Help! I'm self employed. How can I get a commercial mortgage?

The majority of small businesses owners are self employed (including myself) making it very difficult to document your income to qualify for a commercial mortgage (even for a residential mortgage). So what can you being doing to prepare for the time when you want to buy that building you've been occupying since you started your business. Here it goes:

1. First, and most important is to keep your credit scores as high as possible. Typically stated income lenders start around 600 and above.
2. Have your tax returns, including supporting schedules such as Schedule E and K-1s.
3. Develop a relationship with an accountant. Have them prepare your tax return and business financial statements. Most lenders will require a letter from your account supporting your self employment status.
4. Buy a high quality property that has nice cash flow and Cap Rate. Commercial lenders look at the property first then the borrower's credit. If the property produces good cash flow (1.25x Debt Service Coverage Ratio and above), and has good quality tenants supported by strong leases, then the lender will rely less on the borrower's credit.
5. Have established checking accounts for you and your business. Show adequate reserves in those accounts. Reserves mean a buffer amount of cash in case your income or the property's income stops).
6. Have strong assets on your balance sheet. Equity in a house or strong liquid assets including those in a deferred retirement plan all help. If you show a healthy balance sheet that helps. Remember, assets will be verified (through statements or calling the bank) even though your income is stated.
7. Consider putting more than 20% down (some lenders may require more) on the property. Lenders love equity cushions, because it protects their interests. So a high down payment may mean a faster approval.
8. Have the appropriate business license. I know it sounds silly but one way to prove that your are self employed is to have a copy of a valid license.

Having or following these items should lead you to a successful loan closing!! Good Luck.