Leasing a new commercial space is an important step both for your company and for the owner of the property. That’s why in the vast majority of cases, landlords want to see “financials” before signing a lease. But what does this entail, exactly?
What Does It Mean When a Landlord Wants To See “Financials”?
In the context of a commercial lease, the term “financials” is short for financial documents or financial information. The reason landlords ask you to submit your financials is simple: They want to make sure your business will be able to cover the lease rate.
Most landlords will want to see your financials as part of the lease negotiation process. If you are planning to look for a new location, it’s a good idea to gather all the necessary financial documents before you begin your search. In the next section, we will review some of the documents you will need to prepare.
What Financials Do You Need To Submit for a Commercial Lease?
While the financials required to sign a commercial lease can vary from landlord to landlord, there are a few documents that can be considered a de-facto standard, including:
- A completed tenant application
- Prior tax returns (business and personal) for the past 2-3 years
- Profits and loss statements
- Business balance sheet
- A copy of your business plan
Depending on the specific characteristics of your business, landlords may require additional documents.
For example, if your business is a startup, chances are good that it has little to show in the way of financial history.
In that case, a potential landlord will likely ask for additional assurances in the form of a personal guarantee or a predetermined number of months of rent to be paid upfront.
in helping clients navigate even the most challenging commercial real estate negotiations.
Chantel Aguilar: Your Commercial and Investment Property Expert in Orange and LA Counties
As you can see, securing a commercial lease can be a complex task. The good news is that the reliable help you need is only one click away.
Chantel Aguilar has a proven track record of success in helping clients navigate even the most challenging CRE lease negotiations. Contact Chantel by telephone at 562-447-0665 by email at firstname.lastname@example.org.
To learn more about commercial real estate and CRE leases, read our previous blogs “4 Commercial Real Estate Trends To Watch in 2023” and “What Is the Relationship Between Interest Rates and Cap Rates?”