Business Loan Due Diligence

Business Loan Due Diligence

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Borrower and Principal Information

1. Resume
2. Credit Bureau Authorization Letter
3. Financial Statements for Borrower/Principals, audited or unaudited. Must include a list of all contingent liabilities, including the amount and security.
4. Banking references for each of the Borrower Principals and for the Borrowing Entity. Description of borrowing entity, including legal name, type of entity, when formed, principal partners or shareholders with percentage ownership.
5. Copy of partnership agreement or incorporation documents.
6. Federal Tax returns for the past three years and a current balance sheet.
7. Bank or brokerage statements to verify liquid assets.
8. Income property performance schedule (form to be provided) reflecting all income property on the financial statement previously provided. For any property with a negative cash flow explain the circumstances.
9. Mortgage Loan Verification Forms for all income property loans greater than $1 million shown on the income property performance schedule (form to be provided).

Property Information

10. Current rent roll showing the following information:

1. Tenant Name
2. Net Rentable Square Feet Occupied
3. Original Lease Commencement Date
4. Current Lease Commencement Date
5. Lease Termination Date
6. Options and Option Terms
7. Base Rent per Square Foot
8. Expenses PSF (Dollar Amount, Method of Computation, and Due Date)
9. Percentage Rent Paid in Each of the Past Three Years
10. Sales per Square Foot, if available (for any declining trend provide explanation)
11. Concessions, Rebates, or Discounts Given to Tenant
12. Arrearage Owed by Tenant
13. Amount of Security Deposit Held
14. Early Termination Provisions, if any o Co-Tenancy Clauses, if any

10. For commercial properties, a copy of each lease, including any amendments or modifications, and a copy of the standard lease form utilized.
11. Operating statements for the past three years, a YTD operating statement and Borrower's proforma operating statement for the next twelve months. Provide a breakdown of rent (gross potential rent and vacancy), CAM and % rent income.
12. Copies of property real estate tax bills for the prior and current years, including the most recent bill received.
13. Copy of Purchase Contract, if applicable. If purchased within the past eighteen months, copy of the Purchase Contract related to that purchase.
14. Copy of any existing appraisal report, engineering, and environmental reports if available.
15. Site plan, including floor plans with tenants identified for retail properties.

Additional Materials Which May Be Required During the Underwriting Process:

17. Detailed schedule of Tenant Improvement and Leasing Commission Expenditures for the past two years, including tenant name, lease term, whether tenant was new or renewing and base rent.
18. Most recent as-built survey, showing all easements, including access easements. An updated survey is required one week prior to loan closing.
19. A new title insurance policy will be required prior to Rate Lock.
20. Certificate of Occupancy.
21. A zoning conformance letter from the municipality.
22. A schedule of any personal property owned by the Borrower for which there is purchase money or other lien in favor of another creditor, indicating the details of such lien.
23. Copy of the Management and Leasing Contracts, if applicable, and a resume of the Managing Agent.
24. List of all property staff including names, job descriptions, and annual compensation including benefits.
25. List of all vendor contracts.
26. Insurance certificate showing the insurance carrier, coverage limits for buildings, contents, rent loss, and liability, policy term, and premium. Copy of the billings for the prior and current year.
27. A schedule showing the percentage of SF of occupied space as of the end of each of the past three years, both in the aggregate and for local space only.
28. Tenant delinquency report.