Qualifying for a commercial loan is nothing like asking one's parents for a loan or even like asking one's boss for an advance on a raise
. Those are usually done as favors without too many questions asked. Applying for loans from commercial loan lenders is a whole other story, though. Plenty of questions are asked and specific answers are required to be given. Those who prepare themselves and know what they should do are those who will most likely qualify for a commercial loan.
Lenders, when thinking about giving commercial apartment loans, look for a variety of specific things in four specific areas. The first area they want to know about would be the concept behind the need for the loan. This means a full business plan should be prepared in advance to answer the lender's questions and illustrate the marketing strategies that will end up being used to make the investment profitable.
The second area that lenders tend to consider highly is the rate of current cash flow. A company or investment idea with no cash flow at all is a company or investment idea that does not have a great chance of surviving. Those that can show the potential of not only being able to sustain themselves but to be able to have the potential of paying off the loan quickly are those that will most likely receive apartment loans.
Banks tend to look at the cold hard facts, figures and risks in order to make their loan decisions. Generally speaking, banks are not risk takers. They must have a backup plan, safety net and insurance of some sort before they'll embark upon any venture. That's why collateral is an absolute must to have when applying for a loan. Collateral is something that is put up to ensure the loan which means if the loan is not repaid as agreed, the collateral or assets are then repossessed by the lender. If there is nothing that can be put as collateral, there is not much hope for obtaining a loan.
Something else all lending institutions are interested in finding out about is the character of the loan recipient. They will do their best at finding out anything they can about past track records and other credentials they may be able to find. Much can be predicted about an entity's future by looking at their past. That's why it's always good to have references on hand who can vouch for character and good business ethics.