Commercial financing is underwritten on an individual basis. Because every loan application is different it is assessed on its own merits but all borrowers seeking a commercial loan will face an evaluation of the DCR, credit worthiness, and property condition. First a financial analysis should be completed. This analysis includes an evaluation of the debt coverage ratio. The DCR is your monthly debt compared to your monthly income. Following the DCR analysis, your credit worthiness will be evaluated. This portion of the analysis will look at past financial records for the business and may include personal financial history in certain cases. Finally the condition of the property is examined. All of the above factors will influence your ability to secure a commercial loan.

There are many types of commercial financing options available to borrowers and they include adjustable rate commercial loans, wrap around mortgages, credit lines, and balloon loans. Adjustable rate commercial loans have an interest rate that varies through out the life of the loan. A wrap around mortgage is a new mortgage which literally wraps around the old mortgage. By using a wrap-around mortgage, the buyer makes payments on the new mortgage directly to the seller, and the seller continues to make payments on the old mortgage. Credit lines provide a business with resources to fill temporary cash shortages that are the result of the difference between the period of cash outlays and collections. Credit lines are usually used to finance project or contract related work, receivables, and inventories. Commercial borrowers are also able to obtain a balloon loan. Balloon loans feature fixed interest rates for a specified period of time. When the loan reaches maturity the outstanding balance must be paid in full by the borrower. There are many financing options available to commercial borrowers and your investment plan should be evaluated prior to deciding on a specific type of commercial loan.