Standard paperwork for commercial finance to be lent to a potential customer would normally be the last three years profit and loss accounts along with the business balance sheets. This will give the under writing team a feel for the health of the business. They will be looking for serviceability of the loan along with stability of the trading accounts.
Also required will be an asset and liabilities statement that shows the business debt but also the monies coming in or assets to cover the borrowings. Often a member of the corporate lending department of the bank will a make visit to the business premises to ascertain the business and meet the owner. They will be looking for good turnover, profit and a sound running business which appears to be robust.
The owner of the company may be asked to use other tangible assets as potential security against the new mortgage. This may include raising a charge against their personal home as extra security if the deal warrants it.
Proving ID and address, bank statements, other loans and debts will be required. A credit check will be conducted on the business. A valuation will be undertaken which may entail a full Pinder's report. This would show more that just the bricks and mortar value but how the company shapes up to being a profitable entity.
Commercial lenders also have different requirements for various sectors. For example in some cases a very high loan to value may be potentially given to a chemist. Which has generally a good track record for being successful due to the high demand and profit margin of drugs, having government subsides on prescriptions.
In contrast a public house in a the current recession may be only allowed a low loan to value. This may be targeted in such a way because breweries have taken a massive knock from the smoking ban and now the economic downturn has greatly effected their barrel-age, hence to a lender they may feel there is a higher risk to their security.
