How Does the Texas Commercial Lending Process Work?
If you’re currently going through the Texas loan application process, once you’ve actually filled out the paperwork it may seem like it’s disappeared into a black hole. However, when you understand how the Texas commercial lending process works, it can help allay your fears while you await the status of your application.
Texas Commercial lending can be quite exhaustive and complicated. However, it doesn’t have to continue to be a mystery. It’s very similar to applying for a personal loan but with a bit more information.
Most lenders will typically begin the loan process by pre-qualifying a potential buyer. This is done by evaluating the person’s financial history, past credit information and income. Lenders also take other things into consideration such as existing debts and the reason for the loan. Once the pre-qualifying process is done, the borrower will need to fill out a loan application.
Applying for a commercial loan requires a great deal of paper work and documentation to be filled out. If the reason for the loan is to pay for a new or established business, the applicant may want to provide a background about their business, or a business plan that includes future projected earnings. Some other requirements may include submitting tax returns that date back for three or more years, a list of liabilities, personal financial statements and a list of assets.
Once a borrower has completed a loan application, a loan officer will review the person’s credit history, collateral and income. Some of the things put up for collateral on a loan include; real estate, bonds, stocks and other items of great value. Collateral is required in order to provide the lender with confidence that a borrower is going to repay the loan. If the loan is defaulted, whatever has been put up for collateral would be used to satisfy the loan obligation.
When a loan application has been approved, it is then sent to an underwriter or loan committee. It’s the sole purpose of an underwriter or loan committee to grant or reject the loan based on the information the borrower has provided.
Shortly after being looked over by an underwriter or loan committee, the processor will present the borrower with a letter of intent or term sheet, which must then be approved and signed.
The choice to approve or deny a loan usually takes about five business days. During this time, the borrower may be asked to supply additional documentation to the loan committee if necessary.
Once a letter of intent has been submitted, a commercial lender could also ask for a check to serve as a deposit or to cover the fees associated with generating certain reports that are needed for the approval process.
Once completed, the entire loan application is resubmitted to the underwriter or loan committee to be considered for final approval. If the loan application is approved, the borrower will need to sign the final documentation. If the borrower has a closing agent, such as a lawyer, escrow rep or title company, all the closing documentation will be forwarded to that party. It’s then up to the agent to file and complete the remaining documentation.
When a Texas commercial lender has approved your loan, the final stage is closing and it usually happens within a few days of final approval. During closing, the lender will in the form of a check, electronic wire or draft, deposit the money into your account.
If you have any questions about commercial lending or wish to find out more information, contact a Texas commercial lender for further assistance.
Alternatively, you could do a Texas Private Money loan that is based on the property, not your credit and we can close these in a few days to 1 week typically. Many times we do not even require an appraisal and we can cross your collateral with existing property that you own so you can buy with $0 money down if there is enough equity.