Commercial Lease Application Form

A commercial lease application is a document a landlord or property manager uses to screen applicants for a commercial rental property. The occupants of commercial properties use the space for income-generating activities under specific terms the landlord or property manager outlines.

Table of Contents

• What Is a Commercial Lease Application?
• Types of Commercial Leases
• How to Screen a Commercial Rental Applicant
• Key Things to Remember as a Landlord
• What Information Do Landlords Look For?
• How to Write a Commercial Lease Application Form
• Commercial Lease Application Sample
• Frequently Asked Questions

What Is a Commercial Lease Application?

A commercial lease application helps the landlord or property manager screen businesses to evaluate and decide on a tenant for a commercial space. Applications for commercial leases also give insight into a business’s financials and rental history, which helps the landlord minimize risk.

When commercial property owners want to rent out their space, they typically have a potential tenant fill out a simple commercial lease application.

When to Use

Commercial real estate owners should use a commercial lease application to evaluate prospective tenants interested in renting their properties for business purposes. A landlord usually asks a business entity’s representative or owner to fill out an application to lease commercial space before signing a commercial lease agreement.

Landlords of a commercial space include those who own:

Screening also helps landlords better understand the prospective tenant and the business (and its principals or representatives) and determine whether they will add value to a property. Typical commercial leases applicants include:

Types of Commercial Leases

Landlords can write different types of leases to meet their rental needs. Explore some of the different types below:

• Full-service lease: A full-service lease includes all anticipated costs, including utilities, maintenance fees, repairs, and taxes. While the tenant will incur a higher monthly cost with this type of lease, they can avoid surprise costs later in their lease.
• Net lease: A net lease requires the tenant to cover some costs associated with a lease. For example, they may pay maintenance costs, insurance, and property taxes in addition to the base rent. The amount they pay each month may fluctuate depending on the expenses that arise.
• Modified-gross lease: A modified-gross lease combines a full-service and a net lease. The tenant may pay some expenses while the landlord is responsible for others.

How to Screen a Commercial Rental Applicant

Screening potential commercial rental applicants can help you find a high-quality tenant. Here are some steps to follow to screen your applicants properly:

Step 1 – Acquire the Rental Application

Begin by acquiring the rental application. Ensure the tenant has provided all the requested details. Once you obtain this document, you can continue with the subsequent steps to verify the information.

Step 2 – Verify the Business With the State

All 50 states have a specific office, like a Secretary of State, with reputable businesses on file. Ensure your applicant’s business is in good standing with the state.

The resources below help verify a business’s status with its respective Secretary of State or equivalent office:

Step 3 – Look Up the Business’s PAYDEX Score

Look up the business’s credit score, which is a risk and creditworthiness score a third-party company assigns to a business owner or principal. The following companies (and more) provide business credit scores:

• Dun & Bradstreet
• Experian
• Equifax

Dun & Bradstreet is popular in the business credit scoring industry, and it assigns PAYDEX scores that range from 1 to 100 based on past payment performance and creditworthiness. Below is a breakdown of what each score range represents:

• 0-49. High risk of late payment (an average of 30 to 120 days beyond terms)
• 50-79. Medium risk of late payment (average of 30 or fewer days beyond terms)
• 80-100. Low risk of late payment (average of prompt to 30 days within terms)

Step 4 – Conduct a Personal Credit Check

While it’s important to run a business credit check to understand the company’s financials better, you can also benefit from conducting a personal credit check of the business owner. Personal credit checks produce a score between 300 to 850. Ideally, you should consider tenants with a personal credit score of at least 700.

Obtain a personal credit score from one of the three major credit reporting bureaus, which are Transunion, Experian, and Equifax.

Step 5 – Contact References

As the landlord, you can verify the information a potential tenant provides by contacting the references they give. Consider contacting them by phone instead of via email for added legitimacy.

If you have to contact a bank to verify financial information, the bank may request the applicant’s consent before it provides sensitive financial information.

Step 6 – Obtain a Personal Guarantee

Confirm that the tenant will pay the lease regardless if their business succeeds with a personal guarantee. This statement affirms the tenant will keep paying the lease until the agreed-upon termination date.

Step 7 – Decide on the Tenant

Using the information from the previous steps, select a final tenant who has a strong likelihood to pay rent on time for the duration of the entire lease. Notify the tenant with a rental application approval letter. Then, you can start negotiating a lease with your tenant.

You should send a rejection letter with the reasons for the denial to all applicants you decline. You must also tell the tenant if you take an adverse action due to the applicant’s background check [1] . Examples of adverse action include:

• Declining the commercial lease applicant
• Requesting a higher deposit amount
• Raising the rent amount
• Requesting a co-signer on the lease
• Adding a deposit that isn’t required for other applicants

Key Things to Remember as a Landlord

Leasing a commercial space can be the most lucrative when you remember these key points:

Choose Your Tenant Carefully

Even if you receive dozens of commercial rental applications, you may not find the right tenant in your first batch. Take the time to narrow down your choices carefully. Instead of choosing a tenant to simply fill the space and start collecting rent money, select one you have full confidence in.

Understand Maintenance Responsibilities

Usually, maintenance relating to the property’s structure is your responsibility as the landlord. Any other maintenance related to fit-outs, which are the adjustments for making a commercial space suitable for the tenant’s needs, is typically the tenant’s responsibility.

Clarify maintenance responsibilities and ensure applicants understand them when you’re selecting a tenant.

Obtain a Guarantee

While you can obtain a personal guarantee the tenant will pay regardless of their business’s financial situation, consider getting a bank guarantee. A bank guarantee may be more reliable than a personal guarantee, as you can access cash from the bank in case the tenant stops paying their rent.

What Information Do Landlords Look For?

As a landlord or property manager, there are limitations to what you can ask while screening commercial tenants. Reduce potential legal issues by limiting your inquiries to the following:

The Business Name

You can ask your potential tenant the name of their business. You can search for customer reviews and complaints if it is an established business.

This allows you to determine whether the business has a good reputation and a stable client base.

The Business Structure

You can ask the tenant for their business structure. This helps you determine who pays rent and operates the business daily.

Business entity structures may differ for a limited liability company (LLC), corporation, partnership, or sole proprietorship.

The Intended Use of the Space

You can request details about the type of business the tenant intends to operate. You need to know whether the owners will use the space in a manner consistent with legal and regulatory requirements. These details also allow you to determine whether the space is appropriate for the business’s intended use.

Previous Rental Information

You can request details about the tenant’s prior rental history, including their previous landlords’ contact information. References are an excellent way to determine if your potential commercial tenant will be reliable and respectful.

Business Owner Information

It is reasonable to ask for the business owners’ names and identifying information to conduct credit and background checks.

You have the right to know who will be renting your commercial space and whether they have any financial issues that could prevent them from meeting the lease terms.

Business Banking Information

You may request banking details from the business, including bank statements, tax returns, profit and loss statements, and a business plan. As the landlord, you have a right to confirm whether the business can meet the financial obligations of the agreement before you enter into the lease.

Credit References

Credit reports and references from banks, lending agencies, and businesses associated with your potential tenant can provide critical details. You can review the potential tenant’s credit history to confirm their financial reliability.

Authorization to Perform a Credit or Background Check

The Fair Credit Reporting Act (FCRA) requires you to obtain permission before performing a credit or background check on any applicant. You can only use the background or credit check to evaluate the application.

To meet authorization requirements, use a background and credit check authorization form to request the applicant’s name, date of birth, social security number, driver’s license number, and address. The form should include a signed and dated statement authorizing you to conduct the credit check.

How to Write a Commercial Lease Application Form

Step 1 – Fill in Basic Information About the Property

A business rental application form needs to summarize basic information about the property the landlord is renting:

1. Date of Application
2. Landlord Name
3. Property Address
4. Property Square Footage

Step 2 – Enter Business Applicant Information

The next section of a commercial property application addresses the applicant’s basic information:

5. Business name
6. DBA name (if applicable)
7. Type of entity (Corporation, LLC, Partnership, Sole Proprietorship, Other)
8. Date of business formation
9. State of business formation
10. Federal Employer Identification Number (EIN) or Tax Identification Number

It would be best if you also used this section to gather information about the business’s primary location (place of business) and contact information:

11. Office address
12. Business phone number
13. Business email address

Additionally, ask for the following information to get a better idea of how the business operates:

14. Business industry or a description of the business
15. Proposed use of premises
16. Number of years in business
17. Gross annual revenue
18. Other business locations

Step 3 – Write the Name of the Person Signing the Lease/Individual Owner

The person (or persons) who will sign the lease agreement (often the business owner or owners) must provide their personal information on a commercial lease application. This identifying information helps the landlord conduct any credit and background checks necessary to determine risk and creditworthiness.

The following is what you should ask of each person legally responsible for entering into contracts for the business:

19. Full name
20. Position title
21. Date of birth
22. Social Security number
23. Personal address
24. Personal phone number
25. Personal email address
26. Driver’s license number and state of issue

Step 4 – Identify the Name of the Person Guaranteeing the Lease

Landlords often ask for guarantors on a commercial lease. This person agrees to fulfill the primary debtholder’s contractual obligations should the debtholder fail to do so.

You may request more than one person to guarantee the lease. Collect the following information for each guarantor:

27. Full name
28. Business title (if applicable)
29. Date of birth
30. Social Security number
31. Personal address
32. Personal phone number
33. Personal email address
34. Driver’s license number and state of issue

Step 5 – Collect Bank References

Bank references are bank managers’ written opinions of their customer’s (your applicant’s) financial stability and creditworthiness.

On a business lease application form, gather the information necessary to contact the potential tenant’s banking institution:

35. Bank name
36. Bank contact name and title
37. Bank address
38. Bank phone number
39. Bank email address
40. Account type and number

Request bank references for at least two accounts, but you can request more.

Step 6 – Gather Business and Credit References

Business and credit references are companies or individuals who can vouch for prospective tenants’ business aptitude and ability to make timely lease payments.

When writing your application, request the following business and credit reference information:

41. Name
42. Title (if applicable)
43. Business address
44. Relationship to applicant
45. Phone number
46. Email address

Always ask for at least two credit or business references on your application.

Step 7 – Ask for Personal References

Personal references shed light on your applicant’s character.

Request at least two personal references and gather the following from each:

47. Full name
48. Address
49. Relationship to applicant
50. Phone number
51. Email address

Step 8 – Get Lease History

A commercial lease history is a list of properties the business previously rented. If the applicant owned all prior places of occupancy, ask for addresses of real estate ownership. Also, ask if the business entity is paying rent on commercial real estate.

Ask the applicant to provide the following:

52. Current business address
53. Dates of occupancy for current address
54. Reason for leaving current address
55. Whether the applicant owns or rents at its current location
56. Monthly rent/mortgage payment
57. Landlord/mortgage company and contact name
58. Landlord/mortgage company phone number
59. Landlord/mortgage company email address

Step 9 – Enter Assets and Sources of Income

Your applicant should provide information on assets and income sources for consideration in their application.

Request the following:

60. Business assets and their value
61. Sources of income
62. The amount of money brought in monthly from each income source

Step 10 – Fill in Creditors/Liabilities

A business’s liabilities are losses, ongoing obligations, debt, and continued operating costs. Creditors are people or companies to which the applicant owes money.

Ask for the name of all creditors and the amount due to each applicant listed on the commercial lease application.

Step 11 – Identify Other Information to Collect

You can write other questions on your lease application to gauge whether the applicant will be a good tenant.

Ask if the applicant or any principal, officer, or partner has:

63. Been evicted
64. Breached a lease agreement
65. Been sued for nonpayment of rent
66. Been involved in other litigation
67. Declared bankruptcy

If the applicant replies “yes” to any of the above questions, require an explanation.

Step 12 – Ask for Additional Documents

68. Landlords use additional documents, including bank statements and financial reports, to verify assets and liabilities and to discern the business’s stability and creditworthiness:

• Business financial statements, profit and loss statements, balance sheet
• Personal financial statements
• Bank account statements
• Tax returns (business and personal)
• Business plan
• Credit report (business and personal)

Step 13 – Leave Room for Additional Comments

69. Leave space on your business lease application form for additional comments and requirements related to the approval of the commercial lease.

Step 14 – Add an Authorization Statement

A commercial property lease application should include language that states the prospective tenant provides authorization to the landlord to verify all information.

This authorization also gives the property owner the right to conduct credit and background checks as appropriate.

70. Require the applicant’s signature (and date) on your lease application to confirm such authorization.

Commercial Lease Application Sample

Download a commercial lease application template in PDF or Word Format below:

DOWNLOAD PDF

DOWNLOAD MS WORD

Frequently Asked Questions