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Due to the economic impact of COVID-19, commercial underwriting has become more conservative than ever. While the experience is unlike the financial crisis of 2007, which affected the availability of commercial loans — we are seeing a change in the amount of risk a lender is now willing to take on as a result of COVID-19’s other economic effects. This is good news: it means that there is still plenty of commercial money available! However, the parameters that must be met to get funded have dramatically changed.

As we move into 2021, it is expected that cautious underwriting to continue as an industry-wide trend. Thus, borrowers will have to provide more documentation than ever to qualify for commercial loans. Before applying for your next commercial loan, take a few minutes to review our checklist for how to best prepare or the underwriting process. Proper preparation will not only save you time down the road, but may also be a make-or-break in securing the best loan terms in the near future.

Loan Doc Tips 2021

Tip #1: Provide Extra Income Verification

The effects of COVID-19 may have had a significant impact on the income of your business or property in 2020. In order to prove that your business is has a steady track record, be prepared to provide more than the standard 2 years of income tax returns – providing 3-4 years as well as 3-4 years of personal tax returns will set you up to be a more solid candidate.

Every lender has different requirements. Make sure to confirm these requirements ahead of time, and then have the additional documentation readily available – as it will more than likely be called upon.

Tip #2: Prove Higher Debt Service Coverage Ratio

While in 2019, a DSCR of at least 1.15 showed that a business generated enough income to service its debts, such a ratio is no longer accepted as the standard when it comes to applying for commercial loans. In order to put your best foot forward, show how your business is strong enough to last the pandemic by proving a higher debt service ratio of at least 1.2-1.25 or higher.

In order to prove DSCR, banks and lenders used to require copies of bank statements. However, as a result of the pandemic, we’re seeing lenders ask for recent month-to-date bank statements to give a more accurate real-time look at how your business is keeping up with its payments. (These are truly unprecedented times!)

Tip #3: Add your PPP or EIDL to your Debt Schedule

If you received a PPP or EIDL, you’ll need to secure additional documentation for your application. Make sure to communicate with your CPA on whether or not your loans will be forgiven, and then make sure to add them to your debt schedule.

If your PPP loan is forgiven or WILL BE forgiven, make sure to have all statements, payroll, and other documents on hand to support your claim. If you received an EIDL, treat it as an SBA loan in lien position — as it is similar but not superior to a SBA 7a loan.

Tip #4: Re-Verify Your Business and Personal Credit Scores

One of the biggest mistakes we see during the underwriting process is that the borrower was unaware of changes to their credit scores. It is extremely important, more than ever, to know both your business AND personal credit scores from all of the major bureaus.

And please, we know that the deals right now can be tempting — but hold off on making any major purchases, such as a home or even luxury vehicle, until after your loan is approved!

Tip #5: Provide Statement About COVID-19 and Your Business

Treating your lender like they are your partner in your business endeavors is key. In addition to providing all proper income and credit verification as detailed above, consider also providing a personal statement that outlines the effects of the pandemic on your business. Per the SBA, this statement should include:

  1. How has your business revenue/staffing levels been impacted?
    • Do you have a plan in place to return these levels to “normal” operation?
    • What’s your contingency plan in case those levels are not met for the next 18 months?
  2. How have any restrictions such as “stay-at-home orders” and its limitations impacted your cost projections, clientele or access to supplies, inventory and/or equipment?
  3. What other COVID-19 impacts have affected operational cost of your business? (ie. sanitation supplies, protective gear, and other essential costs for protecting the business and its employees?)
  4. Is there any reliable historical financial information for your business based on the current market conditions that can predict its probable success?
  5. How concentrated or diversified is your customer base? and How dependent are you on those concentrations?
  6. How diversified are your vendors/suppliers? and How dependent is the success of your business on those particular vendors/suppliers?

Whether or not you’re applying for an SBA loan, make sure you have this comprehensive statement ready to go.

In conclusion…

Times have changes, and so must your loan application. By thinking like a pandemic-era lender, and preparing your documents like a pandemic-era invest, you’ll save yourself a lot of time from having to go back to the drawing board… and these days, timing is everything!

Speaking of timing, do yourself one better than simply implementing these tips — consider working with a Commercial Loan specialist, like those at ComCapFL. Unlike a broker who simply finds a loan that matches your requirements, a commercial loan specialist leverages their private funds and industry relationships to find the loan that works for you and your specific goals. Working with a commercial loan specialist from the beginning of your loan process won’t only assist you on elements of the loan, such as the application — but it will also keep you from having to start all over again in the case of push back or denial!

At ComCapFL, if we accept your loan request, we’ll close your loan. To learn more, email us today at or call us at (888)959-1648 and find out what we can do to help fund your commercial real estate or business project.