Each tenant's completed rental application The application will contain the tenant's: Full legal name Social security number Date of birth Residential addresses for at least the past two years Current landlord Current employer 2. If youre a business owner, you might need to buy or renovate propertythats where a commercial real estate (CRE) loan comes in. And theyll want to know what your debt payments look like, including credit card and student loan balances. Interest rates for CDC/SBA 504 loans fall between 3.5% and 5%, with a 1.5% CDC processing fee. Purchasing commercial property to either set up a new facility (a store, office or warehouse, for example) or to expand an existing one is often a major commitment for a small business, one that is usually financed by a commercial real estate loan. Even though it may have a lower down-payment requirement, the SBA is a last-resort lender. Here are the answers to some of the most common questions: The minimum down payment required for most commercial loans is typically 25% of the property purchase price (not including closing costs). Commercial real estate loans are for the purchase, or renovation, of commercial properties recognized as owner-occupied real estatemeaning that the business must inhabit at least 51% of the property. Lenders typically have three sets of requirements before granting a commercial loan to your small business. 2 - Put down a bigger deposit. To get an insurance quote over the phone, call: (855) 596-3655 | Agents available 24 hours a day, 7 days a week! New credit: 10% Financial & Credit Information Needed to Lease Commercial Real Estate When leasing commercial real estate (office, retail, warehouse space) landlords WILL require some sort of financials and credit information about you personally and/or your business. Financial & Credit Information Needed to Rent Commercial Real Estate Landlords value your creditworthiness, but they also want to see a history of being a good tenant. The minimum required FICO Small Business Scoring Service (SBSS) credit score is 155 for the SBA 7(a) loan, the government agencys flagship loan program, although there are plenty of exceptions that allow small businesses to get a loan with a score lower than the minimum. Qualifying for a commercial real estate loan is very different from getting a home loan. Eligible properties can include commercial buildings, storefronts or facilities like a warehouse or lab. Maxed-out credit lines have a negative impact on your score. Lenders consider this to be more-speculative activity, with different rates, terms and eligibility criteria. Consumers should independently verify any agency or service mentioned will meet their needs. His pulse-pounding prose has been featured in Salt Lake City Weekly, Coachella Valley Independent, Wausau City Pages, Des Moines CityView, Tucson Weekly, Las Vegas Weekly, Inlander, OC Weekly, and elsewhere; hes currently a senior columnist at SLUGMag.com. See if your business qualifiesfor a tax credit worth up to $26k per employee. Commissions do not affect our editors' opinions or evaluations. But you should still be cautious about spending more than you can comfortably afford on rent. With potential borrowers following the SBAs guidelines, those lenders have more faith that loans made to riskier parties will be repaid and are therefore more inclined to grant them. Youll want to show proof of your salary and a recommendation from your employer. The key is to show your companys viability and steady revenue. However, this varies from landlord to landlord. Most often there's an average credit score needed when it comes to renting a property since the score gives landlords insight into how you pay your bills. While traditional commercial mortgage loans require a higher personal credit score (700 or higher) than the government-backed options, they also call for fewer years in business (usually one, as opposed to three or more). A recent survey of 5 million renters nationwide found that the average credit score for all renters was 638. Beyond these important financial considerations, landlords might have additional preferences. To qualify for a commercial loan, you usually have to have been in business for at least one or two years. However, loan amortizations can often be much longer up to 25 years. Mortgage insurance also isnt an option for commercial loans, so income requirements and interest rates are usually higher. To get a commercial loan, you'll need to have good credit, make a down payment of. This is why lenders have stringent requirements for underwriting and collateralization. As a result, these loans are typically more expensive than other loan options, including SBA 504 loans. If you have a business that owns multiple facilities that you use for your own purposes, make this clear before exploring portfolio loan options with a lender. These loans were designed by the SBA and can be used for real estate or long-term equipment purchases. The process for getting a commercial real estate loan is similar to getting a mortgage for a home. Want to know if leasing or buying a property is better suited to your needs? Agree that the partner or partners with good credit will be responsible for negotiating and signing leases on behalf of the partnership. Any property thats designated to make money is commercial real estate. Current Landlord reference if applicable. The minimum credit score to rent an apartment will depend on two main factors. Talk to them about your history, how youve worked to repair your credit, and how you plan to keep improving it. The minimum credit scoreto rent an apartment will depend on two main factors. Our free checklist can help you understand what lenders are looking for. Fill out the below questionnaire to have our vendor partners contact you about your needs. Request a Viewing for 147 Inverness - Tenant Turner There are several categories of commercial real estate financing, but well be focusing on the three most pertinent to small-business owners: traditional commercial mortgages, SBA 7(a) loans, and CDC/SBA 504 loans. If, on the other hand, you plan to lease out 50% or more of a space, then you need a separate type of loan, as this is considered more-speculative activity. Our affiliate compensation allows us to maintain an ad-free website and provide a free service to our readers. Reviewing the credit scores of prospective tenants is one way to mitigate that risk. Monthly processing fee: 1% of monthly rent. Read More: What Is Commercial Property Insurance? Follow her on Twitter @CaseyLynnBond. They will thoroughly check the title and other documentation related to the property to ensure no liens or claims are against it. Be the first to live in this new 4 bedroom, 3 full bath, two-story . Often, CRE loans are made to a business entity such as a corporation, developer or trust, though an individual can borrow one as well. Some of the links on our site are from our partners who compensate us. Well Help You Unpack the Answer, Explore Your New City: 12 Things to Do in Bellingham, WA, 8 Essential Tips to Make Your Los Angeles Apartment Search a Breeze, Is Aurora, IL a Good Place to Live? However, the minimum credit score required for a DSCR mortgage varies based on the lender and other circumstances. Performance information may have changed since the time of publication. Nonrefundable pet fee: $300 per animal. Your credit scoreis a score between 300 and 850 that represents your likelihood of paying bills on time and repaying loans. For residential mortgages, lenders look at your debt-to-income (DTI) ratio. Commercial Real Estate Broker Serving the Vegas Valley. This measures a borrowers ability to pay their debts based on the business cash flow. What happens if my business isnt as successful as I imagined? The exact terms of a commercial real estate loan depend on the specific type of loan, lender, property financed and more. The Small Business Owners Guide to Getting an SBA Loan, A Guide to Choosing the Right Small Business Loan, How to Get a Bank Loan for Your Small Business, Before You Sign: Important Loan Contract Terms to Review, 8 Factors That Keep You From Getting a Small Business Loan, The Best Phone Systems for Small Business, The Best Business Accounting Software Services of 2023. Older accounts with on-time payments and low balances look best. That means no significant disputes or history of serious damage. is not available to you, youll have to look for other housing options while you build your credit. Since the government isnt sharing in the risk, banks and commercial lenders hold these types of loans to a higher qualification standard. A commercial real estate loan is a type of financing thats used to buy property for business purposes. You are allowed to lease the rest of the property for as long as you use the majority of it for your own business purposes. Note that SBA-guaranteed loans require at least 51% owner occupancy for existing buildings and 60% owner occupancy for new construction. 1 . But that doesnt mean credit isnt important. Here are the findings for the minimum credit score needed by type of unit: However, in many cities, average credit scores are higher. A low personal credit score could harm your company's chance of approval for a commercial loan. By signing up I agree to the Terms of Use. In addition to banks, there are many non-bank finance companies that can provide commercial real estate loans for small- and medium-sized companies. Unlike home loans, which are commonly issued for terms of up to 30 years, commercial real estate loans often last only five or 10 years. Loan balances are the amounts of debt you owe. Conduit lenders will usually finance a minimum of $1 million to $3 million, going up to $50 million, with terms of five to 10 years. All information is subject to change. Due to these shorter loan terms, there are also stiffer penalties in place for early payment on commercial real estate loans to protect the lenders final take. There are many other ways to find housing even with low credit. Read our, several categories of commercial real estate financing, The Types of SBA Business Loans Explained, What is an SBA Loan?