Credit for a Lease

The process of getting a commercial lease can vary from landlord to landlord. One of the biggest qualifying components is the credit worthiness of the tenant. Landlords consider several factors such as tenant mix and contractual terms, business profile and long term potentnial but credit is always a key input.

Personal credit history of the owner, company balance sheet, profit and loss statements, open credit lines, and growth projections all factor in. Small business owners will be required to sign personal guarantees. In commercial leases, a solid business plan and proof of liquidity for upfront buildout expenses and operating capital goes along ways toward approval. Tenants need to show their potential income , that will cover the the landlord for the lease of the space over the term of the agreement.

Any buildout or tenant improvements required, will also factor into any credit decision the landlord will be a factor when leasing the space to the tenant. If the costs are low, with little or no tenant improvements, then landlords may be willing to take a greater risk.

Like in any relationship, putting your best foot forward is always the best path, so being ready with a available information that can be shared with a broker or owner confidentially should move forward the leasing process in a seamless fashion.