It’s Not Your Bankers Fault

How to Manage Your Credit Score Video Thumbnail

If your credit score is low and your financing request isn’t approved,  it’s not the Banker’s fault when she delivers the bad news of a loan denial to you.

Your Banker wants to be your friend, your “go-to” financial resource to help you build your business.  But there are are areas out of the Banker’s control, not the least of which is your credit history and subsequent credit scores.

Certainly you should be aware of your credit score…with the caution that, as a consumer, you cannot access the true credit scores used in financial services-related decisions.  This score is otherwise known as the “FICO CLASSIC” and all the credit monitoring services in the world cannot provide you with access to this score.  Thus there can be wide variances between the scores you find online and the “true” score your Banker will pull when you apply for credit financing.  In our experience at Aurora Consulting, we’ve seen variances in either direction, positive and negative, as much as 100 points in the scores.

But if you have very low scores, chances are very good that you are aware of your credit history circumstances.  That is, scores less than 620, and certainly any scores that are in the 500’s.  Many consumers with scores at 620 and above, where they’re not hitting the high-700’s or even the 800’s, tend to believe they have “bad” credit. This is not always the case, and often that kind of score range, down to 620, will qualify for business credit financing.

But if you are fairly certain, even with the incorrect consumer-access scores, that you have credit circumstances that are pushing your scores down below 620, you need to be aware and to disclose that to your Banker.

And you should be specific with your Banker about those circumstances.  For example, “I’m currently delinquent on the mortgage on my other house,” or, “I have several small collection accounts from three years ago that I have not yet paid off.”  If you’re clear and honest with your Banker about your potential credit history, it helps to manage those expectations, both yours and hers, when presenting a financing request application.

At Aurora Consulting, our process with each client includes a credit report that we run at the very outset of our relationship with the client. Because we’re working on behalf of the client, we have a different perspective on the credit review process.  And we actually have successfully placed loans with credit scores in the 500’s.   The options in that range can be limited. But there are options.  And, like with your Banker, we find it very helpful when the client is clear with us upfront about concerns for their credit history and scores.

Finally, being aware of your credit status is important for you personally and professionally to be aware of how you are managing your money and your bill-paying as you grow your business. When the Banker denies a loan request due to low credit scores, the issue is the lack of awareness of this money-management, not the Bank’s lending protocols.

You can find out more about the “Myths Of Credit Repair” by downloading our free white paper.


Lessons, Lenders, Decisions and Documents

Lessons with Lenders and Decision with Documents

When we locate the right Lender to provide a financing solution for your capital needs, the Lender requests documents as part of the application process.  We prefer to collect and review as many documents as possible early in our qualifying process.

We review each document you submit.  We do this to determine your business’ qualifications for the different financing products available through our matrix of Lenders.  But we also review your documents to look for any issues that might arise in the financing request and to resolve those issues before we submit your request to a Lender. Not all Lenders require all these documents, and occasionally we prefer to submit certain documents only after a detailed conversation with a Lender.

The definition of a successful Loan Application is the approval you want, the approval you need, and the approval that meets your timeline.

Early on in our long experience working in the financial services industry, we learned the lessons of successful applications:

Lesson 1: The Application can make or break the deal.  The Application is the source of all information and, ultimately, the guidepost for processing and Underwriting.  The more complete and accurate an Application, the better the Underwriting RESULT.  That RESULT is not only an approval, but a timely one.  The complete Application typically anticipates the Underwriter’s thinking and answers questions before they’re asked.

Lesson 2: It’s all about the paper.  Yes, even in the 21st Century (is it time yet to say, “Beam me up, Scotty?”), you have to support your Application with documents.

Lesson 3: The front-loader.  When you submit your Application with a complete basic set of documents at the onset, your process moves much quicker along to the goal line.

Lesson 4: Give ’em what they need, not what they want. Many times a Lender and/or Underwriter will ask for more documents than are necessary.  We’ve learned time and again to push-back on certain documents requests.  Often, we’ll ask the Underwriter for a valid reason for the document request.  Piling more documents into the Application package simply because they “want it” slows down your approval timeline.  You’d be surprised with how many times a requested document isn’t actually needed for the loan approval.

Lesson 5: Garbage in, garbage out.  A single document, presented incorrectly, can torpedo your financing request.  At the very least, a document that presents a challenge to the loan approval process should be presented with an accurate explanation, whether the document provides a positive or negative aspect to the entirety of the Application.  We learned long ago the value of the phrase, “Garbage in, garbage out.”

Lesson 6: Underwriting is Subjective.  Underwriting is more a subjective than an objective process. You want your Application to move quickly through the system for one important reason: don’t give the Underwriter time to develop a dislike for your Application.  When an Underwriter can move efficiently and quickly through a Loan Application, they don’t have time to develop negative opinions about the Application. The lingering-loan-application simply provides an Underwriter with more time to excessively scrutinize details that may not really be negative, but can develop into a negative aspect in the Underwriter’s subjective way of thinking.  You know, they’re human too.

Subscribe to our Youtube Channel and check out our video on DIY your Business Loan Application.

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

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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.

The Right Conversation

Too often, business owners have preconceived notions about financing their businesses, whether it’s for a commercial mortgage or credit financing. These ideas arise out of common perceptions about how traditional lenders make credit financing decisions.

And then they speak with their banker. We’ve already discussed the idea that your banker is very often a “gatekeeper” with the “keys to the vault.”  For a business owner, gaining access to the money in the vault can be a daunting process, and that initial conversation with the banker proves out this theory, especially with reinforcing those preconceived notions.

The truth is this: having a conversation, the right conversation, with someone who has your business’ best interests at heart can lead to a different result. That result can be financing the business owner needs to move forward and continue to build their business.

The right conversation with a broker who is working for you and not working for the lender will very quickly wipe away those preconceived notions.

Credit is one of those conversations. The concept that credit must be a very high score with impeccable payment histories is an idea that can be changed with the right conversation. Because there are lenders out there, non-traditional lenders, who have a more forgiving attitude towards credit blemishes.

Same with income tax returns and the dreaded “bottom line” income. Traditional lenders use a decidedly more rigid approach to income-qualifying. That rigid approach can lead to a denial of your loan request.

The right conversation with a broker who has the ability and who works with both traditional and non-traditional lenders will simply assist to “translate” the true income-producing potential of your business that will lead to a positive result.

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