If you are thinking of obtaining a commercial mortgage in Ontario or a business loan to open the business of your dreams, then you may be faced with a few obstacles. Trying to secure a mortgage or loan of any kind can prove to be challenging if you do not know where to go or where to start. There are also many reasons why you or your business partners may be denied for a commercial mortgage in Ontario or a startup business loan, which we will discuss in this article.

Why Lenders Reject Commercial Mortgage Applications

If the loan underwriter or the bank’s loan officer is not satisfied with your business proposal, then they may deny your application. For your business plan to be accepted, they need to feel that the plan firmly supports the requested loan amount, meaning they need to be confident in your business plan.

Also, if they notice something on your tax return that violates the lending policies of the bank, then the bank’s loan officer will deny your application. For instance, they may discover an insufficient net income after evaluating your tax return.

Your commercial mortgage claim can be rejected if the lender does not typically deal with the type of business that you are involved in, or may demand special requirements to qualify that may make it impractical or infeasible for you to take on the loan. For instance, many banks will refuse businesses in the restaurant and bar industry, and those who invest in auto-service enterprises will usually be expected to adhere to environmental reporting protocols that are very expensive and excessive.

Why Lenders Reject Startup Business Loan Applications

Your startup business loan application may be rejected if your credit score is deemed to be too low. The required amount will vary depending on the situation, as well as who the lender is. Many startups have trouble procuring a business loan because they have not built up a business credit history.

For a company to build business credit, it needs to be in business, but lenders may be hesitant to lend to a startup, as they don’t have a proven track record of success. They may deem that your startup is a risky investment. You will have a lot of trouble procuring a business loan for your startup if you wish to open a restaurant, as the restaurant industry is notorious for its very high failure rate.

Those who work in the entertainment and vice industry — i.e., casinos, porn, OTC medicine products — will also face hurdles when trying to obtain a startup business loan. Fortunately, there are specialized lenders in the industry that will help people who partake in precarious business ventures obtain the financing that they need.

To learn more about how to obtain a commercial mortgage or a business loan for your startup business in Ontario, call Northwood Mortgages at 888-492-3690 or contact us here.