Commercial lending differs from most consumer lending, such as residential mortgage lending, in that there are no hard rules or ratios that make a loan either acceptable or unacceptable.
Commercial lending is a bit more of an art than a science. However, the underwriting process of sound commercial lending is not the mystery it may seem to be. It is simply a process of information gathering (or due diligence), financial analysis, and the making of informed judgements.
The process described in this webinar would be typical for a new client, with a more streamlined process for an existing client that a bank already knows well.
Understanding the commercial real estate loan underwriting process can give you a big advantage when seeking debt financing for a commercial property. In this webinar we’ll discuss how lenders underwrite commercial real estate loans, how they determine the maximum loan amount for a property, and then we’ll tie it all together with examples.
Why Should You Attend:
If you do not have a complete understanding of what is involved in a commercial loan transaction and question why all of the documentation is needed, this webinar will provide answers to many of those concerns. You will feel more empowered the next time you need a commercial loan as well as have an understanding of the best sources of lending for your particular project.
Areas Covered in this Webinar:
Before a new loan goes through the full underwriting and credit approval process, the lender and the borrower will often have a preliminary discussion. The purpose of the discussion is to get a better understanding of current interest rates, the bank’s current internal loan policy on underwriting ratios, including the loan to value ratio and debt service coverage ratio, as well as any possible lender adjustments to Net Operating Income (NOI).
At this stage the borrower might submit a rent roll and a real estate proforma for the lender to evaluate internally. Typically the lender will discuss the deal internally with the senior lender or credit officer, and if the bank is comfortable with the deal then they’ll issue a term sheet and move forward with the full underwriting process.
We will examine all of the steps involved in an underwriting decision. Topics including Net Operating Income (NOI), Loan to Value Ratios (LTV), Debt Service Coverage Ratios (DSCR), Maximum Loan Analysis, and other underwriting guidelines.
Also examined will be an overview if real estate markets, demand for commercial loans, demand and supply in current real estate market. And, the various ways of real estate financing; governmental sources and other institutions.
• To understand the entire process of commercial lending relative to your needs
Who Will Benefit:
• Business Owner looking for a Commercial Loan
• Property Owners
Paul Flogstad has been involved in the real estate industry for over 38 years, including sales, construction, project management, appraisal, property management, consulting, and training.
Through his consulting company, Property Management Solutions, Paul provides training and consulting services nationwide to owners, management companies, multi-housing associations, as well as state and federal agencies.
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