Recourse vs. Non-RecourseA recourse loan requires a personal guarantee, while a non-recourse loan does not. Even non-recourse loans require some level of guarantee for “bad boy” carve-outs, typically referring to criminal or fraudulent activity by the borrower causing default.Personal FinancialsThe personal financials of borrowers — typically anyone owning 20% or more of the purchasing entity, along with all managers — will be collected and reviewed by the lender.Business FinancialsIf the client is a business owner operating from the subject property, the ability to repay is dependent on the profitability of that company, not the cash flow of third-party tenants, since none exist.Business OutlookUsually only a consideration for owner-user transactions, where loan qualification is based solely on the borrower's business.Credit & CharacterQualification comes down to how likely the lender believes you are to default on the new mortgage payment, based on your credit and payment history.Property TypeThe asset type — multifamily, office, retail, and so on — is the first factor a lender evaluates when looking at a new commercial loan request.Property LocationLenders generally prefer properties in major metropolitan markets over rural areas, in locations with high traffic and visibility, and with less potential for future competition.Quality & ConditionUsually evaluated by inspectors who complete on-site inspections on behalf of the lender and deliver their report for review — often just an appraisal.Appraised ValueA very important factor in determining final loan terms, completed by an accredited appraiser who specializes in the specific commercial subtype, usually in the same market as the property.NOI & Cash Flow RatiosArguably the most important factor for a lender when evaluating a commercial loan request, since there are many uncontrollables once a loan is funded.Overall TenancyThe value of a commercial property is determined based on the income of that asset — so tenancy strength and lease terms are scrutinized closely.Legal ConsiderationsThe performance of the property and the strength of the borrower to make mortgage payments are ultimately determined by all the factors above, working together. 