Who can get a commercial loan?

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Who can get a commercial loan?
Posted by: Bob Kovach vach37@aol.com Nov 10 2003, 12:19 PM
Hi, I am working for a family business, I make about 50,000 a year in salary pay. I also am a partner in ownership of a building that I receive about 32,000 to 38,000 per year in income. I own a house worth about 120,000 with about a 90,000 mortage on it, I also have debt in the form of an equity line at about 18,000 and a credit card with about 11,000 balance. I found a 76 acre farm in Arkansas I would like to buy and turn into a business, some farming hydroponocs maybe, cattling ,chickens, with trying to get into some tourist business like camping ect… We are also gong to set up a small antique shop with maybe like desert and coffee’s served. Some of our other assets are about 10,000 in antiques, and a 2002 vw bug worth about 15,000 – 18,000 . The asking price for the farm is 172,000. Can I get a Loan to do this???? If I can i want to move a.s.a.p. any help is much appreaciated. What kind of a loan do I need to try to get??? Is this possible???
Posted by: loanuniverse Nov 10 2003, 06:14 PM

You did give me a lot of information about your assets and income, but you are probably not going to like the answers that I am going to give you.

can you get a loan to do this? & What kind of loan do I need to try to get? The problem here is that if you go for a business loan then you will need to either show the historical financial information of the farm that you are buying as an existing business or provide a business plan indicating how you intend to make money out of the business. Unfortunately, I see some potential weaknesses regarding the request from the point of view of a business loan:

1 I did not read anything about your experience in the field. In addition to the farm experience, you will need some retail experience due to the plans for the store and coffee shop.

2 $172,000 purchase price means that lenders will like to see at least 25% or $43,000 coming from you in the form of equity. While your income is healthy at over $80,000 a year {assuming the money that you receive from the building is your net}, you are also highly leveraged.

On the other hand, you could approach this as buying a second home, and approach the lender from that point of view. The problem here is that I can not help you as I am not a residential lender. In fact, not even sure what the debt to worth ratio that you have to meet or the required down payment would be When it comes to doing it this way, then the main factor is your income, which just might give you enough room to get the loan approved.

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Hope this helps,
Author: Commercial Loan Underwriter