Overview of the Commercial Lending Process for Businesses

​Commercial lending involves borrowing funds from financial institutions to cover business expenditures. The process begins with pre-approval or qualification, where the lender evaluates the borrower's financial history, credit lines, debt service coverage ratio, loan purpose, and creditworthiness. If the borrower qualifies, they move forward by submitting a formal loan application along with supporting documents like financial statements, tax returns, and income reports.

After submission, the lender reviews the application to further analyze credit history, personal and business collateral, forecast business income, and similar financial documents. The underwriting process follows, where the application is passed to a team. This team assesses the information provided and determines whether to approve or decline the loan.

Once a decision is made, the lender will duly attach information about the interest rate, loan terms, loan to value ratio, monthly payments, and closing date if the loan is approved.

There are various types of loan products available. These include traditional (term) loans, Small Business Administration (SBA) loans, bridge loans, construction loans, and other types of lending facilities.

James W Murphy Tucson AZ

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