If your commercial loan is maturing and your bank will not renew the loan or is asking for a large paydown, the issue may not be the property. It may be your tax returns.
This is happening to a lot of strong commercial borrowers right now. When banks calculate debt service coverage using tax returns, legitimate write-offs, depreciation, and other tax strategies can make the income look too low. On paper the debt service ratio fails, even though the property is actually producing solid cash flow. The building performs, the tenants are paying, but the tax return does not reflect the true income of the property.
This problem shows up most often with self-employed borrowers. Many investors and business owners run very tax-efficient operations, which lowers taxable income. Banks, however, are built to underwrite clean W-2 income and simple tax returns. When your CPA does a good job reducing taxes, the bank’s underwriting model sometimes cannot recognize the real strength of the deal.
The good news is refinancing is still possible. Some commercial mortgage programs qualify the loan based on the property’s actual cash flow using rent rolls, operating statements, or bank statements instead of relying heavily on tax returns. These programs were designed for borrowers whose tax strategy creates a documentation gap with traditional lenders.
If your loan is maturing in the next 6–18 months, it is best to explore options early. Waiting until the last 60 days often limits lenders and increases pressure.
At Commercial Capital Ltd., we specialize in placing the deals banks decline when the tax return does not tell the full story. If your property cash flows but your bank said no, give me a call at 512-358-1511 before your maturity date becomes urgent.
We are not just business loans; we bring the same creativity and depth of knowledge to real estate loans as well. We have unlimited capital for real estate-based loans, up to $50 Million or more. So if you or anyone you know has a business or commercial loan need, give us a call at 512-358-1511. Commercial Capital, the place to go when the banks say no!
Karen Schimpf
(512) 358-1511
karen@applycommercialloans.com
www.ApplyCommercialLoans.com
P.S. Despite the economic and political noise, business activity is very strong right now. Many investors are moving money out of the stock market and into buying, expanding, or starting businesses. That is exactly we’ve been closing.
We recently financed a restaurant acquisition, a medical clinic purchase, and a franchise startup — deals many banks would have declined.
If you are acquiring or starting up a business, call me at 512-358-1511 to discuss your scenario. One call can usually tell you quickly what is possible.