shortage of precise information as to what's required for a commercial construction project to get financing. This paper will debate what should ideally be included in a good loan submission package for a commercial development project.
The very last thing you would like to happen to your financing suggestion is have it land on the base of the pile on a loan officer's desk. Each loan package for a commercial construction project should contain one or two necessary elements or it'll be ignored, or denied.The 1st component of a good commercial construction loan package is the executive outline.
The executive outline describes the project in paragraph form and it describes the project, location and general strengths of the deal. The second necessary ingredient to a loan package is the detailed resumes of the project guidelines and the general contractor if he is not already a principle. The resume should include an in-depth list of real projects finished. Explicit experience is a vital part of the loan package. Pro-forma projections on the project and the net earnings predicted are needed. A detailed cost breakdown and research should additionally be included. Info on the property-demographics, assimilation studies, selling and management plans, etc should all be included. The more detailed the info the better.
A private finance statement for all partners, the general contractor and all business partners for the last 3 years is needed.Info should be supplied on all pre-sales with evidence of the pre-sales. Lenders and banks like to see at least half of the project pre-sold. The three most vital ingredients in a commercial development loans are cash, experience, and pre-sales. You have to have a couple of the three to have a shot. You need all three to be warranted.And on digging, frequently shortage of experience shows up too. The minimum you want to get a quote is the executive outline and the pro-forma. The rest is wanted to submit.
