The Benefits of Stated Income Loans for Commercial Real Estate Investments

Many people have never heard of a stated loan because the loans have been out of favor by lenders for several decades. The commercial stated income loans have become popular again in the real estate industry and are often used when someone regularly does business with a financing or banking institution. Simply put, the stated loan is the process when a borrower states his or her income on an application, and that amount is used to process the loan. Here are several ways this type of loan benefits commercial real estate investments.

Processing Time

Since stated loan lenders do not need to verify your information with an employer, check your credit score, or run the paperwork by two levels of underwriters for approval, the money can be financed quite quickly. While the process of obtaining a traditional loan can take up to three months, commercial stated income loans can be approved as quickly as within a week or two. 

Little Documentation

For the self-employed individual, this is the ideal type of loan because documentation of a regular income may be difficult to provide. While business may be good one month, it may lag during the next month, thus making your income appear to vary too greatly for most lenders to approve a loan. Using a stated loan allows people with uncertain monthly incomes to get a loan approved on their word alone.

Few Penalties

One of the most popular benefits of the commercial stated income loans is that many of them do not have pre-payment penalties. Although there are some institutions that do charge for pre-payment, many lenders understand that paying the money before the contract ends can allow you to start a new venture which often requires borrowing a new amount from the same lender. 

Chosen Income

For individuals that get a yearly check from a family trust, investors that have rental units requiring rehab, or contractors that work seasonally, proof of an established monthly income may be difficult to prove. For these loan seekers, stated financing can be a solution to traditional loan problems. With no long verification process or tons of paperwork, they can get the money and grow their business or purchase a building.

Since stated income loans require a minimum of documentation, the application process can be finished quickly. While the loan terms may not right for everyone, the popularity of this type of financing shows that there is a lot of individuals that need this type of loan.


Leave a Reply