Are you wondering why your application for a business loan against property is not getting approved despite including important documents? Well, you might be overlooking some things that seem insignificant yet consequential.
Securing a business loan against property can be a daunting task if you don’t know exactly what to include during your loan application.
Therefore, it is important to take your time and consult appropriately before submitting your application for a loan against property.
Business Loan Against Property
A business loan against property is a loan provided against the mortgage of property, whereby the borrower uses his or her property as security for the loan. Borrowers can use this kind of loan for a variety of business purposes without restriction.
The lender for a loan against property may accept securities such as rent roll, property, rural, residential and commercial, invoices, plant and equipment and a myriad of cross-collateralised security options. You can apply for a business loan against a property for a number of purposes such as expanding your business, funding a business trip and funding medical treatments.
Having applied for a business loan, your lender will first evaluate the value of your security before approving your loan request. The following are some of the reasons why you are not getting approval for a business loan against property:
1. Multiple Ownership
Multiple ownership or joint ownership can influence your eligibility for a business loan against property depending on the type of ownership you are a party to. Multiple ownership for property can be joint tenancy or tenancy in common. Joint tenancy allows tenants to own property in equal shares.
On the other hand, tenancy in common allows tenants to own property in unequal shares. Your application for a business loan against property may be declined in the event you are in joint tenancy ownership. This type of ownership generally restrains you from taking out a business loan against property without the consent of your co-owner(s).
To increase the chances of getting your next application for a business loan against property approved, you should first seek the consent of your co-owners, which is typically represented by their signatures.
This gives your prospective lender the confidence to write a mortgage as they will be able to foreclose and get the property in case you fail to repay your loan.
2. Disputed Property
You may fail to qualify for a business loan against property because of a disputed property. Property disputes are legal disputes that cover real property such as apartments, single-family homes, condominiums, roads, canals and ponds.
Property disputes can manifest in various ways including dissent regarding the location of the property line among neighbours, a dispute regarding the legal ownership of the given property, a dispute between real estate developer and homeowner regarding the party responsible for the home repairs and utility easement dispute between homeowners. Other types of disputes on a property may result from a recorded error, fraud or liens.
Any of the above-mentioned disputes may prevent your prospective lender from offering you a business loan against property since they may be unable to foreclose the property in the event you default on loan repayments.
To increase the chances of getting your application for a business loan against property approved in the case of disputed property, ensure that you settle any prevailing property disputes prior to applying for a loan.
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3. Too Many Debts not repaid
Having too many debts can hinder you from getting your business loan against property approved. A majority of lenders for a loan against property tend to avoid borrowers bearing too many debts because of the risk associated with offering them loans. These debt-ridden borrowers are likely to default; hence would put the lenders in trouble of having to use additional resources to recover the loan.
Besides, debt-ridden borrowers may subject lenders to lots of legal battles, which may be costly. Consequently, you are unlikely to qualify for a business loan against property when you have too many debts not paid off. The step to take if you have many debts is to offer your lender alternative security having the same value as the loan you are applying for.
This will boost your lender’s confidence and consequently increase your chances of getting your application for a business loan against property approved. You may also consider paying off your debt first before applying for a mortgage.
4. Insufficient Documentation and Asset Issues
Having insufficient documentation as well as asset-related issues may hinder you from getting your business loan against property approved. Most lenders need to know the conditions the borrower prefer when applying for a loan.
Additionally, they need to acquaint themselves with all the information about the property owner(s). Failure to include all the required information about each property owner in the case of a joint application may derail your chances of getting your loan approved. The documentation must also include the signature of all the property owners in the case of joint tenancy.
On the other hand, asset issues such as legal liability, theft and increased risks may lower the confidence of your prospective lender; thus derailing your application for a business loan against property.
Hubbe’s Business Loan Against Property
Getting a business loan against property has been made easy by Hubbe, an ideal business loans facilitator. You can now enjoy the convenience and less complication while getting your business loan against property approved quickly just when you need it. This loan facilitator offers you business loans against property ranging from $50,000 to $20,000,000 with an ideal interest rate of 1% per month.