Qualifying for a commercial loan workout will depend whether or not foreclosing on a commercial property will cost more than a commercial loan workout from the lender's viewpoint. Real world dictates that the lender's best interests over the borrower will determine if a commercial loan workout will be approved.
5 Key Factors a Bank or Lender will Consider:
1) How much equity is within the commercial real estate?
2) What is the payment history of the borrower? Always late or
financial hardship contributed to delinquency?
3) What is the current financial status of borrower?
4) Will the income producing property be able to handle the newly
restructured loan terms?
5) Regional or local market conditions?
Commercial property owners seeking a commercial loan workout will also need to provide a business plan to the lender. The business plan must justify to the lender why a commercial loan workout to modify your existing mortgage loan or make payment arrangements will fly. Lenders want solid proof in the form of actual figures within the business plan to determine if the commercial loan workout is feasible.
Lenders or banks have teams of attorneys working on their behalf to insure the best outcome in commercial loan workout negotiations. Likewise, commercial borrowers should consult with their legal and/or tax advisor before contemplating commercial loan workouts. A borrower may also retain the services of a third-party, professional commercial loan workout firm with an experienced real estate attorney on staff, that has successfully negotiated many workout plans.
In conclusion, a flood of commercial loan workouts are expected, due to trillions of dollars worth of commercial mortgages that are resetting within the next few years. A sizeable number commercial property owners won't be able refinance. Seeking the help of an experience commercial loan workout firm will help you navigate through the many hurdles to qualify for a commercial loan workout.