OVERVIEW
Many people understand the underwriting requirements for residential mortgage lending. However, just as many people, if not more, do not have the same understanding of commercial mortgage lending. The reasons given include that it is new to them and/or it is normally not explained by lenders to their customers. Therefore, people are not typically as comfortable with the process and do not know what to expect. TLS is here to help.

Below is a general guideline for small to medium sized businesses seeking commercial, owner-occupied real estate financing. This guideline will not only help you obtain commercial mortgages but will also provide you a platform to analyze your business.

Generally, a lender analyzes some combination or form of the 4 “C’s” of commercial lending to determine if and how much it is willing to lend on a given project. The 4 “C’s” include:

•   COLLATERAL
•   CASH FLOW
•   CREDIT/FINANCIAL ANALYSIS
•   CHARACTER/MANAGEMENT

Through an evaluation of each of these areas, a lender will determine the level to which each “C” is satisfied in comparison to its requirements.

Our discussion and description of these areas are meant to provide a general overview and are intended for informational purposes only. Each lender is unique, and although most commercial mortgage lenders generally evaluate projects using the main criteria described herein, a lender may organize criteria in a different manner than that outlined and have different satisfaction requirements than those described herein. Additionally, different lenders place their own level of importance on any given area to determine their interest in a financing project. Different lenders may also allow strength in one area to completely or partially offset a deficiency in another. In addition to the 4 “C’s” of commercial lending, a lender may also incorporate other factors into its decision making process, such as its rate of return on a project, industry specific requirements, or a business’ industry.