The Lender Reviews Everything

When you apply for financing and your tax returns and/or personal financial statement shows that you have interests in other businesses or property, the lender will want to review the financials on those other businesses.

When it comes down to it, the Lender has the right to ask for this information.

The question from our client is often, “Why is this germane to my financing request for my business?  That other business has nothing to do with the business I’m financing.”

While this may be true, remember that you’re asking the lender to assess the risk of lending money to you and to your business (the one on the application), and if there are negative aspects to your other businesses that affect the financial health of this business, the lender wants to assess that risk.

The good news is that you can control the narrative to an extent. Describe what the other business is via a summary statement and how it interacts with the business you are financing.  Especially with regards to debt.

There’s nothing wrong with full disclosure.  Get it out of the way upfront. Don’t wait for the Lender to ask for it.

Understand why the Lender wants that information instead of fighting the request.

The Lender has the right to ask these questions.  Pushing back is okay, as long as you do so in a gentle fashion.  In the end, it’s about achieving your goal of obtaining the financing you need to grow your business with the least muss and fuss as possible.

Download your “HOMEWORK”! You’ll thank us later.

Stop worrying about what's required when pursuing a business loan for your small business. This list will indicate what a lender, bank, SBA, etc. will want to know about you and your small business if you're looking for a business loan. These are prudent documents that help tell your small business story. Without them, it's difficult for lenders to assess you as a risk when it comes to lending your small business money. This is NOT SPECIFIC to the SBA EIDL loan.

It Can Happen That Fast

We’re famous here at Aurora Consulting for the phrase, “Growth sneaks up on you!”  We’ve written a blog about it and have done a few videos where this notion comes into focus as the reason we are doing the video in the first place.

Even the best-prepared, most-organized, super-efficient Business Owner can find themselves with a new client who’s blowing up the revenue to extraordinary levels, or new orders for products and services that far exceed previous orders and expectations.

We like to say, “One Vehicle leads to 20 Vehicles.”
It can happen that fast.

We believe in your business success story.  You are putting in the effort every single day to grow your revenue and live the business life of your dreams.  That’s why we also believe that your financial services relationships today are so vital to your business growth tomorrow.

Begin with your Banker relationship.  It’s not enough that you know your Business Banker’s cell number; she has to answer it when you need her.   It’s not enough that she promises to get it done; RESULTS are the only thing worth talking about.   

Both these items are great metrics to help you understand if your Business Banker puts as much value in your relationship as you do.   If your Banker is meeting these basic standards, then you’re in good hands.  If not, then you should reconsider your banking relationships.

Along the lines of your relationships is thinking about future credit financing. We heartily recommend you invest some time at least once a year, if not more often, to sit down with your Business Banker and review your business’ financials.  You want to know if you are positioning yourself in the most favorable way possible to apply and be approved for credit financing when you need to grow from ONE vehicle to 20 vehicles.

Some Business Owners fear exposing their financials to their Banker.  Maybe the fear surrounds the Banker questioning the Bank’s commitment to your relationship.   We have found the opposite to be true for one reason.  

Your Banker’s commitment to you is driven by the motivation to maintain and grow your banking relationships with the Bank.  When we say relationships, we mean bank accounts.  Bankers are driven to grow depository relationships.  That’s their goal.  And once they have your business, they want to grow it and make sure you stay with them.

Reviewing your financials with your Banker can only further the Bank’s confidence in you and your business.  And it may provide you with cogent advice and knowledge that will help you prepare for that moment when you need 19 more vehicles.

At Aurora Consulting, we are Brokers. We work for you, not for the Bank.  And we know the tolerances that Lenders have for financing businesses on a growth trajectory.  

We understand the Underwriting guidelines and how your business financials fit into those “boxes” at different Banking institutions. We’re happy to review your financials too and prepare you for the eventuality you’ll need credit financing for more vehicles.

3 Types of Financing for Your Commercial Property Purchase

There are three types of financing for the purchase of a Commercial property.


The tried and true traditional method of financing for a Commercial mortgage can be the most favorable for a Borrower regarding rates and terms.  This method of financing can also be the most challenging.

For a traditional commercial mortgage, the Lender will require a minimum down payment of 25%.  You should be prepared for a larger down payment once the loan is well along in the processing.  More on that below.

The Lender in this type of financing also requires more documentation from you, the Borrower, and from the property you are purchasing.  This documentation runs the gamut from Bank Statements to tax returns, and any business documents for the Borrower’s business the Lender deems necessary.

For the property, a detailed Income and Expense statement is required.  If the property is a rental property with residential tenants subject to local municipal housing agency regulations, the Lender will require the appropriate documentation from any and all housing agencies involved in regulating the residential rentals.

The “traditional” commercial Lender appraises the property based not on market value, but rather on a calculation unique to each Lender to determine the Lender’s exposure to risk based on the Net Operating Income for the property.  Net Operating Income (NOI) is calculated from Gross rental income and a detailed ledger of expenses.  This valuation method can often lead to a final appraisal value lower than the purchase price and market value of the property.  Traditional Lenders use this method as a way of reducing risk exposure.

Therefore, you’ll want to be prepared to make a larger down payment at closing due to the Lender’s appraisal potentially being less than the purchase price AND the Lender’s criteria of lending no more than 75% of the appraised value of the property.

When we at Aurora Business Consulting prequalify you for a purchase, we look to qualify you first and foremost under the traditional lending method.


A vibrant market exists of Lenders willing to lend on commercial properties with criteria more flexible and liberal in the risk-tolerance than traditional Lenders.  Rates and terms with these Lenders are frequently higher than what a Borrower would pay with a traditional Lender.  But the opportunity to find financing in this arena is substantially improved due to the more flexible criteria.

Examples of the flexibility in the Non-Traditional Lending field include:

  • Lower down payment requirements: as low as 10% down payment.
  • Quick documentation/reduced documentation requirements: for example, a cash-flow analysis of a Borrower’s bank statements over 12 or 24 months as an alternative verification method from tax returns.
  • Credit Scores. Non-Traditional Lenders can have a better appetite for lower credit scores.


Many purchasers of commercial properties often cannot qualify for loans, either through the Traditional or Non-Traditional lending channels.  The reasons for not qualifying are many and varied and may include the Borrower’s personal qualification criteria such as down payment, credit or income.  In other instances, the property being purchased may not qualify for Lender financing of any sort.

These purchasers can often negotiate with a property-Seller to “self-finance” a property purchase.  In this instance, the Seller holds a note from the Purchaser.  A mortgage is created and the appropriate lien is filed against the property.  The Purchaser/Borrower will make a down payment and then make monthly payments to the Seller, usually for a short term of anywhere from 3-7 years.

Typically the Purchaser/Borrower will then refinance that loan into either a Traditional or Non-Traditional mortgage after building sufficient qualifications.

Negotiating such a unique financing package can be complicated.

Visit our Financing Fodder YouTube Playlist for more information on how to prepare yourself when requesting a business loan.