Five Steps to a Successful Business Loan Solution

Getting a business loan solution can be a very laborious process. Having all of your “ducks in a row” is key to successful training. For homeowners who cannot refinance, have an upcoming balloon payment, have defaulted on their mortgage, or are facing foreclosure, a business loan solution can accomplish one or more of the following:

1. Reduce interest and/or principal amount
2. Extend the reset period or due date to delay the balloon payment
3. Defer payments
4. Temporary interest-only payments
5. Avoid foreclosure

Please review the following five steps:

1) Required paperwork
The required documentation is obtained from the owners. Necessary documents: List of rents, copies of the expenses of the last year, rental agreements, copies of the mortgage note, etc. Not having all the required documents could delay the entire process.

2) Research Analysis
Before a business loan solution is submitted to the lender, a financial snapshot of your situation is needed. The lender is primarily concerned with your ability to pay each month if your loan is restructured to more favorable terms. Determining current market value, rental rates, and recent comparable sales are also important factors to consider. Once the review of the note is complete, an exercise package is generated.

3) Loan Presentation
Once a delivery confirmation is received from the lender, the presentation package is sent to a restructuring specialist. Not confirming receipt of the restructuring package by the lender could mean your file is stuck somewhere in the mail room for weeks or “lost in never-never-land.”

4) Negotiation process
The restructuring specialist reviews the package and submits a loan modification offer. Sometimes the property owner or third party negotiation firm will make counter offers until an agreement with favorable loan terms is excepted. The entire process from start to finish can take 2-3 months to complete. Stay in regular contact with the lender’s exercise specialist until a proposal is received.

5) Final approval
Once the newly restructured mortgage loan is approved by the lender, a proposal is submitted to the property owner for review. The homeowner can expect the following options: deferment of payments, lower interest rate, extended due date, increased cash flow, or principal reduction. The lender may offer any combination of options. Finally, the modified loan documents are signed by both parties to make the changes official.

With so many commercial property owners unable to meet their mortgage obligations, commercial lenders are now willing to modify their existing mortgage loans to avoid foreclosure. The key to preventing a default is to be proactive and contact your lender or seek help from a professional third-party commercial loan restructuring firm.

Commercial mortgage loans are much more complex than residential mortgage loans. Hiring a professional business loan servicing company can help you navigate through the negotiation process with your lender.

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