Dealing with the rejection of a mortgage application is always disappointing, though can be particularly problematic where commercial mortgages are concerned.
Whether you are starting from scratch with a new business venture or looking to expand an existing enterprise, a competitive commercial mortgage could be all that stands between you and your business objectives.
Therefore, it is important to take a proactive approach to your application’s rejection, which begins by determining why you were turned down in the first place.
Why Was Your Commercial Loan Application Rejected?
As all lenders have their own qualification requirements for a commercial loan, only your lender can confirm why your application was rejected. Most failed commercial loan applications however are rejected for one or more of the following reasons:
- Bad Credit. Most commercial lenders conduct credit checks as part of the application process, which in some cases can make or break the entire application. If you have poor credit, you will need to be more strategic with your applications and who you submit them to.
- Poor Track-Record. It could also be that you have a track-record that does not inspire confidence in the lender. For example, you may have a history of bankruptcy or insolvency, both of which could stand in the way of accessing a competitive commercial mortgage.
- Lack of Security. This refers to the failure to provide enough security (collateral) to cover the costs of the loan you require. It is essential to have every aspect of your application extensively checked and assessed, prior to submission.
- Cashflow Issues. Your lender will expect to see evidence of your current financial situation and cashflow, without which your application will not be considered. If your cash flow is not good enough, your application will be rejected.
- High-Risk Industry. Another common reason for rejection is the lender’s decision or assumption that the industry you operate within is risky. For example, if you operate in a sector that is either unpredictable or is expected to experience a downturn in the future.
- Application Inconsistencies. A surprising proportion of commercial mortgage rejections are attributed to nothing more than application inconsistencies. Errors and inaccuracies in initial applications or failure to provide the required documentation will almost always result in rejection.
Determining where you went wrong is the most important step in the process of putting things right, after which you will benefit from independent broker support.
How a Commercial Mortgage Broker Can Help
If you have been refused a commercial mortgage and would like to apply again, you will find the support and representation of an experienced broker invaluable.
Just a few of the ways an independent broker can support your subsequent application are as follows:
- Your broker will carefully consider your requirements and your financial position to ensure your application is submitted only to appropriate lenders.
- The reasons for your prior application’s rejection will be considered and discussed, to make sure your next application is successful.
- A commercial mortgage broker can be particularly useful when applying for a loan with a history of poor credit, or an imperfect financial track-record.
- If your broker does not believe you are currently in a viable position to apply for a commercial loan, they will advise you on suitable alternative options.
- Before applying, your broker will conduct a whole of market comparison on your behalf to help you find an unbeatable deal.
- An experienced broker can also thoroughly check every aspect of your application prior to submission, in order to identify and address errors or omissions.
- Your broker can also help you obtain and provide the formal documentation and evidence required to support your commercial loan application.
Book your obligation-free consultation with one of our consultants today to discuss any aspect of commercial mortgage applications in more detail.