What Financials Are Needed for a Commercial Lease
Whether you’re a startup or an established retailer aiming to grow your retail center or strip mall operations, you’re likely looking to lease commercial space. When you approach a landlord for a commercial lease, they require you to assure them that you will be able to pay rent on time.
If it’s a shopping center startup, they know that new tenants won’t make any profits for at least six months or even a year and will still need to take care of inventory, payroll, and upfront costs. They want to see how much you have left after paying those upfront expenses to pay for 6 to 12 month rent during the upcoming year. Hence, be prepared to provide the following financial documents they may request for the commercial lease:
Business Plan
Unless you’re a well-known brand, the landlord will require you to show your business plan.
Prior Tax Returns
The landlord may ask you to show personal or corporation tax returns filed in the past two years.
Financial Statements
The majority of landlords demand financial statements for the past two years. These include the income statements and balance sheets. From sole-proprietorship or startup retailers, they may also require personal financials so they can assess their individual financial situation.
Credit Reports
To demonstrate that you have a good credit history, you’ll also need to provide credit reports from all three reporting bureaus. A good credit history shows that you’ll likely stay financially stable in the future.
Business Bank Statements
Your corporate bank statements will also be required to prove that you possess funds to pay your rent now as well as in the future. Ideally, the amount of available funds should cover your complete lease. This means that the statements should show that you should be able to pay the rent for up to a year until you turn a profit.
Bank References
If you’ve acquired a small business loan to fund your commercial lease, you’ll probably need to obtain a letter from your bank, showing pre-approval for a particular amount. This helps assure your future landlord that you’re in a good financial situation for the lease.
Commercial Leasing In Florida, New York, and New Jersey
The commercial real estate market is not easy to operate in. While there are multiple leasing documents to prepare when looking to secure a commercial lease, we discussed the most important ones in this guide. To explore some amazing commercial vacancies in New York, New Jersey, and Florida, connect with Milbrook Properties.