What should you consider when financing your business or commercial property?
We will discuss an overview of the process from a borrower’s perspective.
Hi, my name is Kate Felluca, and I am and attorney here at Evans Fox. This installment of our monthly series is about financing. Whether you are looking to buy assets, refi debt, have working capital or the like, here is a brief overview of the financing process.
First, identify your lender. Financing can come from an array of sources, from banks and credit unions to private, hard money lenders and even sellers. The best source can vary from person to person and deal to deal.
Next, firm up the loan terms. With seller financing, they are baked into your purchase contract. Other lenders will give you a commitment letter. It is important that you review and understand the loan terms set out in these documents before you sign them. Key areas to home in on include the loan amount, interest rate, repayment terms, prepayment premium and collateral.
From there, institutional and hard money lenders will require certain due diligence. Your lender’s attorney will issue a checklist of items that you and your attorney will need to deliver in order to close. These are generally aimed at ensuring that you will be able to repay the loan and the lender is getting a priority lien on the collateral assets.
The last step is to proceed with closing, where you will sign various loan documents in exchange for the loan proceeds.
We have several attorneys here who can help you navigate this entire process; it would be our pleasure.