Obtaining a business loan can be a labor-intensive process. Having all your “ducks in a row” is key to successful training. For homeowners who are unable to refinance, have a balloon payment past due, default on their mortgage, or face foreclosure, a business loan solution can accomplish one or more of the following:
1. Reduce interest and / or principal amount
2. Extend the reinstatement period or due date to delay balloon payment
3. Defer payments
4. Temporary interest only payments
5. Avoid foreclosure
Review the following five steps:
1) Required paperwork
The required documentation is collected from the owners. Necessary documents: rent roll, copies of expenses from the previous year, rental contracts, copies of the mortgage note, etc. Not having all the required documents could delay the whole process.
2) Research analysis
Before a business loan arrangement is presented 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 was restructured to more favorable terms. Determining current market value, rental rates, and recent comparable sales are also important factors to consider. After the review of the note is completed, an exercise package is generated.
3) Give presentation
Once a delivery confirmation is received from the lender, the shipment package is sent to a specialist in training. Failure to confirm receipt of the exercise pack by the lender could mean having your file stuck somewhere in the mailroom for weeks or “lost in never land.”
4) Negotiation process
The exercise specialist reviews the package and submits a loan modification offer. Sometimes the property owner or third party repair company will make counter offers until an agreement with favorable terms for the loan 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 you receive a proposal.
5) Final approval
Once the lender approves the newly restructured home loan, a proposal is presented to the homeowner for review. The homeowner can look forward to the following options: deferral, lower interest rate, extended due date, increased cash flow, or reduced principal. The lender can offer any combination of options. Finally, the modified loan documents are signed by both parties to make the changes official.
Because many commercial property owners are unable to meet their mortgage obligations, commercial lenders are now willing to modify their existing home loans to avoid foreclosure. The key to preventing a default is to be proactive by contacting your lender or seeking the help of a professional third-party business loan repair company.
Commercial home loans are much more complex than residential home loans. Hiring a professional business loan repair firm can help you navigate through the negotiation process with your lender.