Factors to Consider While Opting for Commercial Lending in California

Are you applying for commercial loans in California for your next project? Well, then you must understand the role of a lender and their decision making procedure thoroughly. Commercial lending in California involves a number of factors that are often considered by the lenders while making loan approval decisions.

The following post is about the various factors that commercial lenders take into consideration. Take a look to have a clear idea about what you need on hand before plunging into the commercial lending market!

Credit Score and History Usually, commercial lenders look for your credit score and history for determining whether or not you are eligible for the loan you are applying. They make the decision primarily based upon your earlier financial decisions. They will check your credit report that highlights your credit score and any probable concerns that your previous lenders might have experienced in lending to you. The credit score determines your credibility as a client. The higher your credit score is, the lower the risk for the lenders.

History of Income and Employment Your income and employment history pay a vital role in determining your capability of repaying loans. In the case of commercial loans, lenders often consider the current income of your business and its growth in the past year. Also, the lenders might ask for the projections of your business in the coming years for making more efficient lending decisions.

Capital Available Besides your income and employment history, commercial lenders also review your current assets, as well as liquid capital. The current capital might be in the form of savings, existing loans, and other investments which can be liquefied if necessary for repayment of loans.

Purpose of the Loan The purpose for which you are applying for the loan is an essential factor when it comes to commercial lending in California. What is your plan? How are you planning to utilize the money you are requesting with this new loan? Are you going to invest the money in buying new equipment for your establishment or in new real estate opportunities in the local market? All these questions will be asked by the lender. Knowing that you are investing the money in your business to increase or maintain your income is beneficial for the long term success of the loan.

Apart from these factors, you must also be aware of the current trends and changes in the California commercial lending laws to avoid future risks. Also, make sure that the lender you choose abides by these laws rigorously. You should be working with a licensed individual in California. Typically they need to be licensed through the department of real estate or through the department of corporations. If you are working with someone unlicensed, that could be a red flag.

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