Credit check vs. reviewing business financials?
My family owns a commercial industrial building which I help manage. We recently found a new tenant, with help from a broker. The broker received the tenants’ financials in the form of a spreadsheet, and tax return. My father found them acceptable and we are just about to sign the lease with the business. 

I’m new to this world — but all my research points to running a credit check on the tenant, and even looking into their standing in the state. (We are jn NY.)

The broker didn’t do this. My question is — if I have the tenant fill out an application now and I run a credit check, is it too late to do so, and is it necessary for me to do so? They are looking to sign a 10 year lease so I’m being cautious and preventive, since we have been burned before by shitty tenants and had to deal with drawn out evictions.

Thanks in advance for your advice.
[{"id": "f7lc8w0", "text": "Until the lease is signed, nothing has been finalized with the Tenant. It is relatively easy to verify on a state's corporation website (NY: [https://www.dos.ny.gov/corps/bus\\_entity\\_search.html](https://www.dos.ny.gov/corps/bus_entity_search.html)) whether a business entity is registered and in good standing.\n\nAs for a credit check, this is more applicable when leasing to an individual or receiving a personal guarantee. You will likely want written permission (checkbox on an application for example) permitting you to run a credit check on the individual through experian or something similar. A credit check is just another tool to see an individual's credit history, but is more supportive evidence than anything else. Presuming the credit score isn't ridiculously low and there haven't been any bankruptcy's, any additional risk perceived through a credit check could be offset with an increased security deposit or a qualified letter of credit.\n\nIt is typically on the landlord to decide what they need to see to feel comfortable entering into a lease with a Tenant. Don't expect any brokers to do this for you.", "replies": [{"id": "f809bvh", "text": "Thanks so much for your response.  This is really good to know \u2014 had not heard of looking up a business\u2019 standing. I\u2019ll definitely look into your suggestions.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f7lcxua", "text": "Ask for all the company Financials (Credit check, Profit &amp; Loss report,  Business plan). If the company financials are weak, ask for a personal guarantee of the lease so you have someone to go after if they default.\n\n&amp;#x200B;\n\nThis is standard in Calfornia.\n\nFeel free to DM me.", "replies": [{"id": "f809e1z", "text": "Awesome. Thanks so much \u2014 will follow up with the tenant on all of these. Appreciate your help!", "replies": [], "depth": 2}], "depth": 1}, {"id": "f7mhvnd", "text": "You can run business credit without a signature, it would be through a credit company like Dunn &amp; Bradstreet, they have credit profiles for most companies, both public and private and an estimation of their credit worthiness. \n\nIf the lease is personally guaranteed by an officer of the tenant, then it is worth it to run a personal credit, where you will need a signature in order to do so. \n\nYou can also run a Lexis Nexis on the business entity or the person on the lease without their consent. This will tell you if they have unpaid taxes or other liens on them.  \n\nBe sure to save the application and their signature authorizing you to run credit.", "replies": [{"id": "f80946z", "text": "Thanks for your reply \u2014 really appreciate it! I will look into all of these things.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f81uuqy", "text": "As part of my job as an analyst - I also approve/deny tenants for our portfolio based on materials we receive from prospective tenants. We hardly ever accept corporate guaranties and pretty much always demand personal guaranties. We request\n\nMost recent 2 years personal tax returns\nBank statements to verify cash on hand(reconciling their startup costs)\nCredit checks (helps to see credit history and liens)\nOFAC checks\nPersonal financial statement showing net worth and liabilities\n\nWe will also ask that anyone who is a guarantor has their spouse guaranty the lease as well due to the fact you can easily shuffle cash/assets between spouses. If you are doing a corporate guaranty, I\u2019d request most recent 2 years P&amp;L/balance sheet and tax returns. Let me know if you have any questions..I review 2-3 applications per week", "replies": [{"id": "f84solc", "text": "What type of criteria do you follow when looking at personal financials? My partners and I found a new retail space and heard the landlord is strict. I've submitted a personal financial statement and waiting to see of that's enough or if they need tax returns.", "replies": [{"id": "f86dqnd", "text": "So we have one of the more strict review processes vs other landlords. Note I am in retail. Main things we try to determine\n\nPersonal financial statement- we want to see your net-worth and this shows us visibility of your assets and liabilities. Credit report and tax returns can verify certain items. Bank statements as well.\n\nCredit report - Are there any liens/would there be someone else in line for the rent monies due if you went under? Do you pay your bills? Is your credit shit? Maxed out ccs? Credit report will also verify real estate owned via mortgages etc\n\nTax returns- can your income/spouses income support the business? (Tbh if it\u2019s over 30-40k, not as important, less important with partners) tax returns also allow us to see income/losses from other businesses/ventures, specifically schedule C/E\n\nBank statements- do you have what you say as on your PFS? Do you have the monies for the startup costs (tenant will always have to use their own money for startup costs because TI/TA won\u2019t cover everting)\n\nBusiness plan- pretty straightforward \n\nBusiness tax returns- if it\u2019s a corporate guaranty (rare for my company to accept) need to obviously see health of business plus P&amp;L and balance sheets \n\nKind of drunk right now..don\u2019t think I left anything out. Let me know if you have any questions", "replies": [{"id": "f86tew4", "text": "Cool, thanks for the info. We are currently negotiating a lease but contemplating a different higher end center. First spot was negotiated to $41/sq ft for 2k sq ft, second spot $45 but we should be able to bring it down closer to $41.  Our build out cost is around $280k which we are paying out of pocket across 3 partners.  I guess I'm just nervous that we won't pass their criteria.", "replies": [{"id": "f8bevlv", "text": "Are you getting any TA dollars from LL of either space? How long is the lease for? Why are you worried about not passing their criteria?", "replies": [{"id": "f8dwem5", "text": "First place we are getting a little over $100k in tenant improvement allowance.  Second place we are not to that point yet.\n\nWorried because none of our partners have experience in this new concept we are opening which the LL asked about.  Financially we can afford the build out of around $280k", "replies": [{"id": "f8q3qtf", "text": "Every LL would prefer experience but there it happens more often than not where the TT has no experience. His focus would likely be making sure you and your partners are personally guaranteeing the lease if you ultimately fail(which no party wants). The LL will just want to make sure he can be made whole and release the space if the unfortunate happens.\n\nIt will really come down to - do you and your partners financials look good enough in the unfortunate event? My guess is you\u2019d be fine in that sense if you have the capital are you referring to to startup to begin with. Let me know if you have any further questions", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]