How to make a loan processor understand a business loan?
So I am trying to get a home equity line of credit. My credit score as well as my wife's are both above 800.
The only debt I have is my mortgage and a couple of credit cards paid off monthly so I don't pay interest. DTI is maybe 15%.
However my business has a $200,000 SBA loan with a very large monthly payment. It clearly says on this accounts on my credit report that these are business loans and joint responsibility.
With personal guarantees required for any meaningful type of business loan, how does one explain to a loan processor that you simply don't pay that every month?
I've offered them the tax returns for the business as well as personal but to no avail.
Is there some trick? Can I get the business to write some document that says they pay that note every month and not me. I'm a minority partner at 20% ownership.
Thanks for any help.
Thu Apr 16, 2015 8:07 pm
GardenCat Full Member
Cash: $ 11.60
Joined: 07 Dec 2014
What you probably need are a couple things.
1. If the business is some official entity, LLP, LLC, S Corp, C Corp, etc then there should be official documentation (Articles of Incorporation, By-Laws...) that state the structure of the business and who are partners and their shares, as well as who gets what percentage of profits and pays what percentage of debt.
2. Bank statements, personal and business, for at least two, maybe three months that show all deposits and expenditures - and documentation for the deposits (where the money came from) on your personal accts.
3. credit card statements for 2-3 months and your documentation of how the ccs' were paid, where the $$ came from...again for your personal accts.
4. documentation from the SBA loan holder showing regular payments made from the business and if possible where from & how much your payments are...maybe a breakdown of who paid how much...
Also, whoever you are working with to get the heloc should really know this stuff!!! Maybe you need to shop around and find a good mortgage broker who actually understands the ins and outs of the mortgage world. The person I use here in Colorado has taught me so much and been so helpful in making things work I don't really understand why someone in the business would not try to REALLY be helpful. Sometimes there actually are workarounds when your type of situation comes into play.
Thu Apr 16, 2015 9:09 pm
oldguy Senior Member
Cash: $ 717.80
Joined: 21 May 2006
I would probably shop this around to a couple other lenders. There are probably some knowledgeable lenders that would like to place some capital with some 800+ folks.