There are many reasons why companies look into refinancing their commercial loans. It could be because lower rates have become available or the company needs the payments to be stretched out. Here are the steps on how to refinance a commercial loan.
1. First, prepare the paperwork and documentation that the bank could ask for such as your financial statements, projected cash flow reports and other business information.
2. You should also compute for your debt ratio, loan to value ration and debt service coverage ratio. The bank or lending institution would probably request for these figures that would help them compare the income and worth of your business with the size of the loan you are asking for.
3. Make sure to take your time talking with different banks and lenders as you show them your paperwork to know if you would be qualified for the loan you are asking for and to have an idea of the best rate that each of them can offer you. If you come across a bank or lender that offers a higher rate, ask them if they offer other services that the other banks and lenders do not which could make the higher rate worth it.
4. After talking with several banks and lenders, narrow down your options to just two or three and then negotiate with them some more. Go with whoever is able to offer you the best deal.