Commercial Loan Expectations

[Randy E.]

A brief overview.

40-year old S-Corp with a stable history and no past financial problems. Assets: $700K-$1M. Debts: Zero. Vast majority of assets are commercial, with less than 10% SFR. Clean, complete books and accounting.

If this entity went shopping for a commercial loan or a business LoC, what should its expectations be in regards to interest rate and collateral?  Would a lender loan with all/part of the assets as collateral?  Or, in addition to the property collateral, would a lender demand personal guarantees from some/all members of the board?  Would this vary based on the amount of the loan?  Or the expected use of the loan? 

For instance, would a $50K LoC/Loan requested for CapEX come with different requirements than a $250K LoC/Loan intended for property acquisition?  Would a $500K loan be a reasonable request?

If personal guarantees were required, would the lending institution have the same credit-worthiness requirements of each personal guarantor as with a personal loan?

Any other financial tips would be appreciated. 

Thanks.

[Greg Dickerson]

Originally posted by @Randy E.:

Thanks for the rapid response, @Greg Dickerson.  

We have complete financial information available, but we need to assemble it into a loan-request-ready package.  

We have deposit accounts at 3 banks in this town and we plan to shop those first.  The first one is requesting personal guarantees, but half the board is not likely to agree to that.  It's good to know that, at least hypothetically, it is not unreasonable to hope for a strictly-business no-personal guarantee might be arranged.

-Randy

 Yes I have done plenty of business loans and spec development loans in the corporate name only and with only corporate guarantees. Just let them know personal guarantee is not an option.