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Home Commercial Loan Information Borrower Qualifications
Borrower Qualifications PDF Print E-mail


qualified borrowerWorld Net Capital I evaluates numerous criteria to determine if you are qualified for a commercial loan for your business. The information we need to determine if you are qualified is discussed on our webpage Apply for a Commercial Loan.


Three primary criteria are used to evaluate all commercial loans: 1) loan-to-value ratio (LTV), 2) debt service coverage ratio (DSCR), and 3) credit rating. You will see these terms mentioned often on our website. These three criteria have defined values that are easy to determine. If you don't meet our minimum requirements for all three, it may be difficult to qualify for our loan program, but not necessarily impossible. Collateral and equity, or down payment, are two other important considerations.


The first measuring index that we look at is the loan-to-value ratio, or LTV. This ratio is equal to the loan amount divided by the property value. Most businesses cannot obtain 100% financing through conventional or special loan programs. Our lenders will generally offer a loan in the amount of 60% to 90% of the property value, or 60% to 90% LTV, depending on the business circumstances and the type of loan. Therefore, you will have to put up at least 10 to 40 percent of the total amount of money needed for the property. This 10 to 40 percent is commonly called equity, or a down payment. Lenders expect the business to invest a portion of its own money in the project or property. Equity can be obtained from retained business earnings or from cash investment by the owner or other investors. If you want a commercial loan, you must make sure that there is enough equity in the company to satisfy the lender’s requirements. Having the right loan-to-value ratio does not guarantee you will get a loan. As mentioned earlier in this article, there are a number of other factors used to evaluate a business to determine how much money you can borrow. However, the value of the commercial property is one of the primary factors in determining the amount of loan you can get, since it determines the LTV and the amount of collateral you may have.


The second and equally important criterion we consider is the debt service coverage ratio (DSCR). This is the net operating income (NOI) divided by the debt service, or mortgage payment. The NOI is the total revenue minus the direct operating costs, excluding depreciation, amortization, interest expenses, and taxes (NOI is calculated before before income tax). Our minimum DSCR is 1.2. You can estimate this index on our Cash Flow Template included with our online forms.


The third criterion is the borrower's credit history and credit rating, expressed as a number. World Net Capital I has a minimum credit rating requirement of 620.


In addition to these primary criteria, we will look at all of your other business and personal data during our Application Process. We will make a quick but careful determination of your ability to qualify for the type and amount of loan which you are seeking. World Net Capital I charges no upfront application fees.


If your business is new, risky, or otherwise can not meet our qualification requirements, you may still be able to get a loan if you are able to put up personal assets or cash to obtain a more favorable LTV ratio. Or, the loan may have to be based partially or totally on the individuals and owners that are signers on the business. In these cases, we will still base our decision for loan approval (and the loan terms) on the credit history of the individuals with the business.

Last Updated on Thursday, 29 May 2014 16:04

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