When you're ready to purchase a property for your business, you need to understand what it takes. The banks need to see your credit score and background clearly to determine if it will invest in you by providing you with a mortgage. There are several things that could get in your way if you're not careful.
For example, if you approach a bank with a great idea for a business and have a solid business plan, that's great. Unfortunately, if you don't have the funding to back up your plans (or at least a substantial cash reserve), the bank isn't likely to find your request justified. It wants to know that its investment won't be in vain.
Before you can get a mortgage, you may have to show that you've been in business for at least three years. With three years of history behind you, it's possible to show your profits and losses clearly. Banks want to see that you've been profitable at least two out of the last three years. If you haven't been yet but expect to be by the end of next year, consider waiting before you approach the bank. The exception is if you can show that you had two poor or weak years followed by a substantial increase in revenue in the last year.
It's always important to put your best foot forward when you're in business. If you falsely inflate your value self-reporting to a bank, you will get found out on paper. It's a good idea to know your status before you apply for loans or seek additional help from a bank, so you know what to expect in an offer.
Source: Huffington Post, "The Biggest Problem With Commercial Real Estate And How You Can Fix It," Dean Sioukas, accessed Oct. 25, 2017