Commercial Project Financing 

Every field has its own rules, assumptions and regulations. When it comes to commercial financing, you need to be a wise handler of money otherwise your lender would get upset.  

There are the three C’s that you need to follow in case of commercial financing. With these elements, you will not be hard-pressed in getting your loans approved. The lenders evaluate their borrowed based on these three elements – Cash, Credit and Collateral.  

Let me explain these elements in detail for your understanding: 

Cash – pertains to your ability to repay the debts from your income or cash flow. Always lenders assure that you yourself are aware about your current business state and how much your business would fetch you to give back the lenders.

You should always have a well-documented history of all your cash flows and cash transactions of your business to give a proof to your lender that you are genuine and can repay.

In addition, you are expected to have at least 10 percent of your own money while transacting with these lenders. If you are unwilling to invest your own money in your business, then which bank or lender would want to take up the entire risk? They will simply not.  

Credit – is one way to estimate your trustworthiness with the lender. They will judge and evaluate you based on your present and past credit transactions as I mentioned earlier. If your credit scores are less than 650, then your interest rates are set significantly higher and loan terms are made more difficult by the lenders.

Your credit score is used as a filter to eliminate your marginal transactions rather than saying they evaluate your transactions.  

Collateral – are the properties than you keep with the lenders to borrow a sum of loan that suits the value of the property you have submitted. At the end of the day, even the lenders should feel safe about lending you money and that is the reason why they evaluate you based on the kind of collateral you submit with them. Your properties will require a commercial appraisal, which will not be accepted if you appraise it yourself. Take it from a bank so that it is approved with no difficulty.  

So understand these basic elements based on which you will be judged. I am sure you will follow the same to judge your borrowers when you become a lender yourself!