Qualification of business loan
We are considering acquiring a business property.
We’ll put about 30% down payment, the rest will be financed (about 450,000).
We are in the retail business since 1989, and have never been late for rental payment.
Since our current business location is getting lesser and lesser visitors, and our business hurts, thus getting negative income in the last few years.
The new location we are looking forward to is much better and getting well known to the local community. We did some calculation, the monthly mortgage payment of the new property will be approximately equal to our current monthly rental payment, so we think we’ll be able to make the mortgage payment without problem.
The question is, with our recent years business loss, will it be harder for us to get a business loan in the amount of $450000?
My wife is the store owner and she manages her business, I’m working to get healthcare coverage.
Another unfortunate event happened late last year, I was laid off from my then employer and just returned to the work force 3 months ago with much less salary.
In such a situation, do you think we’ll be able to secure a loan with any lender?
What are our chance of the loan approved?
What are our options if the normal loan process fail due to “not yet profitable business income” like us?
Do you have any suggestions for us?
thanks in advance.
I work on the business finance team with Jeff and I’m happy to help. Since you’ve never missed a payment on your debt, it sounds as if your credit score may be high enough to help your chances of getting financed on your new property. To overcome your current negative income challenge with a lender, a good business plan that shows how your new location can make you profitable in the future can help. See our article on how to write a business plan.
Finally, since the amount you’re financing is under $500,000 you may be able to qualify for an alternative business loan, which can be a great option when traditional lenders can’t lend to you. It can also be a good option if you’re looking for a simpler application process and willing to pay a little extra for the convenience.
I hope that helps! Good luck!
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