commercial mortgage business plan

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How to Write a Successful Business Plan for a Loan

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Table of Contents

What does a loan business plan include?

What lenders look for in a business plan, business plan for loan examples, resources for writing a business plan.

A comprehensive and well-written business plan can be used to persuade lenders that your business is worth investing in and hopefully, improve your chances of getting approved for a small-business loan . Many lenders will ask that you include a business plan along with other documents as part of your loan application.

When writing a business plan for a loan, you’ll want to highlight your abilities, justify your need for capital and prove your ability to repay the debt. 

Here’s everything you need to know to get started.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

A successful business plan for a loan describes your financial goals and how you’ll achieve them. Although business plan components can vary from company to company, there are a few sections that are typically included in most plans.

These sections will help provide lenders with an overview of your business and explain why they should approve you for a loan.  

Executive summary

The executive summary is used to spark interest in your business. It may include high-level information about you, your products and services, your management team, employees, business location and financial details. Your mission statement can be added here as well.

To help build a lender’s confidence in your business, you can also include a concise overview of your growth plans in this section.

Company overview

The company overview is an area to describe the strengths of your business. If you didn’t explain what problems your business will solve in the executive summary, do it here. 

Highlight any experts on your team and what gives you a competitive advantage. You can also include specific details about your business such as when it was founded, your business entity type and history.

Products and services

Use this section to demonstrate the need for what you’re offering. Describe your products and services and explain how customers will benefit from having them. 

Detail any equipment or materials that you need to provide your goods and services — this may be particularly helpful if you’re looking for equipment or inventory financing . You’ll also want to disclose any patents or copyrights in this section.

Market analysis

Here you can demonstrate that you’ve done your homework and showcase your understanding of your industry, current outlook, trends, target market and competitors.

You can add details about your target market that include where you’ll find customers, ways you plan to market to them and how your products and services will be delivered to them.

» MORE: How to write a market analysis for a business plan

Marketing and sales plan

Your marketing and sales plan provides details on how you intend to attract your customers and build a client base. You can also explain the steps involved in the sale and delivery of your product or service.

At a high level, this section should identify your sales goals and how you plan to achieve them — showing a lender how you’re going to make money to repay potential debt.

Operational plan

The operational plan section covers the physical requirements of operating your business on a day-to-day basis. Depending on your type of business, this may include location, facility requirements, equipment, vehicles, inventory needs and supplies. Production goals, timelines, quality control and customer service details may also be included.

Management team

This section illustrates how your business will be organized. You can list the management team, owners, board of directors and consultants with details about their experience and the role they will play at your company. This is also a good place to include an organizational chart .

From this section, a lender should understand why you and your team are qualified to run a business and why they should feel confident lending you money — even if you’re a startup.

Funding request

In this section, you’ll explain the amount of money you’re requesting from the lender and why you need it. You’ll describe how the funds will be used and how you intend to repay the loan.

You may also discuss any funding requirements you anticipate over the next five years and your strategic financial plans for the future.

» Need help writing? Learn about the best business plan software .

Financial statements

When you’re writing a business plan for a loan, this is one of the most important sections. The goal is to use your financial statements to prove to a lender that your business is stable and will be able to repay any potential debt. 

In this section, you’ll want to include three to five years of income statements, cash flow statements and balance sheets. It can also be helpful to include an expense analysis, break-even analysis, capital expenditure budgets, projected income statements and projected cash flow statements. If you have collateral that you could put up to secure a loan, you should list it in this section as well.

If you’re a startup that doesn’t have much historical data to provide, you’ll want to include estimated costs, revenue and any other future projections you may have. Graphs and charts can be useful visual aids here.

In general, the more data you can use to show a lender your financial security, the better.

Finally, if necessary, supporting information and documents can be added in an appendix section. This may include credit histories, resumes, letters of reference, product pictures, licenses, permits, contracts and other legal documents.

Lenders will typically evaluate your loan application based on the five C’s — or characteristics — of credit : character, capacity, capital, conditions and collateral. Although your business plan won't contain everything a lender needs to complete its assessment, the document can highlight your strengths in each of these areas.

A lender will assess your character by reviewing your education, business experience and credit history. This assessment may also be extended to board members and your management team. Highlights of your strengths can be worked into the following sections of your business plan:

Executive summary.

Company overview.

Management team.

Capacity centers on your ability to repay the loan. Lenders will be looking at the revenue you plan to generate, your expenses, cash flow and your loan payment plan. This information can be included in the following sections:

Funding request.

Financial statements.

Capital is the amount of money you have invested in your business. Lenders can use it to judge your financial commitment to the business. You can use any of the following sections to highlight your financial commitment:

Operational plan.

Conditions refers to the purpose and market for your products and services. Lenders will be looking for information such as product demand, competition and industry trends. Information for this can be included in the following sections:

Market analysis.

Products and services.

Marketing and sales plan.

Collateral is an asset pledged to a lender to guarantee the repayment of a loan. This can be equipment, inventory, vehicles or something else of value. Use the following sections to include information on assets:

» MORE: How to get a business loan

Writing a business plan for a loan application can be intimidating, especially when you’re just getting started. It may be helpful to use a business plan template or refer to an existing sample as you’re going through the draft process.

Here are a few examples that you may find useful:

Business Plan Outline — Colorado Small Business Development Center

Business Plan Template — Iowa Small Business Development Center

Writing a Business Plan — Maine Small Business Development Center

Business Plan Workbook — Capital One

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U.S. Small Business Administration. The SBA offers a free self-paced course on writing a business plan. The course includes several videos, objectives for you to accomplish, as well as worksheets you can complete.

SCORE. SCORE, a nonprofit organization and resource partner of the SBA, offers free assistance that includes a step-by-step downloadable template to help startups create a business plan, and mentors who can review and refine your plan virtually or in person.

Small Business Development Centers. Similarly, your local SBDC can provide assistance with business planning and finding access to capital. These organizations also have virtual and in-person training courses, as well as opportunities to consult with business experts.

Business plan software. Although many business plan software platforms require a subscription, these tools can be useful if you want a templated approach that can break the process down for you step-by-step. Many of these services include a range of examples and templates, instruction videos and guides, and financial dashboards, among other features. You may also be able to use a free trial before committing to one of these software options.

A loan business plan outlines your business’s objectives, products or services, funding needs and finances. The goal of this document is to convince lenders that they should approve you for a business loan.

Not all lenders will require a business plan, but you’ll likely need one for bank and SBA loans. Even if it isn’t required, however, a lean business plan can be used to bolster your loan application.

Lenders ask for a business plan because they want to know that your business is and will continue to be financially stable. They want to know how you make money, spend money and plan to achieve your financial goals. All of this information allows them to assess whether you’ll be able to repay a loan and decide if they should approve your application.

On a similar note...

Mortgage Broker Business Plan Template

Written by Dave Lavinsky

Mortgage Broker Business Plan

You’ve come to the right place to create your Mortgage Broker business plan.

We have helped over 10,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Mortgage Broker companies.

Below is a template to help you create each section of your Mortgage Broker business plan.

Executive Summary

Business overview.

Davidson Mortgage, located in Tucson, Arizona, is a new mortgage brokerage specializing in residential mortgages. The company will operate in a professional setting, conveniently located next to several banks in the center of the shopping district. We offer a wide range of services to help our clients get a mortgage, including finding loan options, applying for the loans on the clients’ behalf, and completing all the paperwork. We strive to serve our clients with the utmost empathy to ensure they get the best mortgage for their situation.

Davidson Mortgage is headed by Harold Davidson. He is an MBA graduate from Arizona State University with 20 years of experience working in the finance industry. His passion is to help his clients qualify for their dream homes and provide them with a smooth process from start to finish.

Davidson Mortgage will focus on providing superior service to all of its clients to ensure they get the best mortgage possible. Our services include finding loan options, applying for loans on behalf of customers, and completing closing paperwork. Since customer service is our top priority, we will keep in touch with our clients after they have closed on the mortgage. Furthermore, Harold will create webinars, online courses, and other content to educate his clients and the local community on the mortgage lending process.

Customer Focus

Davidson Mortgage will primarily serve homebuyers interested in properties located in the Tucson, Arizona area. Tucson is a growing city with thousands of residents eager to purchase a new home. We expect our clientele to be equal parts first-time home buyers and existing homeowners.

Management Team

Davidson Mortgage is run by Harold Davidson. Harold has been a licensed mortgage broker for the past 20 years, working for several large firms. However, throughout his career, he desired to have a closer connection with his clients as well as have more flexibility to help them get their dream homes. He started this company in order to achieve those goals. In addition to his valuable experience, Harold also holds an MBA from Arizona State University.

Harold is joined by Bethany Peterson. She will serve as the company’s full-time assistant, who, among other things, will manage the company website, coordinate scheduling, and answer basic client questions. Bethany has experience working with C-level executives and has spent significant time as an administrator.

Success Factors

Davidson Mortgage is uniquely qualified to succeed due to the following reasons:

• Davidson Mortgage will fill a specific market niche in the growing community we are entering. In addition, we have surveyed local realtors and homebuyers and received extremely positive feedback saying that they would consider making use of our services when launched.
• Our location is in an economically vibrant area where new home sales are on the rise, and turnover in homes and rentals occurs often due to the upward mobility of residents.
• The management team has a track record of success in the mortgage brokerage business.
• The local area is currently underserved and has few independent mortgage brokers offering high customer service to homebuyers.

Financial Highlights

Davidson Mortgage is seeking a total funding of $250,000 of debt capital to open its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses, and working capital.

Specifically, these funds will be used as follows:

• Office design/build: $50,000
• Three months of overhead expenses (payroll, rent, utilities): $100,00
• Marketing expenses: $50,000
• Working capital: $50,000

Company Overview

Who is davidson mortgage, davidson mortgage history.

After surveying the local customer base and finding a potential office, Harold Davidson incorporated Davidson Mortgage as an S-Corporation on 1/1/2023.

The business is currently being run out of Harold’s home office, but once the lease on Davidson Mortgage’s office location is finalized, all operations will be run from there.

Since incorporation, Davidson Mortgage has achieved the following milestones:

• Found office space and signed Letter of Intent to lease it
• Developed the company’s name, logo, and website
• Hired an interior designer for the decor and furniture layout
• Determined equipment and fixture requirements

Davidson Mortgage Services

Industry analysis.

Despite the pandemic hurting several industries, the mortgage brokers industry still performed strong and is projected to continue to do so. Last year, U.S. mortgage brokerages brought in revenues of $11.7 billion and employed 47,000 people. There were just over 12,000 businesses in this market.

However, the mortgage broker industry is highly fragmented, with the top two companies accounting for just over 11% of industry revenue. Furthermore, mortgage interest rates are on the rise, as well as housing prices, preventing many people from buying houses and applying for mortgages. These two factors significantly stunt the industry at present.

Despite these challenges, the industry is still projected to increase moderately throughout the rest of the decade. Though larger firms may dominate revenue and clientele, studies and surveys show that clients don’t necessarily favor working with large firms. Providing excellent service and personal touches throughout the process can help small firms succeed in the industry.

Customer Analysis

Demographic profile of target market.

Davidson Mortgage will primarily serve the residents of Tucson, Arizona. The area we serve has a significant population of people who are searching for their first home, as well as families and individuals who need a new home.

The precise demographics for Tucson, Arizona are:

Customer Segmentation

Davidson Mortgage will primarily target the following customer segments:

• Existing homeowners
• First-time home buyers

Competitive Analysis

Direct and indirect competitors.

Davidson Mortgage will face competition from other companies with similar business profiles. A description of each competitor company is below.

The Loan Store

Established in 2010, The Loan Store originates, finances, and sells mortgage and non-mortgage lending products throughout the United States. It offers a range of consumer credit products, such as home loan products, home equity loans, and unsecured personal loans, as well as home and personal loan servicing. The company claims to be one of the largest private, independent retail mortgage lenders in the U.S. Its current business channels include direct lending, affinity, branch retail, and servicing.

However, agents working with The Loan Store experience high turnover, resulting in little concern for maintaining ongoing relationships with clients. Also, the agents themselves are mixed in quality, ranging from part-time brokers with little experience or sales records to full-time brokers with long-term experience. There is no systematic company method for passing on knowledge from experienced to inexperienced brokers as all are competing with each other, to a certain extent, for commissions.

Direct Loan Connection

Founded in 2006, Direct Loan Connection (DLC) employs licensed mortgage professionals who have access to multiple lending institutions, including banks, credit unions, and trust companies. This access enables the company to offer a vast array of available mortgage products – ranging from first-time homebuyer programs to financing for the self-employed to financing for those with credit blemishes. In addition, to help homebuyers and homeowners, DLC offers commercial mortgages.

Though they are a local leader in the premium end of the market, they refuse to negotiate their broker’s fees and sometimes lose potential clients because of this. Davidson Mortgage’s fees will be far more reasonable.

Supreme Mortgage

Supreme Mortgage specializes in mortgage brokering and is committed to helping homebuyers, and homeowners get the best mortgage with the lowest interest rate. The brokerage works with more than 40 lenders who compete to provide mortgages and who pay Supreme Mortgage’s fee so that clients receive the service free of charge.

Some reviews of Supreme Mortgage point out the low-quality service offered by brokers, who have little training in customer service. Furthermore, Supreme Mortgage does not attempt to maintain long-term relationships with customers who will eventually purchase another home.

Competitive Advantage

Davidson Mortgage enjoys several advantages over its competitors. These advantages include:

• Location: Davidson Mortgage’s location is near the center of town, in the shopping district of the city. It is visible from the street, where many residents shop for both day-to-day and luxury items.
• Client-oriented service: Davidson Mortgage will have a full-time assistant to keep in contact with clients and answer their everyday questions. Harold Davidson realizes the importance of accessibility to his clients and will further keep in touch with his clients through monthly seminars on topics of interest.
• Management: Harold Davidson has been extremely successful working in the mortgage brokerage sector and will be able to use his previous experience to grant his clients detailed insight into the world of home loans. His unique qualifications will serve customers in a much more sophisticated manner than many of Davidson Mortgage’s competitors.
• Relationships: Having lived in the community for 25 years, Harold Davidson knows many of the local leaders, newspapers, and other influencers.

Marketing Plan

Davidson Mortgage will use several strategies to promote its name and develop its brand. By using an integrated marketing strategy, Davidson Mortgage will win clients and develop consistent revenue streams.

Brand & Value Proposition

The Davidson Mortgage brand will focus on the company’s unique value proposition:

• Client-focused residential mortgage brokerage services, where the company’s interests are aligned with the customer
• Service built on long-term relationships and personal attention
• Big-firm expertise in a small-firm environment

Promotions Strategy

The promotions strategy for Davidson Mortgage is as follows:

Website/SEO

Davidson Mortgage will invest heavily in developing a professional website that displays all of the features and benefits of working with the mortgage broker. It will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.

Social Media

Davidson Mortgage will invest heavily in a social media advertising campaign. Harold and Bethany will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Davidson Mortgage understands that the best promotion comes from satisfied customers. The company will work to partner with local realtors by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.

By offering webinars and courses on topics of interest in the office or other locations, Harold Davidson will encourage residents in the community to become comfortable with the expertise and character of Davidson Mortgage. These webinars will generally be offered free of charge as general promotion and for direct networking.

Davidson Mortgage’s pricing will rely on the standard industry rates in order to be perceived as neither a luxury nor a discount broker. The standard rate for brokering a mortgage is 1-2% of the loan amount. By seeking quality clients and maintaining long-term relationships with them, Davidson Mortgage will fend off pressure to discount their rates, even in down markets.

Operations Plan

The following will be the operations plan for Davidson Mortgage.

Operation Functions:

• Harold Davidson is the founder and will operate as the President of the company. He will be in charge of all the general operations and executive functions within the company. Furthermore, until he hires additional staff, he will personally help all clients who agree to utilize the company’s services.
• Harold is assisted by his long-term assistant Bethany Peterson. She will serve as the company’s full-time assistant and will manage the company website, coordinate scheduling, and answer basic client questions. Bethany has experience working with C-level executives and has spent significant time as an administrator.
• As the business grows and Harold takes on more clients, he will hire other mortgage brokers to assist him.

Milestones:

The following are a series of steps that will lead to the company’s long-term success. Davidson Mortgage expects to achieve the following milestones in the next six months:

3/202X            Finalize lease agreement

4/202X            Design and build out Davidson Mortgage office

5/202X            Hire and train initial staff

6/202X            Kickoff of promotional campaign

7/202X            Reach break-even

8/202X            Reach 25 ongoing clients

Financial Plan

Key revenue & costs.

Davidson Mortgage’s revenues will come primarily from the commissions earned from residential mortgage sales.

The major cost drivers for the company will include employee salaries, lease payments, and marketing expenses.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

• Annual lease: $30,000

Financial Projections

Income statement, balance sheet, cash flow statement, mortgage broker business plan faqs, what is a mortgage broker business plan.

A mortgage broker business plan is a plan to start and/or grow your mortgage broker business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Mortgage Broker business plan using our Mortgage Broker Business Plan Template here .

What are the Main Types of Mortgage Broker Businesses?

There are a number of different kinds of mortgage broker businesses , some examples include: Retail Mortgage Broker, Business/Corporate Mortgage Broker, or Private Mortgage Brokers.

How Do You Get Funding for Your Mortgage Broker Business Plan?

Mortgage Broker businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Mortgage Broker Business?

Starting a mortgage broker business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Mortgage Broker Business Plan - The first step in starting a business is to create a detailed mortgage broker business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your mortgage broker business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your mortgage broker business is in compliance with local laws.

3. Register Your Mortgage Broker Business - Once you have chosen a legal structure, the next step is to register your mortgage broker business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your mortgage broker business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Mortgage Broker Equipment & Supplies - In order to start your mortgage broker business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your mortgage broker business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful mortgage broker business:

• How to Start a Mortgage Broker Business

Advertiser Disclosure

Your Guide To Commercial Mortgages 

Marc Guberti is a Certified Personal Finance Counselor who has been a finance freelance writer for five years. He has covered personal finance, investing, banking, credit cards, business financing, and other topics. Marc’s work has appeared in US News & World Report, USA Today, Investor Place, and other publications. He graduated from Fordham University with a finance degree and resides in Scarsdale, New York. When he’s not writing, Marc enjoys spending time with the family and watching movies with them (mostly from the 1930s and 40s). Marc is an avid runner who aims to run over 100 marathons in his lifetime.

Updated October 19, 2023​

4 min. read​

What Is a Commercial Mortgage and How Does It Work?

Is a commercial mortgage right for your business, business growth, business expenses, business opportunities, what are the benefits of getting a commercial mortgage, loan large amounts, own a commercial real estate asset, build equity, flexible terms, how to get a commercial mortgage, 1. do your research, 2. know your credit score, 3. gather required documents, 4. devise a business plan, 5. prepare your down payment (just in case).

A commercial property establishes your business in the local community. You’ll have a location for prospects and can expand if your initial property gains momentum. While price can present a steep barrier to entry, commercial mortgages help business owners finance these assets. We’ll explain how commercial mortgages can help your company and how to get one.

A commercial mortgage is a financial product that business owners use to secure a commercial or multifamily property with five or more units. These loans help business owners obtain property without making a cash offer. Some business owners take out a new loan with a lower interest rate to refinance their existing commercial mortgage, but you can also use this financial product for other endeavors, such as renovating properties you own.

Many businesses rely on commercial mortgages to finance commercial properties. These loans can help your business, but they’re not for everyone. Consider these factors before getting a loan:

A business property gives your company a physical footprint, which helps your company grow within the local community. Businesses with solid margins can grow sustainably, and a commercial mortgage puts these companies in a position to gain market share. Leverage is a useful resource for business growth. You can finance new equipment , hire new people, and spend money on ads. Commercial mortgages turn leverage into new locations for businesses.

A commercial mortgage adds an expense to your budget and turns the property into collateral. You should assess your finances and determine if you can comfortably afford the monthly mortgage payments. Buying a commercial property and losing it in a few years is a significant setback. Not only will you have to acquire another commercial property, but customers may habitually visit your old location and not know about your new address. Some companies overextend and end up losing everything, so you should assess your financial situation before taking on more debt.

A commercial mortgage isn’t only an investment in the building but an investment in the neighborhood and residents of the area. You should analyze a community before buying a piece of land. The average income, unemployment rate, and crime rate serve as starting points for assessing a community. Location is one of the most important parts of real estate, and it influences how many opportunities will come your way.

Business owners use commercial mortgages to obtain financing, but they’re not the only choice. We’ll explore the competitive advantages commercial mortgages have over other financial products:

More opportunities open up when you retain more funding. While you can borrow money with many financial products, few provide as much as commercial mortgages. Most mortgage lending companies provide loan amounts of up to $5 million for a commercial mortgage. Since lenders require a down payment, you could use one of these loans to buy a property with over $5 million.

A commercial real estate asset puts your company on the map. You get a physical location people to interact with your customers and provide services. Additionally, owning real estate will benefit your company during tax season. Real estate owners can access depreciation, 1031 exchanges, and other tax-saving measures to protect more of their profits.

Real estate investors flock to the asset for equity and appreciation . You may have business aspirations with this property, but you also need to expand your real estate portfolio. Each monthly mortgage payment increases your equity in the commercial property, and building equity will help if you sell the property, use a cash-out refinance, or tap into a line of credit. As you make monthly payments and gain equity, your property may appreciate. The location can become more desirable, and annual inflation props up real estate.

If you own a multifamily investment property, appreciation rates are under your control. Investors look at a multifamily property’s net operating income to assess the valuation. Working hard to increase net operating income will raise your property’s value and build more equity in the process.

Low rates reduce the monthly payments for any loan, but they carry extra significance for commercial mortgages. Some business owners borrow over $1 million for commercial real estate financing. However, a higher interest rate can sting business owners. Depending on how much you borrow, an additional percentage point can add over $1,000 to your monthly payment. Comparing commercial real estate loans from multiple banks and lenders will lead to the most competitive rates. Such due diligence can help you secure a lower interest rate and save thousands of dollars over the loan’s lifetime.

Business owners can select from several financing choices with shorter terms than residential mortgages. You can choose a 3-year loan term if you want to pay it back quickly or a 25-year mortgage for lower monthly payments. Most commercial loans have 3, 5, or 10-year terms.

Getting financing for a commercial property is exciting. This property can help your business grow, and you may expand operations in the future. A commercial mortgage loan is the starting point of new opportunities, and we’ll share how to get one.

Investing in an office building, apartment complex, or any commercial property is a significant expenditure, so you should do as much research as possible to feel confident about the location and find the right lender. Reaching out to several lenders gives you more financing choices. Then, once you have the proper financing, you can swoop in and secure a high-quality property you feel confident about after doing your research.

Lenders will ask about your credit score before giving you a loan. Most lenders have post-credit approval requirements for aspiring commercial property owners. A credit score indicates your ability to manage debt; Lenders feel more confident giving money to people with higher scores, and strong credit can lower your interest rate. Check your credit score before approaching a lender, and improve it as much as possible. Paying off credit cards and other debt on time is one of the best ways to raise your score.

Lenders will ask for several documents in your application. Each lender has different requirements, but you can expect to provide the following documents:

• Personal and business tax returns
• Financial statements
• Business operating statements for the year
• Profit and loss statement
• Business projections (i.e., cash flow and other metrics)
• Basic personal information (i.e., social security number)
• Business Plan

Assemble these files now, so you have them when it’s time to approach lenders.

Some lenders will review your business plan before letting you borrow money. A business plan will help you utilize the commercial property, identify the available opportunities, and position yourself to gain market share. You should already have a business plan, as it’s a valuable resource. However, it would help to adapt your strategy to accommodate your new asset.

Not all lenders will let you escape from making a down payment. Saving up for a down payment is a good insurance measure, as you don’t want to get rejected from a desirable property because you didn’t save enough money for the initial payment. Start saving money and put the down payment proceeds into a separate bank account. A separate account lowers the chances of those funds getting mixed up with other costs.

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Commercial Mortgage Business Plans

A detailed business plan is a key requirement for your commercial mortgage application. Your plan will outline what your business does, how it operates, and how it plans to grow.

Every mortgage is a risk for lenders. The most effective commercial mortgage business plans illustrate why that risk is worth taking.

As you plan your real estate investment, take the time to understand how to write a business plan for commercial mortgage approval.

7 Essentials for a Business Plan for Commercial Mortgage Approval

It’s important to look at your business at a high level and detail each element so that a lender can understand your model and your aspirations. A solid business plan can make the difference between an offer and a rejection.

All business plans should include the following information:

1. Your Executive Summary: All successful commercial mortgage business plans feature killer executive summaries. The summary needs to describe your business, its goals, its points of differentiation, and why you need a commercial mortgage. Keep it simple and impactful.

2. A Description of What Your Company Does: In this section, you will elaborate on how your business was formed, what it does, and where you want to take it next. This can be detailed, but, avoid repeating information that can be better presented in the following sections.

3. Details of Your Management Team: Lenders want to know that you have the leadership to succeed in your business goals. An overview of your management, including previous experience, must be included in commercial mortgage business plans.

4. Essential Financials: Financial data will provide context for your current and future strategy. Details matter. Important financials include earnings and outgoings dating back at least three years.

5. Your Growth and Marketing Plans: A successful business plan for commercial mortgage approval needs to do more than just indicate where you want to take your company. You need to illustrate how you will achieve goals. Marketing and growth strategies should be outlined.

6. Production / Execution Plan: Do you have the resources to achieve your targets? If you will be an owner-operator of industrial property, do you have equipment and supply chains set up? If you are seeking to buy property to manage and rent, do you have existing tools in place to manage tenants?

7. HR Strategy: Depending on the size of your business, you may need to explain how you plan to hire and retain the talent that will help you achieve your goals.

Supporting Documentation for Commercial Mortgage Business Plans

It’s not enough to simply state your intentions. You will need verified documentation to provide as evidence. This can include contracts with suppliers and staff, bank-issued transaction records, contracts with third parties, market research reports, etc.

Documentation needs can be extensive. Knowing what to include can be challenging. This is why commercial real estate clients prefer to work with licensed Ontario mortgage brokers.

Build the Most Compelling Business Plan with a Mortgage Broker

Developing a business plan for commercial mortgage approval can be time-consuming and at points confusing. If you are making a commercial investment for the first time, a mortgage broker will become an invaluable asset.

We can help you to prepare your business plan with all the supporting documentation that gives your application an edge. With experience and a deep understanding of the mortgage industry, we know exactly what lenders want to see.

Talk to us today if you want expert support throughout the mortgage application process, the lowest possible rates, and the best terms. Commercial property investment can help you to achieve your personal and business goals. We provide the expertise to bring it all together.

To book an appointment to discuss your needs and learn more about how Mortgage Capital Investment can help you, call 416-877-7438 today, or contact us.

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Updated: May07 , 2024

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Mortgage Broker Business Plan

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Claremont Funding

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Claremont Funding is an outstanding mortgage brokerage firm serving the lending needs of real estate professionals, builders and individual home buyers. We have access to a full range of mortgage sources and are dedicated to finding the right loan–with the best rates, terms and costs–to meet our clients’ unique needs.

This firm is capitalized by two principal investors, Joan Billings and Maureen Shoe. Both are licensed brokers with a combined experience of over 30 years in the industry.

1.1 Objectives

Claremont Funding aims to offer comprehensive mortgage broker services. Claremont Funding will focus on providing personal and specialized services to meet each client’s specific needs. The primary objectives of our firm are:

• Become profitable serving the real estate investment opportunities becoming available in the rapidly growing old town section of the city.
• Develop a solid, corporate identity in our specified target market area.
• Become one of the top brokerage firms in the area by our third year of operation, or before.
• Realize a positive return on investment within the first 12 months.

1.2 Mission

Claremont Funding offers high-quality mortgage brokerage services to residential and business customers. Our aim is to provide our customers with fair mortgage rates at reasonable prices, while keeping our clients informed and educated throughout the process.  We will become friends and mentors to our customers as well as quality service providers. Claremont is an excellent place to work, a professional environment that is challenging, rewarding, creative, and respectful of ideas and individuals.  Claremont ultimately provides excellent value to its customers and fair reward to its owners and employees.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Claremont Funding is a new company that provides a high level of expertise.  We will provide superior personal service to buyers.  We take pride in knowing that 70% of our business comes from repeat clients and their referrals.

Our responsibility as mortgage professionals is to determine what a customer’s financial goals are, not just quote a rate. We have access to hundreds of loan programs, allowing us to arrange the most beneficial solution… whatever the buyer’s needs may be.

2.1 Company Ownership

The owners and brokers of Claremont Funding are Joan Billings and Maureen Shoe.

2.2 Start-up Summary

Our start-up costs are outlined in the following table. Start-up costs derive from website design, office equipment, main computer station complete with all mortgage information for broker usage, stationery, legal costs, furnishings, office advertising and services, and expenses associated with opening our office. The start-up costs are to be financed by direct owner investment and credit. Lease office space averages $1.10 – 1.60 per square foot to an approximate of $1,500 per month, plus utilities, for efficient leased office space. Commercial lease will be for a three to five year agreement with the first month and a security deposit equal to the monthly lease rate payable at the time of lease start date.

Our personal goal is to break through the barriers that impede homeownership for those who wish to realize the American Dream.  We provide potential and current homeowners the opportunity to find the best mortgage loan for their needs.

We match buyers to loan programs. We have an extensive questionnaire for our buyers to list their wants and needs. We then take this questionnaire and put the supplied information to match buyers to the loan packages matching their criteria.

Market Analysis Summary how to do a market analysis for your business plan.">

Due to the strengthening of the area’s economy and lower interest rates, more home buyers today are looking to purchase homes. These changes in attitudes of home buyers are a tremendous boost to real estate firms. Residential construction is booming in the city’s Old Town section. We are poised to take advantage of these changes, and expect to become a recognized name and profitable entity in the city’s real estate market. We chose to locate our office in the area of most revenue potential and where we have close connection to dominant real estate firms. Our targeted market area, the Old Town area, shows stability and growth. We have a beautiful office, centered in the Old Town area.

The first quarter home values were up 12.5 percent from the same period in 2001, the Office of Federal Housing Enterprise Oversight reported. The gain reflects an increase from the previous quarter, when residential real estate values saw growth of 12.1 percent.

4.1 Market Segmentation

The home buyers that Claremont Funding will be serving can be divided into two groups:

• First-time homeowners: A bulk of the new construction in the Old Town section of the city is directed toward first-time homeowners.
• Residential refinancing: Whether it is for purchasing, construction, remodeling, debt consolidation, investment properties or refinancing–we have programs available to service those with good and bad credit.

4.2 Target Market Segment Strategy

We cannot survive waiting for the customer to come to us. Instead, we must get better at focusing on the specific market segments whose needs match our offerings. Focusing on targeted segments is the key to our future. Therefore, we need to focus our marketing message and our services offered. We need to develop our message, communicate it, and make good on it.

Strategy and Implementation Summary

Claremont Funding will focus on the mortgage broker needs in the Old Town section of the city and the surrounding areas. Our target customer will be first-time home buyers and existing homeowners who are interested in refinancing.

5.1 Sales Forecast

The following table and chart give a run-down on forecasted sales. We expect sales to build between January through March with the most growth during the months of March through August. We expect sales to drop off from September till the end of the year.

5.2 Milestones

The accompanying table lists important program milestones, with dates and managers in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

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5.3 Competitive Edge

Claremont Funding’s competitive edge is that both Joan and Maureen are the most visible lecturers to new home owners in the city. Joan has a weekly column in the city’s daily newspaper and Maureen lectures weekly to the city’s numerous neighborhood councils and civic groups.  Together, they represent the most recognizable faces in the city on the subject of home ownership and refinancing a home.

Between them, they have a base of 6,000 satisfied customers who continue to make referrals to the brokers.

The city has been growing by 15% annually for the past 10 years.  With the population now at 1.3 million, the new construction in the Old Town section of the city is valued at two billion dollars in home sales next year alone. Claremont Funding is positioned well to grab a large share of the mortgage services demanded by the city’s growth in Old Town.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Claremont Funding is a two member mortgage brokerage firm.  Both brokers are equal partners in the firm.

6.1 Personnel Plan

The following table shows the personnel plan for Claremont Funding.

Financial Plan investor-ready personnel plan .">

• We want to finance growth mainly through cash flow.
• The most important factor for Claremont Funding is the closing sales days. These dates will be determined ultimately by the Seller and the Buyer and a move out/move in schedule will be complied with.

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table as annual assumptions. The monthly assumptions are included in the appendix. From the beginning, we recognize that collection days are critical, but not a factor we can influence easily. At least we are planning on the problem, and dealing with it. Interest rates, tax rates, and personnel burden are based on conservative assumptions. Some of the more important underlying assumptions are:

• We assume a strong economy, without major recession.
• We assume, of course, that there are no unforeseen changes in the economy that would change our estimations.

7.2 Break-even Analysis

The following table and chart will summarize our break-even analysis.

7.3 Projected Profit and Loss

Our projected profit and loss is shown on the following table.

7.4 Projected Cash Flow

Cash flow projections are critical to our success. The annual cash flow figures are included here and the more important detailed monthly numbers are included in the appendix.

7.5 Projected Balance Sheet

The balance sheet in the following table shows managed but sufficient growth of net worth, and a sufficiently healthy financial position. The monthly estimates are included in the appendix.

7.6 Business Ratios

The following table provides important ratios for the industry, as determined by the Standard Industry Classification (SIC) Index, 7389, Business Services.

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Your Commercial Loan Amortization Schedule

The following table shows your regular amortizatizing payments with annual summaries.

Current Mortgage Rates

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Commercial Property Loan Calculator

This tool figures payments on a commercial property, offering payment amounts for P & I, Interest-Only and Balloon repayments — along with providing a monthly amortization schedule. This calculator automatically figures the balloon payment based on the entered loan amortization period. If you instead want to calculate for a known ending balloon payment, please use our balloon loan calculator .

Current Commercial Mortgage Rates

Note: The range of commercial mortgage rates should be considered typical. However, there are outliers on the high and low end of the range. Thus, these figures do not guarantee actual rates on a specific commercial mortgage deal. To see which options you qualify for & get the best deal you can we recommend contacting a commercial mortgage broker who can help you see what you qualify for.

The Complete Guide to Understanding Commercial Mortgages

Running a new or old business? Coming up with strategic plans to achieve your goals is a must. But besides all the careful planning, you need enough working capital to jumpstart your operations. This is important whether you’re a establishing a new company or getting ready for expansion.

As your business grows, it’s crucial to find the appropriate commercial property that can accommodate your needs. This is where securing commercial mortgage can help. It saves money on rising rental expenses and reduces your overall cost structure. In the long run, this provides financial leeway for your business, especially during unfavorable economic periods.

In this guide, we’ll detail how commercial real estate loans work and how to qualify for this type of mortgage. You’ll learn about commercial loan terms, its payment structure, and rates. We’ll also discuss various sources of commercial real estate loans, as well as different options available in the market.

What is a Commercial Mortgage?

A loan secured by business property is called a commercial mortgage. It is used to purchase commercial property, develop land, or a building. This type of mortgage is also used to renovate offices and refinance existing commercial loans. Examples of property that use commercial mortgages include apartment complexes, restaurants, office buildings, industrial facilities, and shopping centers.

Commercial mortgages are commonly offered by banks and credit unions. They are also provided by insurance companies and independent investors. As for government-backed commercial loans, you may obtain Small Business Administration (SBA) loans to finance a business venture.

Commercial real estate financing is similar to traditional home loans. Lenders provide borrowers with money which is secured to your property. But instead of acquiring a primary residence or vacation home, commercial loans are designed to help you own business property. Commercial loan funds are also used as capital to start a business or expand its operations.

In summary, companies use commercial mortgages to accomplish the following goals:

• Develop or renovate an owner-occupied business
• Buy their own commercial property
• Obtain land development investments
• Acquire buy-to-let premises and lease them out

Commercial loans take a smaller fraction of the real estate market. Despite this fact, they remain significant financing tools for economic development. Commercial mortgages help companies acquire business property, improve its service, and implement expansion. In contrast, residential mortgages receive further government backing, making them more liquid than commercial loans. Meanwhile, commercial properties remain essential income-producing assets for economic growth.

Personal Guarantee on Commercial Loans

Business owners must personally guarantee a commercial mortgage if they don’t have enough credit to secure financing. Credit requirements are based on the risk assessment conducted by a lender.

Once you sign a personal guarantee, you tie your private assets to a commercial loan. And because it is an unsecured contract, a lender can take any of your assets as debt repayment . This allows them to seek monetary compensation in case you default on your loan. It’s a risky move, especially if you’re operating on thin margins. As a rule, try to secure enough credit before taking a commercial loan.

Commercial Loan Terms and Payment Structure

Commercial mortgages come in short terms of 3, 5, and 10 years. Others stretch as long as 25 years. But in general, commercial mortgage terms are not as long as most residential loans, which is usually 30 years.

When it comes to the payment structure, expect commercial loans to vary from the traditional amortizing schedule. A lender asks a borrower to pay the full loan after several years with a lump sum payment. This is called a balloon payment , where you pay the total remaining balance by the end of the agreed term.

For instance, a commercial loan has a balloon payment due in 10 years. The payment is based on a traditional amortization schedule such as a 30-year loan. Basically, you pay the first 10 years of principal and interest payments based on the full amortization table. Once the term ends, you make the balloon payment, which pays off the remaining balance in the mortgage.

Furthermore, you have the option make interest-only payments in a commercial loan. This means you do not have to worry about making principal payments for the entire term. Likewise, once the loan term is through, you must settle any remaining balance with a balloon payment.

In some cases, commercial lenders offer fully amortized loans as long as 20 or 25 years. This is how certain Small Business Administration loans are structured. And depending on the commercial loan and lender, some large commercial mortgages may be given a term of 40 years.

Commercial Loan Repayment Example

To understand how commercial payments work, let’s review this example. Let’s presume your commercial real estate loan is $2.5 million with 9 percent APR, with a loan term of 10 years. Let’s use the calculator on top of this page to estimate your monthly payment, interest-only payment, and total balloon payment.

• Commercial loan amount: $2,500,000
• Interest rate: 9% APR
• Term: 10 years

According to the results, your monthly commercial mortgage payment will be $20,155.80 for 10 years. If you choose to make interest-only payments, it will only be $18,787.00 per month. Once the 10 years is up, you must make a balloon payment of $2,240,215.07 to pay off your remaining balance.

What If You Can’t Make the Balloon Payment?

Sometimes, you might not be able to make a balloon payment on your commercial mortgage. If you’re worried about lack of funds, refinance before the end of the term. Start asking about refinancing at least a year before the term ends. This will save you from foreclosure and losing your lender’s trust. If you default on your loan, it spells bad news for your credit history, making it difficult to get approved for future commercial loans.

Commercial refinancing is basically taking out a new mortgage. It will help you restructure your payment into an amount you can afford. It also allows you to lower your interest rate and take a workable payment term. To refinance, you must also meet lender qualifications. Lenders conduct background checks on your personal and business credit history. They will also ask how long you’ve had the property.

Commercial Real Estate Interest Rates

Commercial loan rates are often slightly higher than residential mortgages. It is usually around 0.25 percent to 0.75 percent higher. If the property needs more active management such as a motel, the rate can increase. Depending on the establishment and type of financing, commercial mortgage rates typically range between 1.176 percent up to 12 percent.

Commercial real estate loans are fairly considered illiquid assets. Unlike residential mortgages, there are no organized secondary markets for commercial loans. This makes them much harder to sell. Thus, higher rates are assigned for purchasing commercial property.

Indexes Used for Commercial Loans

Lenders tie their commercial loans to several different types of indexes. An index is an indicator or statistical measure of change in market securities. Some of the most popular indexes used for commercial mortgages and adjustable rate loans are the prime rate and LIBOR. Commercial loans rates are also determined by U.S. Treasury Bonds and swap spreads.

This is the average of the prime rates offered by banks to other banks. The prime rate is also offered to the most creditworthy borrowers. Lenders adjust prime rates depending on market conditions. If your commercial loan is indexed to a prime rate, it generally means the rate is based on your lender’s individual prime rate.

LIBOR stands for the London Inter-Bank Offered Rate. It is one of the most widely used benchmarks for indexing interest rates all over the world. LIBOR is the rate used by London banks to lend funds to one another. It is also the rate used by banks that lend in the inter-bank market for short-term loans. LIBOR is based on estimates submitted by leading global banks. The calculation is headed by the ICE Benchmark Administration, which estimates 35 LIBOR rates for various financing products daily.

U.S. Treasury Bonds

Bonds are an important component of the commercial mortgage market. They establish the limit on how much lenders and banks can charge for real estate loans. In particular, the 10-year Treasury note is a type of bond that impacts mortgage rates. It’s auctioned and backed by the U.S. Government, which means it’s more secured compared to high-risk corporate bonds. Moreover, the 10-year Treasury bond is one of the benchmarks for commercial mortgages and residential loans. How the real estate market performs is dependent on 10-Year Treasury yields, which sets the standard for loan prices.

Swap Spreads

A common type of spread used in commercial real estate loans are swap spreads. A swap spread shows the difference between the swap rate (fixed interest rate) and the corresponding government bond yield (sovereign debt yield) of similar maturity. For the U.S., the sovereign debt yield would be the U.S. Treasury security. Swap spreads measure the likelihood of how interest rates will rise.

The tables below show commercial mortgages indices with corresponding yield and swap rates (July 27, 2020):

SOFR – Secured Overnight Financing Rate

The next table indicates commercial mortgage rates from different lending sources in 2020 & 2022:

Note: The range of commercial mortgage rates should be considered typical. However, there are outliers on the high and low end of the range. Thus, these figures do not guarantee actual rates on a specific commercial mortgage deal. The above chart shows data from the middle of 2020 and early August 2022 so you can see how changing credit conditions can impact various options.

Common Sources of Commercial Mortgage Financing

There are many sources of commercial financing in the market. Commercial loans are offered by banks, credit unions, insurance companies, and government-backed lenders. Private investors also lend commercial mortgages but at much higher rates.

The right kind of commercial loan for your business depends on the loan features you need. You must also factor in your business strategy, the type of commercial property, and your credit availability.

Below are several common types of commercial loans and where you can obtain them:

Conventional Commercial Mortgages

Business loans provided by FDIC-backed enterprises such as banks and credit unions are called conventional commercial mortgages. These are used for owner-occupied premises and investment properties. Conventional commercial loans are the kind that require a personal guarantee. During the underwriting process, they also need to check your global cash flow and your personal and business income tax returns.

A commercial mortgage is referred to as a “permanent loan” when you secure your first mortgage on a commercial property. Personal loans are typically amortized for 25 years. But for buildings with significant wear and tear, or properties over 30 years old, they may only grant a commercial loan for 20 years.

Permanent loans are known for their low rates compared to other types of commercial financing. The rates are low because they typically guarantee property that’s already developed and almost fully rented.

Owner-occupied Business vs. Investment Property

For developing an owner-occupied business, you are required to use 51 percent of the property. If you cannot meet this requirement, you should secure an investment property loan. Investment property loans are more appropriate for business owners who want to purchase property and lease them for extra profits. You can also use this to flip and sell old houses.

Conduit or CMBS Loans

A conduit loan , also called a commercial mortgage backed security (CMBS) loan, is a kind of commercial real estate loan backed by a first-position mortgage. Conduit loans are pooled together with a diverse set of other mortgages. Then, they are placed into a Real Estate Mortgage Investment Conduit (REMIC) trust and sold to investors. Each sold loan carries a risk equivalent to its rate of return. This type of loan is also used for properties such as retail buildings, shopping malls, warehouses, offices, and hotels.

Conduit loans can provide liquidity to real estate investors and commercial lenders. They are package by conduit lenders, commercial banks, and investment banks. These loans usually come with a fixed interest rate and a balloon payment by the end of the term. Some lenders also allow interest-only payments. Conduit loans are amortized with 5, 7, and 10-year terms, as well as 25 and 30-year terms.

The Small Business Administration (SBA) offers guaranteed commercial loans to qualified applicants. The SBA is a federal agency dedicated to aid businesses in securing loans. They help reduce default risk for lenders and make it easy for business owners to access capital. The SBA does not lend directly to borrowers, but offer financing through partner lenders, micro-lending institutions, and community development organizations.

There are two common types of SBA loans, the SBA 7(a) loan and the SBA 504 loan.

SBA 7(a) Loans

SBA 7(a) financing is used for developing owner-occupied business property. If you’re looking to build a new commercial establishment or renovate an old office, this can work for you. Likewise, a business is eligible for an SBA 7(a) loan if they occupy more than 50 percent of the property. An SBA 7(a) loan may guarantee up to 85 percent of the loan amount if the mortgage is $150,000. If you need a higher loan amount, the SBA can guarantee up to 75 percent.

This loan can be taken as fixed-rate mortgage, a variable-rate mortgage, or as a combination of the tow. SBA 7(a) loans fully amortize and typically paid up to 25 years. Moreover, the maximum rate for this type of financing is dependent on the current prime rate.

Qualified borrowers can secure up to $5 million from an SBA-backed lender. SBA 7(a) loans are available in fully amortized loans of up to 20 or 25 years.

Business owners can use SBA 7(a) loans to:

• Expand a business
• Establish or acquire a business
• Fund inventory
• Purchasing equipment and machinery
• Renovate or construct buildings
• Refinance existing business debt unrelated to the property

SBA 504 Loans

Another popular SBA commercial mortgage is the SBA 504 loan . It’s geared toward borrowers who utilize over 50 percent of their existing commercial property. This type of mortgage is structured with 2 loans: One part of the loan must be financed with a Certified Development Company (CDC) which accounts for 40 percent of the loan amount. The other part should be financed by a bank that will provide 50 percent of the loan amount.

With an SBA 504 loan, you can obtain up to f $5.5 million from your CDC lender. On the other hand, you can secure up to $5 million from the bank lender. You can use this type of loan to secure larger financing compared to an SBA 7(a) program. SBA 504 loans come with a fully amortized payment structure with a term of up to 20 years.

Borrowers can make use of SBA 504 loans to fund the following business goals:

• Invest in equipment
• Build or upgrade existing facilities
• Purchase existing land or buildings
• Develop land – parking, landscapes, streets
• Refinance debt associated with business expansion, including new or old property and equipment

Hard Money Loans

Borrowers who are unable to secure commercial loans usually have a history of foreclosure or a short sale on a loan. When this happens, they can turn to private investors for hard money loans .

Hard money loans are granted by private lenders as long as you have sufficient equity signed as a collateral for the loan. This type of financing comes in short terms, such as 12 months up to 2 years. If you’re looking for short-term financing to move your business or reconstruct your establishment, you can take advantage of this type of loan.

However, take caution. Private investors can be critical when it comes to repayment. They may also perform background checks on your credit. They base loan approval on property value without heavy reference to creditworthiness. Furthermore, hard money loans usually demand a higher interest rate of 10 percent or more compared to traditional commercial mortgages.

Hard Money Loan Risks

If your lender notices you’re not producing the agreed income, they might cut your financing. Some private lenders may even seize assets signed as collateral till they see proof of return of investment. Keep these risks in mind before you sign up for a hard money loan. If you really must take it, make sure you have enough funds to cover all your bases.

Bridge Loans

Bridge loans are similar to hard money loans though they can last up to 3 years and the interest rate tends to be slightly lower - in the 6% to 10% range. Both bridge and hard money loans are typically interest-only loans.

How to Qualify for Commercial Real Estate Loans

Commercial loan approval depends on your creditworthiness as a business owner. When a lender grants a loan, they trust that your company will produce enough profits to pay back the mortgage. That said, a commercial lender can only approve your loan after carefully reviewing your financial status.

Main Qualifications for Commercial Lending

Lenders refer to three main types of requirements before approving a commercial mortgage. These qualifications include your business finances, personal finances, and the property’s characteristics. They also check your personal and business credit score. Commercial lenders review your accounting books to verify if you have enough cash flow to repay the mortgage.

Apart from your finances, commercial underwriters also evaluate your company profile and your business associates. They will even assess your business plan and check the company’s projected earnings based on your goals. Due to this strict underwriting process, many new companies have a hard time getting their loan approved.

Make sure to meet the following requirements when you apply for a commercial loan:

Business Credit Score

Lenders assess your business credit score to gauge the appropriate interest rate, payment term, and down payment required for your loan. A higher credit score gives you greater chances of securing a commercial loan approval.

Who Scores Business Credit Profiles?

There are three primary credit agencies that assess business credit scores. The following are three main types of business credit scores classifications used by lenders:

• FICO LiquidCredit Small Business Scoring Service ( FICO SBSS score ) – This credit system ranges from 0 to 300, with 300 being the highest. The minimum required FICO SBSS score is 140 for a Small Business Administration loan pre-screen. But generally, 160 is more preferred by lenders.
• Dun & Bradstreet PAYDEX Score – This business credit system has a scale between 1 to 100, with 100 being the best possible score. Scores between 80 and 100 are considered low risk, increasing your company’s credibility to lenders. So aim for a high credit score of 80.
• Experian Business Credit Score – This scoring system ranges from 0 to 100. Zero represents the highest risk, while 100 indicates the lowest risk. For Experian, a credit score between 60 to 100 is classified with medium to low risk. A score of 80 and above is well preferred by lenders.

Personal Credit Score

When it comes to your personal credit score, get ready with a high credit rating. Most commercial lenders prefer borrowers with a FICO score not lower than 680. But to increase your chances of securing a commercial loan, aim for a score of 700.

Down Payment

Make sure you’ve saved up a large down payment. Commercial lenders typically require 20 to 30 percent down payment to secure a loan. Other lenders may even request for a 50 percent down payment.

Your Company’s Age

Lenders prefer businesses that have been running for at least 2 years . This is possible if you have an excellent credit history, both for your business and personal finances. But in many cases, you have higher chances of getting approved if your business is older.

Occupying More Than Half of the Property

A small business is required to occupy 51 percent of the property or more than half of the premises. If you are unable to meet this criteria, you cannot qualify for a commercial mortgage. You should consider applying for an investment property loan instead.

Investment Property Loans

Investment property loans are appropriate for rental properties. Borrowers use them to buy commercial property and rent them out for extra profit. Investment property loans are also used by house flippers who renovate and sell houses in the market.

Lending Ratio Qualifications

Commercial lenders evaluate three major ratios before approving a mortgage. This helps them further assess the risk profile of your loan. The three types of ratios are as follows:

1. Loan-to-Value (LTV) Ratio

LTV ratio is the percentage between the loan value and the market value of the commercial property securing the loan. A mortgage is considered a high-risk loan if the LTV ratio is high. Lenders typically accept 60 to 80 percent LTV for commercial loan borrowers. If you have a high risk loan, your lender usually assigns a higher interest rate.

The accepted LTV ratio depends on the type of property. For instance, 65 percent LTV is approved for land development. On the other hand, up to 80 percent LTV is usually approved for construction loans and multi-dwelling units. In some cases, lenders offer non-conforming commercial loans for borrowers who need a larger mortgage. Non-conforming commercial loans can provide 90 percent financing to qualified borrowers.

To calculate LTV, use the equation below:

LTV = Loan amount / Appraised value of asset

Let’s suppose you have a property worth $850,000 with commercial loan amount of $595,000. Your LTV ratio will be 70 percent.

= 595,000 / 850,000 = 0.7 = 70%

2. Debt Service Coverage Ratio (DSCR)

DSCR estimates your company’s available cash flow. This is essentially the money that pays for your company’s current debt obligations. DSCR is calculated by dividing the annual total debt service with your annual net operating income (NOI). The total annual debt service is the amount borrowers use to pay the principal and interest of a commercial mortgage.

Preferred DSCR for Commercial Loans

A good DSCR range for companies is between 1.15-1.35. Most commercial lenders require a DSCR of 1.25 for approval.

3. Debt Ratio

The debt ratio is evaluated to make sure commercial loan borrowers are not weighed down with personal debt. To estimate debt ratio, divide your personal monthly debt by your monthly income.

In instances where the commercial property is not enough to service the loan, lenders use a global cash flow analysis. Global cash flow analysis is calculated by adding the profits generated by the property and the borrower’s income. By assessing this indicator, a lender can come up with an appropriate coverage for the commercial loan.

Is debt-to-income (DTI) ratio evaluated? Commercial lenders rarely check DTI ratio because they are more focused on the business property’s income and costs.

Prepare the Required Documents

Processing paperwork for a commercial mortgage application is often a slow and taxing process. Lenders require many legal documents that contain extensive financial information.

Get ready with the following documents when you apply for a commercial mortgage:

• Income tax returns – up to 5 years
• Third-party appraisal on the property
• Proof of citizenship (if needed)
• Your business credit report
• Your associates’ credit reports
• State certification as a limited liability entity
• Books accounting the last 5 years of your business, or since it started
• Business plan – states how the property will be used, details the strengths of the business, etc.

How Long Does the Processing Take?

It typically takes around 93 days or 3 months from application to closing. This is the median time for most commercial loan applications. For construction loans, the processing time can even take up to 6 months. And compared to residential mortgages, commercial loans take a lot longer to close.

Factoring the Closing Costs

Besides gathering a significant down payment, you should prepare your finances for other expenses associated with closing a loan. Refer to the following commercial loan fees below:

Underwriting Fees

Commercial lenders pay a fee for the time their staff dedicate to underwriting and processing a loan request. This typically costs around $500 to $2,500. That fee must be stated in the term sheet and is usually paid upfront or via deposit once the loan term is implemented.

Lender's Origination Points

Most banks and credit unions charge 0.25 to 0.5 of the loan amount for origination fees. For independent lenders, it can be 2 percent or higher because of the higher risk involved.

Appraisal Fees

Expect appraisal cost to be anywhere between $1,000 to $10,000. Large-scale commercial projects can even cost between $10,000 to $25,000 for appraisal.

Third-party appraisal is commonly done to analyze and estimate the value of the commercial property. Though it's not strictly imposed, appraisal is commonly practiced by many private lenders. Third-party appraisal is especially required for federally-backed commercial real estate exceeding a value of $500,000.

Title Insurance Policy

Title search and insurance costs around $2,500 to $15,000. This protects the lender from financial losses in case there are claims against the property's title.

Property Inspections

Inspections evaluate the actual condition of your property. The cost is determined by the size of your prperty, which is around $0.03 to $0.10 per square feet.

Environmental Report

Inspecting a land or building for environmental issues is a required step in securing commercial financing. A Phase 1 environmental report typically costs around $2,000 to $6,000.

Broker's Fee

You only need to worry about this cost if you use a broker or third-party platform. For commercial loans $5,000,000 and below, the hovering broker fee is around 1 percent to 1.5 percent of the loan amount. Brokers can add a lot of value to the process by getting you the best rate and keeping things running smoothly so you are not surprised by a lender which backs out.

Comparing Commercial Mortgages with Residential Loans

There are many similarities between residential mortgage requirements and commercial real estate loans. Both need satisfactory credit scores, credit background checks, and the right down payment amount to secure financing. However, there are many differences between these two loans.

First, commercial mortgages require a stricter underwriting process. It also takes a lot longer compared to the average residential loan. Next, commercial mortgages entail higher costs compared to residential loans. They also usually have a higher interest rate compared to housing loans.

To detail the differences between commercial loans and residential mortgages, we came up with the table below:

Useful Tips Before Applying for a Commercial Loan

Looking for a favorable commercial mortgage deal can get overwhelming. But by doing enough research, you can find a loan option that works for you. Here are several tips you should take note of before obtaining a commercial loan:

• Shop Around for Different Commercial Loans – Don’t rely on a single commercial lender. Instead, contact at least three different loan providers. business lending is very subjective. This means your eligibility is determined by someone who may or may not be fair. The more options you have, including both banks and non-bank lenders, the more likely you are to get approved. You can also choose the most favorable deal from your options.
• Beware of Scammers – Why would anyone pretend to be a direct commercial lender? Sadly, scammers charge exorbitant application fees without the intent of approving a loan. If for any reason, you find a direct lender suspicious, look for another loan provider. For your safety, it’s better to contact reputable commercial lenders like banks, insurance companies, or credit unions.
• Take Advantage of Your Deposit Relationship – If your company generates a high cash flow, you can use the promise of a deposit relationship to get a better deal. Promise to transfer all of your accounts to the bank that handles your business real estate. Smaller banks will especially appreciate the additional cash flowing into their coffers.
• Lenders Must Order The Appraisal – Never let a mortgage broker talk you into letting them order the appraisal. Only the lender can do that. By law, a bank won’t be able to accept it.
• Wait For the Term Sheet – A term sheet is a written declaration of interest by a direct commercial lender that comes with an estimate of the terms. While it is not binding, it is a very desirable document to have. Don’t agree to pay for an appraisal until you see a term sheet that holds details that are acceptable to you.
• Consider the Location – Location is equally important when it comes to choosing a lender for business real estate. As a rule of thumb, local lenders offer better deals than out-of-town lenders.
• Filing a Toxic Report – If you default on your loan and the lender forecloses your property, provide a Level 1 toxic report. In case the property is a toxically-impaired building, the lender is strictly liable for the cleanup costs. Toxic reports are done by an environmental engineering firm. They investigate properties for any evidence of contamination that may be harmful to occupants. A typical Level 1 toxic report costs $1,800 and $3,000.

The Takeaway

Commercial real estate loans are essential financing tools that aid business growth. Small and large businesses can qualify for commercial financing to jump-start their company or upgrade their operations. They can use it as capital to renovate commercial property and even purchase business equipment.

But unlike residential mortgages, commercial loans require a large down payment, which is at least 20 percent of the commercial property’s value. Other lenders may require up to 50 percent down payment. They also impose more stringent credit background checks on your business and personal finances. For these reasons, a commercial mortgage takes longer to process than residential loans.

Despite the long process, securing a commercial loan is vital for many businesses. It help companies acquire commercial property to avoid paying rent. In the long-term, if you own your business property, you can avoid rising rental expenses and lower your cost structure. This gives you financial cushion during harsh economic downturns that negatively impact your profits.

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• Compare Commercial Mortgage Rates

Commercial loans can fund the purchase, refinance or expand commercial property. Knowing what impacts commercial mortgage rates and using strategies to find competitive ones can help you make the most of your investment.

Updated: October 29, 2023

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What Is a Commercial Mortgage?

• Commercial vs Residential Mortgages

Securing a Commercial Mortgage

• Common Mistakes to Avoid
• Finding the Best Rates

Mortgages are loans taken out to buy property, helping individuals and businesses alike make major purchases. Not all mortgages are for residential properties. There are also commercial mortgages specifically designed for businesses to purchase or refinance commercial properties. These loans come with their unique considerations, and one critical aspect to keep in mind is the mortgage rate. Understanding commercial mortgage rates is vital because they significantly impact the overall cost of borrowing and can affect your business's financial future. Knowing the rates, how they fluctuate and what factors influence them will help borrowers make well-informed decisions.

Current Commercial Mortgage Rates

Commercial mortgage rates can vary, often reflecting changes in the broader economy. That's why staying updated on current commercial mortgage rates becomes essential when making wise financial decisions. Knowing the current commercial mortgage rates can help borrowers gauge whether it's a suitable time to take out a loan or refinance an existing one .

You can use the table below find the most recent data on current commercial mortgage rates. These numbers are subject to change and can fluctuate depending on several factors.

Understanding the dynamics of commercial mortgage rates and keeping an eye on current trends allows you to make smart decisions that align with your business goals and financial situation.

Factors Affecting Commercial Mortgage Rates

Commercial mortgage rates fluctuate for various reasons, and understanding this allows you to strategize effectively. For example, if you recognize that current economic conditions are leading to lower commercial mortgage rates, you might delay obtaining a loan until the rates drop. Conversely, if market trends indicate a spike in demand for commercial properties, you might decide to get a mortgage before the current rate increases.

Knowing what drives rates up or down lets you make informed decisions tailored to your unique situations. You may want to time your loan application to take advantage of favorable rates or choose a property with characteristics that align with lower rates.

Economic Conditions : Interest rates, inflation , and the health of the economy can drive commercial mortgage rates up or down. For example, a robust economy with low inflation might lead to lower interest.

Market Trends : The demand and supply dynamics in the commercial real estate market directly impact rates. A surge in demand with limited supply might push rates higher, while increased supply with stagnant demand may lead to lower rates.

Lender Policies : Individual lenders may have unique criteria, lending practices and internal policies that influence the rates they offer. For example, a lender focusing on community development might offer more favorable rates to businesses in targeted areas, while another might charge higher rates based on their risk assessments.

Property Location : The location of the commercial property affects its value and risk, which in turn influences the mortgage rate. Prime locations may attract lower rates, while properties in less desirable areas may have higher ones.

Tenant Quality : Lenders look at the quality and stability of tenants in a commercial property. Reliable, long-term tenants might lead to lower rates, while higher-risk tenants could result in increased rates.

Lease Terms : The terms of leases within the commercial property can also affect rates. For instance, long-term leases that provide stable income may lead to lower rates, while short-term or unstable lease agreements might drive rates higher.

These factors are interrelated and shape commercial mortgage rates. You can better anticipate changes in rates and find the best fit for your financial goals when you recognize and understand these elements.

A commercial mortgage is a specialized loan to finance commercial properties such as office buildings, shopping centers or industrial warehouses. It's not just about property acquisition — you can use commercial mortgages to refinance an existing property, fund the expansion of a current facility or for other business-related needs, such as purchasing essential equipment or increasing working capital.

Understanding commercial mortgage rates is vital if you are looking at this loan type because the rates will influence the cost of borrowing and, subsequently, your return on investment.

Knowing the types of properties that qualify for a commercial mortgage, or how the funds can be used, can help borrowers make strategic financial decisions. These include:

• Office Buildings : Ranging from single-tenant offices to large skyscrapers.
• Retail Spaces : Such as shopping centers, strip malls, and individual retail stores.
• Industrial Properties : Including manufacturing facilities or warehouses.
• Hotels : Encompassing everything from smaller motels to large luxury hotels.
• Multi-family Units : These are apartment buildings designed to house multiple tenants.

You can use this knowledge to explore tailored financing options that align with the specific nature and requirements of the commercial property or business needs.

Types of Commercial Mortgages

Understanding the different types of commercial mortgages available is crucial. It allows you to select the loan that best suits your needs and goals, considering your business model and financial situation. An informed choice can lead to favorable terms and a more sustainable repayment strategy. Our table below breaks down your options:

You can search for financing with a strategic mindset if you know your options. Selecting the loan type that matches your business needs and financial situation is important for securing a mortgage that will support your business's growth and stability.

Comparing Commercial and Residential Mortgages

If you're thinking about buying property, it's helpful to know the differences between commercial and residential mortgages. They might sound similar, but they have key differences that can affect what type of loan is right for you.

Understanding these differences makes it easier for you to pick the right loan, whether you're looking to invest in a business property or buy a place to call home. It's all about finding what fits your needs and goals.

When it comes to securing a commercial mortgage, there's more to it than just filling out an application. It involves thoughtful consideration of various factors, understanding the application process step-by-step and knowing the costs that come with commercial mortgages. Whether you're a seasoned business owner or venturing into a new opportunity, this information puts you in a better position to make a well-informed decision.

What to Consider When Shopping for a Commercial Mortgage

Shopping around for a commercial mortgage might feel overwhelming, but rushing into the first offer could lead to serious consequences. Without exploring various lenders and understanding what's behind the numbers, you might end up trapped in unfavorable terms, hidden fees or a loan that doesn’t align with your business's future. Here's what you should carefully consider:

Interest Rates : While rates are vital, don’t forget to see how they align with other aspects, like the flexibility of repayment or possibility of refinancing. A low rate doesn't always mean the best deal.

Loan Terms : Assess the length of the loan, payment structure and any potential penalties. A short-term loan might have higher monthly payments, while a long-term one could mean paying more in interest.

Lender Reputation : Look for reviews and ask for references. Working with a reputable lender can ease the process and help you avoid unexpected complications.

Prepayment Options : Explore if you can pay off the loan early without penalties. This flexibility might help you save on interest if your business grows faster than expected.

Additional Costs : Understand all the fees involved, not just the ones you pay upfront. Ongoing fees or late payment penalties can add up and affect your budget .

Your Financial Situation : Assess what you can realistically afford. Overcommitting might lead to financial strain or even default, affecting your credit rating .

Property Evaluation : Consider not just the current value but the property's potential growth and alignment with your business plan. A well-located property might justify a higher interest rate.

Legal and Regulatory Requirements : Verify compliance with all laws and regulations. Non-compliance could lead to legal challenges later on.

Making the effort to explore different lenders, understanding your needs and considering how all these factors interplay increases your chances of finding a commercial mortgage that fits your unique situation. That way, you’re not just settling for a loan, but strategically choosing a financial tool that supports your business growth.

Steps to Getting a Commercial Mortgage

Navigating the commercial mortgage application process can feel like a maze, but understanding the steps ahead of time turns it into a clear path. Here’s a step-by-step guide to help you move confidently through the application, underwriting and approval stages:

Preparation : Gather all required documents, including business financial statements, personal credit reports and property details. Understanding what's needed can smooth the application process.

Choosing a Lender : Evaluate mortgage lenders based on your specific needs and considerations.

Submitting the Application : Complete the application forms with all necessary details. Providing accurate and comprehensive information avoids delays.

Underwriting : The lender evaluates your application, assessing the risk, your ability to repay and the property's value. Being transparent and prompt with any information requested can hasten this stage.

Loan Approval : If the underwriting is successful, you’ll receive a formal approval. Thoroughly review the terms before accepting to ensure they match your expectations.

Closing Process : This final step includes signing all documents, paying any closing costs and formally securing the loan.

Post-Closing Obligations : Stay aware of your ongoing obligations, such as payments, reporting and compliance with any commitments. Keeping open communication lines with your lender helps you maintain a positive relationship.

Understanding these steps allows you to be an active participant in the process. Each stage requires thoughtful decision-making, where awareness of the rates, terms and other factors allows you to align the loan with your unique business needs.

Costs Associated With Commercial Mortgages

It is important you understand the associated costs because overlooking them can lead to unexpected surprises that may strain your budget. A loan may have an attractive rate, but you may be caught off guard by hefty fees at closing. Ongoing expenses you didn't anticipate could disrupt your cash flow. These scenarios emphasize the importance of knowing the different costs tied to commercial mortgages. Let's break them down into three main categories:

Upfront Costs : These are the costs you encounter at the beginning of the loan process. They're related to the initial steps, such as applying and evaluating the property's worth.

• Application Fee : Paid during the application process.
• Appraisal Fee : For professional property valuation.
• Loan Origination Fee : Covers administrative setup costs.

Closing Costs : These are expenses that arise when finalizing the loan. This is the last stage before you secure the mortgage, where all the legalities are completed and everything is ready for the loan to be granted.

• Legal Fees : Ensuring all legal documents are in order.
• Title Insurance : Protection against title issues.
• Closing Fee : Fees related to notary services, document preparation and other finalizing costs.

Ongoing Expenses : Unlike the upfront and closing costs, ongoing expenses persist throughout the life of the loan. They include regular payments and responsibilities that continue for as long as you have the mortgage.

• Interest : Ongoing interest costs.
• Property Taxes : Regular payments to local governments.
• Insurance : Required insurances, such as property or liability coverage .
• Maintenance and Repairs : Continuous upkeep of the property.

You need to understand these associated costs from start to finish. These can help you navigate your commercial mortgage confidently, ensuring you align your choices with your broader financial objectives, preventing any financial surprises.

Common Mistakes When Searching for a Commercial Mortgage

Knowing these common mistakes can help you avoid unnecessary delays, costly errors and unfavorable loan terms. You need to understand how these mistakes can affect both rates and overall loan conditions so you can make informed decisions. These mistakes are described below:

Not Shopping Around for the Best Deal : Accepting the first offer might seem the easiest choice, but it could lead to higher rates and less favorable conditions. You can find a deal that best suits your needs by exploring different lenders, comparing various loan terms and negotiating,

Neglecting to Assess the Property Properly : Failing to assess the property correctly can lead to an unfavorable loan-to-value ratio, impacting rates and conditions. You can negotiate better terms by hiring a professional appraiser and understanding factors influencing the property's value, such as location and condition.

Failing to Consider Loan Type and Structure : Choosing the wrong loan type or structure might lead to unexpected costs and difficulties in managing the loan. Take time to understand the differences between fixed and variable rates, short and long-term loans and consult with a financial advisor if needed.

Overlooking Legal and Compliance Requirements : Non-compliance with legal requirements might lead to delays, extra costs or even loan rejection. Familiarize yourself with zoning laws, permits and licenses specific to your property, and ensure complete compliance.

Inadequate Preparation of Financial Documents : Missing or incomplete financial documents can slow down the approval process and might affect the loan's terms. Organize all necessary financial records, including business financials and credit history, well in advance to ensure a smooth process.

Ignoring Potential Risks and Exit Strategy : You might find yourself in a difficult financial position if you don’t plan for market fluctuations or other unexpected scenarios. Consider potential risks, develop contingency plans and have a clear exit strategy to protect your investment.

You can ensure a more successful commercial mortgage application by knowing these common mistakes. You'll be better prepared to navigate the complex landscape of commercial lending, making decisions that align with your unique needs and financial aspirations.

Tips to Get the Best Commercial Mortgage Rates

Securing competitive commercial mortgage rates isn't just about saving money — it's about maximizing the potential of your investment. Whether you're a seasoned business owner, an investor or someone looking to venture into the commercial real estate market, having the best rates helps your financial success. These tips can help you secure the most favorable commercial mortgage rates:

Build Strong Relationships with Lenders : Maintaining relationships with financial institutions can lead to better negotiation and special deals. Show that you're a trustworthy borrower through consistent communication and collaboration.

Consider Shorter Loan Terms : While longer terms might appear more manageable, shorter loan periods often come with lower interest rates. Weigh the pros and cons of loan durations to find the balance that suits your financial situation.

Monitor Interest Rate Trends : Stay updated on market trends and economic indicators that influence interest rates. Understanding these trends can help you time your application for maximum benefit.

Improve Your Creditworthiness : Beyond your credit score, lenders consider your entire credit profile. Take actionable steps to improve areas like debt-to-income ratio or business financial stability to present yourself as a low-risk borrower.

Consider Hiring a Mortgage Broker : If the mortgage landscape seems daunting, consider hiring a professional broker . Their expertise can assist in finding the best rates, negotiating terms and streamlining the application process.

Utilize Your Business Network : Use connections within your industry or business community. Referrals and recommendations can lead to specialized lenders or unique opportunities that might offer more favorable rates.

These tips allow you to position yourself for financial savings and ensures alignment between your decisions and your financial plan. Making informed choices ensures that your commercial mortgage supports your business success and long-term financial well-being.

Frequently Asked Questions

Borrowers exploring commercial mortgages often have unique questions and concerns. You can get additional insights from these commonly-asked queries and deepen your understanding of commercial mortgage rates, allowing you to make well-informed decisions.

About Christopher Boston

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.

The importance of a good business plan for a Commercial Mortgage

by mortgageguide | May 14, 2023 | commercial mortgages | 0 comments

How to Create a Winning Business Plan for a UK Commercial Mortgage

Quick review of key points, why you need a good business plan for a uk commercial mortgage, investors and lenders require specific documents, the different asks of a uk commercial mortgage plan, financials and risk assessments to include, creating a brief yet detailed plan, setting goals and achieving them, must-know summary points, most common questions, what are the costs associated with obtaining a uk commercial mortgage, what are the advantages and drawbacks of obtaining a uk commercial mortgage, what types of documents/information are needed to apply for a uk commercial mortgage.

UK commercial mortgages can be intimidating for businesses to navigate. But, by taking the right steps you can secure the funding you require to get your business up and running. The key to a successful UK commercial mortgage lies in creating a winning business plan that can secure the equity and financing you need to get started. So, let’s take a look at how you can create a winning business plan that is sure to turn the head of a loan provider!

When creating a business plan for a UK commercial mortgage, it’s important to include detailed financial statements, an overview of the property you wish to purchase, and a strong marketing strategy. You should also include an assessment of the risks associated with your mortgage.

It is essential to have a comprehensive business plan when applying for a UK commercial mortgage. A good business plan outlines your company’s goals, objectives and financial projections that demonstrate why lenders should approve the loan. It can help show lenders why they should be willing to take on such a large amount of money as it shows that you as the borrower are financially prepared to accept this type of loan. One of the advantages of having a well-thought-out business plan is that it communicates your plans effectively to lenders. This means that when companies present their business plan, it will leave an impact on lenders who for which it was intended for and allow them an understanding about what you’re planning to accomplish with the funds. Furthermore, if there are any difficult decisions for them to make, providing them with a clear plan about how you’ll be using the funds can help sway their decision in your favour. Having a good business plan also demonstrates to lenders that you are organised and professional; qualities they will be looking for in potential borrowers. Lenders need to know they are making a reasonable risk assessment and getting back what they put in over time, so creating a detailed timeline showing each step of the project could prove beneficial in getting approval. On the other hand, many experienced entrepreneurs don’t necessarily require a business plan when applying for commercial mortgages but short loans statements instead. However, having some sort of plan still contributes significantly to higher chances of loan approval as potential investors or lenders like to know exactly how their money will be used and it reassures them that their money won’t be wasted if they approve your request. Therefore, having a good business plan is incredibly important when applying for UK commercial mortgages; not just for the purpose of achieving loan approval but also for better project management down the line. Moving forward, it is important to keep in mind that most investors and lenders will require certain documents from borrowers prior to approving their applications.

When it comes to a UK Commercial Mortgage plan, the most important element is gaining the attention of lenders and investors. To do this, your plan needs to be backed up by specific documents that verify claims and present a comprehensive overview of your business and financials. In some cases, you may need to provide additional documents that demonstrate liquidity, credit history, business insurance policies,, and any necessary permits or licences. Investors and Lenders require these documents to confirm the feasibility of a UK commercial mortgage. Without them, they will not feel secure that the loan can be repaid within an agreed-upon timeline. Hence, presenting all necessary paperwork is critical as part of a successful business plan. On the other hand, it is also important not to overwhelm lenders and investors with superfluous documents that don’t actually contribute anything during the mortgage approval process. Therefore, providing only relevant information can give you a better chance of approval. After all, lenders and investors are busy professionals who are not interested in reading through convoluted details that have nothing to do with their decision-making process. It is crucial to submit all requested documents while also avoiding unnecessary ones. By diligently preparing all required documents and providing an accurate overview of your business’s financials while eliminating irrelevant information, you can help improve your chances of securing approval for a UK commercial mortgage plan. Now that you understand what documents must be included in a successful UK Commercial Mortgage Plan, it’s time to review the different asks that come with such an exciting venture.

When constructing a business plan in order to obtain a commercial mortgage, it is important to understand the various asks and understand what will be required of you as the borrower. Generally speaking, lenders ask for information which can help them determine if the business venture you are proposing is viable and likely to be repaid in full. As such, there are some key pieces of information that your business plan must include in order to secure a UK commercial mortgage. These details often include information regarding the purpose of the loan and how long repayment terms should last. Along with this, they may also want to know the projected cash flow of the company and assess how much debt service can be sustained. On one hand, providing lenders with these financial documents ensures that they can more accurately assess the risk associated with lending you money and feel assured that their investment will be protected. Furthermore, these documents can also help to increase the chances of getting a loan approved due to the bank being confident about their decision. Additionally, having comprehensive financials will allow companies to see into greater detail exactly how much money will be coming in and out, ensuring that businesses are able to pay back loans in a reliable manner, while not affecting any other operations. On the opposite side of the argument, providing too much detail can have negative impacts. There’s a chance lenders could view certain aspects of the commercial mortgage proposal unfavourably if it looks like too much risk or simply does not adhere to their criteria. It is important therefore for applicants to make sure that all material submitted for consideration is accurate and conveys an overall favourable performance by the business venture being presented. During times of economic crisis, banks are also more likely to take uncertainty into account when making lending decisions and therefore having incomplete data could potentially hurt your chances of receiving approval. In conclusion it is important that businesses producing proposals for a UK commercial mortgage have evidence of their financial stability in order stay competitive and maximise their chances of approval by creditors. A thorough understanding of retail banking requirements combined with up-to-date financials ensures that your proposal stands a strong chance of succeeding when measured against competitors operating in similar markets. Moving forward, it is also essential that businesses consider how they can properly assess risk and manage any potential liability associated with taking on additional debt through a commercial mortgage agreement.

• According to the British Business Bank, over 60% of new businesses fail within the first 3 years due to lack of effective planning.
• A 2018 survey by the U.K. government revealed that only 16% of small businesses have a formal written business plan.
• According to a study published in 2020, nearly 50% of lenders in the UK prefer to review an applicant’s business plan when considering their application for a commercial mortgage.

When writing a business plan for a UK commercial mortgage, the financials and risk assessments should not be an afterthought. This section of the business plan is possibly the most important and requires detailed attention. Preparing these documents accurately and thoroughly is necessary to ensure the lender has everything they need to make an informed decision on your mortgage application . Including financial statements and cash flow projections are integral parts of the commercial mortgage plan. This includes details such as profit and loss statements along with balance sheets, income statements, accounts receivable and payable information, capital expenditure budgets, asset management plans and any other information pertinent to the nature of the loan you are seeking. The details here must be accurate as lenders require up-to-date information that is clearly understood in order to assess your ability to repay a loan. Preparing ris k analyses is also key in a commercial mortgage plan. Risk assessment looks at factors such as market fluctuations and currency rate changes when determining if your loan application should be approved or denied. It is important to adequately explain these risks prior to making a request for a loan; any shortcomings in this area could prompt the lender to reject your application outright, so consider it time well spent if done correctly. This stage may also require financial modelling using mathematical projection estimates which would help determine how market variations could affect repayment over time depending on loan terms. By gathering all the required documentation and providing clear evidence in both financials and risk assessments lenders can gauge their investments’ soundness before committing funds to those businesses. Without this information, commercial mortgage loans may be rejected outright due to lack of transparency or unsustainable risk profiles. Therefore, adding details around these two elements will be a great aid in convincing lenders that they can trust you with an investment loan approval. Moving forward, providing concise yet comprehensive details in your business plan will make a critical difference between approval or rejection of your application.

Creating a brief yet detailed plan for a UK commercial mortgage is essential for any entrepreneur or businessman. Having a well-thought-out plan can significantly increase likelihood of success and help secure financing from investors or lenders. Therefore, given the importance of such plans, it is important to strike the right balance between brevity and detail. On one hand, it is important to provide enough details in a business plan so that potential financial investors or lenders can get an insightful understanding of the project’s goals. This should include comprehensive research into the industry, target market and competitors. Moreover, by providing evidence of thorough market research and achievable financial projections, lenders will be more inclined to fund a project. On the other hand, it is also important not to provide too much detail in order to maintain overall readability and keep the key points clear. Otherwise potential lenders may lose interest in the project altogether. Therefore, when creating a business plan for a UK commercial mortgage it is vital to provide just enough information that highlights key elements such as profitability estimations, revenue sources and proposed strategies while keeping brevity in mind. Keeping focused on these primary points increases the likelihood of securing financing for a project without making the document feel overly long winded or cumbersome. By creating a brief yet detailed business plan for their UK commercial mortgage and researching the industry, market and competitors thoroughly, entrepreneurs can significantly improve their chances at achieving success with their projects or ventures. Additionally, being forthright about risks associated with these projects can further allay any fears from prospective lenders and get them on board with your business ideas faster than ever before. With this winning combination in place, entrepreneurs can then move on to setting goals that are achievable and realistic so they can ensure their success will last over time.

Creating a successful business plan is essential when seeking to secure a UK commercial mortgage. Having a clearly defined plan in place from the outset will build confidence in potential lenders and help you to set objectives for the future of your business. Once the brief but detailed business plan has been constructed, setting goals and achieving them should be your highest priority. Setting goals should be realistic and achievable, as well as measurable so that you can chart your progress over time. Goals should be broken down into smaller chunks and aimed at both short-term and long-term strategies. For example, if you are trying to acquire additional capital through a commercial loan, setting a six-month goal to fully prepare all necessary documents may be beneficial. In addition, setting goals that revolve around advancing project milestones or improving customer service are also powerful motivators which will help move the company forward. The importance of mindfulness when it comes to goal-setting is crucial. You must take into consideration several factors, such as the resources needed or current market conditions, which could affect the timeline or direction of your project. Achieving goals requires focus on what needs to be done while also accepting any bumps along the way. The ability to stay resilient even during challenging times or setbacks can be one of the most powerful tools in your arsenal when it comes to overcome any obstacles that may arise on your journey towards success. As evident with various studies on goal management, research shows that individuals who make consistent efforts towards their goals are more likely to not only achieve them faster but also experience greater levels of job satisfaction and autonomy. If applied correctly, goal setting techniques can make a huge difference in helping businesses navigate turbulent times and come out as better versions of themselves after every endeavours.

Clear goal-setting is important when seeking a UK loan and is also key to achieving growth and success in any business. Goals should be measurable, realistic, and achievable, broken down into smaller chunks and be mindful of resources needed and market conditions. Research has proven that those who set clear goals and make consistent efforts towards them are more likely to achieve them faster with increases in job satisfaction and autonomy.

The costs associated with obtaining a UK commercial mortgage can vary greatly depending on the size of the loan, the lender and the type of property being mortgaged. Generally speaking, costs will include application fees, legal fees, surveyor fees (or valuation fee), broker fees and set-up/arrangement fees. Application fees vary with each lender but typically range from £500 up to around £2,000; legal fees will also vary depending on the lender and structure of the loan and can often be a percentage of the loan amount; surveyor fees may also be charged to carry out a valuation or inspection of the security property; broker fees (if applicable) are usually a percentage of the loan amount for arranging the financing; and set-up/arrangement fees may be charged by some lenders for setting up or structuring a good deal.

The advantages of obtaining a UK commercial mortgage are numerous. First, it allows businesses to acquire the necessary financial capital to invest in expansions, new products and services, new markets, or even acquire other businesses. Second, it offers a more flexible repayment plan than traditional bank loans, which can be tailored to the borrower’s specific needs. Third, interest rates for commercial mortgages tend to be preferable for borrowers when compared to standard bank loans. On the downside, there are certain risks associated with obtaining a UK commercial mortgage. First, if the business defaults on its payments the lender may repossess their property in lieu of payment. Second, depending on the size of the loan requested or size of the equity stake being put up by the borrower, they may need to provide additional collateral such as personal guarantees or additional bonds to minimise their risk exposure to the lender. Additionally, since commercial mortgages are secured against physical property such as buildings and land, this also means that if something happens to these properties (eg natural disaster), it could affect the business’s ability to service its loan obligations.

The types of documents and information required to apply for a UK commercial mortgage depend on the lender and type of business. Generally, however, some common documents and information may include: • Proof of identity – This could be a valid passport or driver’s licence. • Business financials – This could include your balance sheet, annual accounts, or other records that reflect the financial state of your business. • Last 3 years’ tax returns – Any tax returns you have filed in the last three years will need to be submitted as part of your application. • Business plan – Lenders like to see a comprehensive and well-thought-out business plan outlining your goals and strategies. • Cash flow statements – These should provide an accurate snapshot of the income and expenditure of your company over a given period of time. • Collateral/security – You may need to offer security in order to obtain a loan; alternatively, some lenders might accept just a personal guarantee. By providing accurate information backed up by relevant documents, you can help show potential lenders that your business is in good shape and ensure you are well prepared when applying for a UK commercial mortgage.

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What are commercial real estate or CRE loans?

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Key takeaways

• Commercial real estate loans are used to purchase, construct, rehabilitate or refinance commercial properties, as opposed to residential ones.
• However, they might also be used to buy and develop land for residential homes to be built and sold.
• With a CRE loan, the borrower's credit and income are less important than in residential loans — the property's potential income is the main factor.

Whether you’re a developer embarking on a new subdivision project or an office building owner looking to refinance, chances are you’ll need a commercial real estate loan. Unlike residential real estate, commercial real estate refers to property that’s used for business, such as a hotel, office park or shopping center. The typical commercial real estate loan borrower might be a business owner (including small business owners), developer or investor. Commercial real estate loans work differently than residential mortgages in terms of underwriting, structure, interest rates and fees, and there are several types to choose from.

What are CRE loans?

Commercial real estate loans, often called CRE loans for short, are typically used to purchase, construct, rehabilitate or refinance commercial, industrial and other non-owner-occupied property. That can include office buildings, multi-unit rental buildings, medical facilities, warehouses, hotels or vacant land on which one or more of these types of properties will be built. They can also be used to buy and develop land on which homes will be constructed and sold.

Unlike buying a home with a residential mortgage, the underlying asset for a commercial loan is not a primary residence. Instead, the commercial lender underwrites based on the income — such as rent from tenants — and expenses that the property will generate.

“Ideal candidates to pursue a commercial real estate loan include borrowers who either own the property and are seeking to lower their interest rate by refinancing or seek to obtain capital through a cash-out refinance,” says Chris Moreno, CEO of GoKapital in Miami. “Business owners who rent a location and qualify for a commercial real estate loan may be better off obtaining financing to purchase their business property.”

Commercial real estate loan types

CRE loans come in many different varieties. Here’s a rundown of common commercial real estate loan types to pick from.

Commercial real estate loans are also classified by asset classes. These include apartment buildings, office spaces, medical facilities and industrial properties, as well as multi-unit versus single-tenant assets.

“All of these are evaluated differently by the lender,” says Barry Saywitz, president of the Saywitz Company, a commercial real estate brokerage based in Newport Beach, California. “The value of the asset will be determined by the appraisal required, and the appraisal will be determined based on the quality of the tenant, their credit, payment history and rental rate, and the condition of the building and expenses involved.”

CRE loans for investment properties

Commercial real estate loans can be ideal for financing many different kinds of investment properties. But it’s important to understand the rules.

“The investment property must be capable of generating income, and the strength of the sponsor/owner will likely be relied upon for evaluating the loan,” says Rohit Mathur, CEO of commercial lending company Bridge in New York City and Charlotte.

Like all loans, the lender will broadly evaluate the confidence that the loan for an investment property will be repaid, according to Adam Kenney, chief product officer for Numerated, a Boston-based commercial lending platform.

“What’s unique about a CRE loan is that the property will get evaluated as much or potentially more than the business holding the loan,” Kenney says. “The property’s ability to reliably produce positive cash flow is almost always going to be the biggest determining factor in the ability to repay the loan.”

Commercial loan rates fluctuate depending on the property type and the anticipated income it will generate. Commercial buyers may need to provide a larger down payment than regular homebuyers, as commercial lenders typically require lower loan-to-value ratios. Just like with residential loans, commercial loan interest rates are influenced by various factors and adjust frequently based on market conditions.

Commercial loan vs. residential loan

Commercial loan.

• Used for development and business properties
• Underwriting relies on the business financial plan
• Typically shorter payoff periods

Residential loan

• Used for personal residences
• Underwriting relies on the personal finances of the borrower
• Typically longer payoff periods

Like a residential mortgage, a commercial mortgage can be used to purchase or refinance a property. Commercial real estate loans, however, typically come with a shorter term than a residential mortgage loan. A commercial loan could have fixed rate for five years and a 15-year term, amortized over 20 years, for example, says James Sandagato, senior vice president at Cornerstone Bank in Southbridge, Massachusetts.

“The interest rate would adjust every five years, and the balance would be due at the end of the 15-year term, which is referred to as a balloon note,” Sandagato says. “The balance could then be repaid at the end of the term, or the loan can be renewed on rates, terms and conditions to be determined at that time.”

Commercial loan lenders also look to the property, not the borrower, as the source of debt repayment. “With a residential loan, the lender underwrites the repayment capacity of the borrower by analyzing his or her income and creditworthiness,” says Suzanne Hollander, a real estate attorney and professor at Florida International University in Miami. “A commercial loan lender looks at the debt service coverage ratio from the income the property will generate.”

Riley Manke, a director at Walker & Dunlop in Calabasas, California, notes that residential loans “rely heavily on a borrower’s credit score and their debt-to-income ratio, while CRE underwriting relies on a borrower’s net worth, liquidity and experience with the product type they are seeking financing on.”

In addition, the fees and closing costs involved with a commercial real estate loan are commonly much higher than those for a residential mortgage, along with the down payment. Count on making a down payment of at least 20 percent, although up to 45 percent could be required.

The appraisal process is different, as well, Saywitz says. A commercial real estate appraiser will review the property’s potential rental income, comparable sales and prospective replacement costs. This generally takes longer than a residential appraisal that often merely examines comparable sales in the area .

Additionally, when it comes to interest rates, expect to pay more for a commercial mortgage if you’re obtaining it through a private lender, says Moreno. “If you’re looking to close on a transaction quickly or have less-than-perfect credit, you’ll probably have to work with a private lender,” he says.

How to get a commercial real estate loan

The process of seeking and applying for financing for a commercial property involves several key steps.

• Assess the commercial property’s financials carefully. “Lenders will not only review your personal credit history and financials, but they will also evaluate the underlying asset thoroughly,” Moreno says.
• Determine the type of commercial loan you need and shop around. If you have a strong credit profile and your financials are in good shape, you should be able to work with a bank. “Typically, the main avenue borrowers use is to source lenders directly, such as by going to individual banks and soliciting options,” says Mathur.
• Complete a commercial real estate loan application. You’ll need to provide documentation, such as personal and business tax returns, a personal financial statement, personal balance sheet and historical income and expenses for the property. “[This] can also include the property seller’s Schedule E from their federal tax return or a financial statement prepared by the seller,” Sandagato says. Also, be ready to furnish a current listing of each tenant, the space they occupy, tenancy commencement dates, lease details and lease agreements.
• Await the loan processing and underwriting. The lender will use the information you provide to substantiate the property’s ability to repay the debt. “In general, lenders are looking for the property to be able to support a debt service coverage ratio of 1.2 to 1,” Sandagato says. “What that means is, for every $1 in mortgage debt on an annual basis, there is $1.20 in cash flow to support it.”
• Close on the loan. Closing a commercial loan can often take longer than it would for a residential mortgage. “Remember that the lender views a loan to purchase commercial property as more risky than residential, so they need to do their due diligence,” Hollander says.

Are CRE loans impacted by rising rates and inflation?

How long is a commercial real estate loan, can you get a cre loan for a residential home.

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Loan Officer Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped thousands of loan officers develop business plans to grow their businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a loan officer business plan template step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Loan Officer Business Plan?

A business plan provides a snapshot of your loan business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Loan Officer

If you’re looking to grow your existing loan business, you need a business plan. A business plan will plan out the growth of your loan business in order to improve your chances of success. Your loan business plan is a living document that should be updated annually as your company grows and changes.

Finish Your Business Plan Today!

If you want to grow your loan officer business, you need a business plan. Below are links to each section of your loan officer business plan template:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

In it you must provide an overview of each of the sections of your plan. For example, give a brief overview of the loan industry. Discuss the type of loan business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.  

Company Analysis

In your company analysis, you will detail the type of loan business you are operating.

For example, you might operate one of the following types of loan businesses:

• Commercial Loan Officer : this type of loan business focuses on arranging business loans.
• Consumer Loan Officer: this type of business focuses on providing loans for things such as vehicles.
• Mortgage Loan Officer: this type of loan obtains loans for consumer to purchase real estate.

In addition to explaining the type of loan business you will operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, number of positive reviews, dollar value of loans arranged, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the loan industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the loan industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy, particularly if your research identifies market trends.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your loan business plan:

• How big is the loan industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your loan business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your loan officer business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: parents, students, professionals, businesses, couples, families, prospective home buyers, prospective car buyers, contractors, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of loan business you operate. Clearly, someone interested in purchasing a new car would respond to different marketing promotions than a business seeking equipment financing, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most loan businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Loan Officer Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other loan businesses.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes commercial banks, online loan brokers, etc. You need to mention such competition as well.

With regards to direct competition, you want to describe the other loan businesses with which you compete. Most likely, your direct competitors will be loan officers located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What types of loans do they specialize in?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide higher value loans?
• Will you offer lower interest rates on loans?
• Will you provide better customer service?
• Will you offer a wider variety of loan options?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a loan officer business plan, your marketing plan should include the following:

Product : In the product section, you should reiterate the type of loan company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to loans, will you provide insurance, financial advisory, or real estate services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.

Place : Place refers to the location of your loan company. Document your location and mention how the location will impact your success. For example, is your loan business located near a real estate brokerage, or car dealership, etc. Discuss how your location might be the ideal location for your customers.

Promotions : The final part of your loan officer marketing plan is the promotions section. This is perhaps the most important section of your plan. Here you will document how you will drive customers to your website and/or location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local websites
• Social media marketing
• Local radio advertising

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your loan business, including processing loan applications, arranging signings, marketing your business, paperwork, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to arrange your 100 th loan, or when you hope to reach $X in revenue. It could also be when you expect to expand your loan business to a new city.  

Management Team

To demonstrate your loan business’ ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in managing loan businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience as a loan officer or success being a local bank or credit union manager.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you work on commission, or on a fee for services model? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your loan business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a loan business:

• Location build-out including design fees, construction, etc.
• Cost of equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or outline your strategic partnerships with local realtors and lenders.  

Putting together a business plan for your loan officer business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the loan industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful loan business.  

Loan Officer Business Plan FAQs

What is the easiest way to complete my loan officer business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Loan Officer Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of loan officer business you are operating and the status; for example, are you a startup, do you have a loan officer business that you would like to grow, or are you operating a chain of loan officer businesses?

Don’t you wish there was a faster, easier way to finish your Loan Officer business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how Growthink’s professional business plan consulting services can create your business plan for you.

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Partner Account Executive

• Sales & Support

Equifax is where you can power your possible. If you want to achieve your true potential, chart new paths, develop new skills, collaborate with bright minds, and make a meaningful impact, we want to hear from you.

The Equifax Workforce Solutions (EWS) Partnership Account Executive is responsible to lead new and existing partnership business development and enable revenue growth for non-mortgage verifications through an execution oriented annual plan.  The Partnership AE is responsible to strategically ensure that AC/DC Verifier (Auto, Card, Debt Management, Consumer Finance) develops & maintains a best-in-class portfolio of 3rd party technology partners serving as a The Work Number (TWN) distribution channel to end-client non-mortgage Lenders & Financial Institutions.  A significant portion of variable compensation in this role will be tied to measurable enabled revenue growth.

It is strongly preferred that the Partnership Account Executive live in St Louis, and work a hybrid schedule from the office 3 days per week.

What You'll Do:

• Facilitate enabled revenue growth via 3rd party technology partners through the execution of a systematic sales process and annual sales plan
• Demonstrate industry expertise encompassing Income & Employment data landscape, key Loan Origination / Account Management / Debt Management technology companies.  AE maintains awareness of Competitive Landscape and proactively adjusts growth plans accordingly to maximize market positioning and revenue outcomes 
• Proactively prepare for and execute Quarterly Business Reviews with strategic Partner account Executives: recurring topics being Revenue growth, Marketing Collaboration, optimizing Integrations, & Product Development / Roadmap planning.
• Size existing and potential revenues associated with 3rd party Partnerships, and prioritize & mobilize EWS resources accordingly.  AE owns proactively mobilizing AC/DC Legal, Product, Marketing, Technology Enablement, and Direct Sales to grow enabled Revenues.
• Demonstrate knowledge of Auto, Card, Consumer Finance, Insurance, and Debt Management in order to maximize TWN integrations and workflows with Partners
• Strategically direct & secure Partners into the appropriate position of Connector, Re-Seller, MCSP, or Hybrid
• Proactively & strategically collaborate with USIS and other EFX business units in the interests of the Enterprise
• Prospect for new partners and existing Partner Account Management
• Pipeline / Opportunity management & forecasting (SalesForce)
• Attend customer meetings & presentations, Internal & Executive meetings & presentations
• Deal & contract negotiations, internal and Partner objection handling
• Proactive contracting and change management related to TWN product releases & changes

What Experience You Need:

• Bachelor’s degree or equivalent work experience
• 5+ years of successful service-based solution selling in a business-to-business environment dealing with senior management in the Fintech vertical (alliance/ partner experience preferred)
• 5+ years of experience working with customers to develop scalable solutions for the Fintech industry while being able to drive sales activity
• Ability to travel up to 30%

What Could Set You Apart:

• Experience working with verification solutions
• Experience developing, managing, and growing strategic partner/ client relationships
• Experience demonstrating innovation and ability to help craft custom partner solutions
• Successful track record in meeting and/or exceeding sales goals
• Experience negotiating and creating consensus where appropriate with internal groups and external clients and/or strategic partners

Equifax is required by law to include a good-faith salary range for this role. This compensation range takes into account the wide range of factors that are considered in making compensation decisions including but not limited to: skill sets; experience and training; and other business and organizational needs. At Equifax, it is not typical for an individual to be hired at or near the top of the range for their role. A reasonable estimate of the current range is $116,000 to $156,000. This position is also eligible for our incentive compensation program.  

We offer comprehensive compensation and healthcare packages, 401k matching, paid time off, and organizational growth potential through our online learning platform with guided career tracks.

Are you ready to power your possible? Apply today, and get started on a path toward an exciting new career at Equifax, where you can make a difference!

Who is Equifax? 

At Equifax, we believe knowledge drives progress. As a global data, analytics and technology company, we play an essential role in the global economy by helping employers, employees, financial institutions and government agencies make critical decisions with greater confidence. ​​​​​​​  

We work to help create seamless and positive experiences during life’s pivotal moments: applying for jobs or a mortgage, financing an education or buying a car. Our impact is real and to accomplish our goals we focus on nurturing our people for career advancement and their learning and development, supporting our next generation of leaders, maintaining an inclusive and diverse work environment, and regularly engaging and recognizing our employees. Regardless of location or role, the individual and collective work of our employees makes a difference and we are looking for talented team players to join us as we help people live their financial best.  

Equifax is an Equal Opportunity Employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran.

Working at Equifax

We believe in a growth mindset. At Equifax, this includes providing our employees opportunities to perform at their best and learn new skills along the way to inspire and build fulfilling careers. Watch our video to learn more about how you can power your possible! 

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