Top Questions About Pre-Approval for Otso
Otso is a financial services company that provides AA-rated guarantees as an option for Landlords and Tenants to replace cash or letters of credit as security deposits in a commercial lease. We cover office, retail and industrial properties in the United States.
With approvals up to $50,000 (or more in some cases) you won’t need to put up a security deposit in your lease, you can keep that cash!
Getting Pre-Qualified for Otso allows you to lease with more confidence. When you’re shopping for space and considering options you will undoubtedly be asked for financials at some point in the process.
With an Otso PQ letter you can present certification that a AA-rated 3rd Party has the confidence in your business to back any instance of default that a Landlords lease may cover.
With Landlord approval, you will not be required to put up any form of security deposit on the lease itself. Being qualified for Otso means we back your performance for the life of the lease.
Landlords can feel confident that they have strong collateral with our guarantees and often end up with more coverage against default scenarios with Otso than they would with cash.
If approved we will provide you with a letter good for ninety (90) days outlining our approval for the amount you applied for along with a short financial report. You can deliver this (or not) at your leisure to any Landlord who is considering you as a Tenant.
The financial report will also include our pricing for the guarantee, for more information on pricing continue reading this guide.
We do not use personal credit in our decision making and do not make any inquiries on your personal credit. We do make a pull of the business credit from the DNBI database and Euler Hermes (our financial partner).
We recommend applying for equivalent value of three (3) months rent. This shows the Landlord you can pay multiple months and gives them confidence in your business. It also covers them for more than a regular deposit would.
If you are having trouble calculating what this might be let us know, we can help figure it out quickly 🙂
The typical fee for our guarantee is based on creditworthiness and ranges from $5-$10/month for every $1,000 we guarantee.
You will be paying for Otso as part of the rental rate in your deal although the Landlord pays us directly so there is no additional account for you to set up.
Feel free to negotiate all of your other terms as you see fit, knowing you don’t have to put up any deposit when you sign.
- Apply for Otso Pre-Qualification here it only takes a few minutes.
- Once you’re approved for an amount, we will notify you, often the same day.
- When you find a space you like, present your financials package to the Landlord and their team.
- This report will include the monthly cost of the guarantee, the Landlord will add this to your rent.
- The Landlord at this point will need to get setup with Otso, it’s 100% free for them to join. If they have questions we’re happy to chat with them.
- This usually removes friction in the deal as well since the Landlord has immediate access to your financial worthiness.
- Negotiate your lease terms.
- Once everything is negotiated and ready to sign your Landlord will generate you a guarantee document to sign along with your Lease.
- Sign everything, the Landlord will pay us directly for the costs of the guarantee.
- Keep your cash and enjoy your lease!
Landlords need to join because they are ultimately the ones we are covering in the event of a default. It is their collateral for your good lease performance. Since we are an exhibit to your Lease, we need their agreement.
The good news is that it’s 100% free and Landlords get a ton of benefits by being part of Otso.
Being pre qualified by Otso means you are a great bet and most Landlords love that we provide them with an up-front package of financials along with more coverage against default than normal deposits do in any event. Ultimately you are the Tenant and wanting to use the guarantee is a strong positive in your negotiations.
If you’re having any trouble getting the Landlord to accept your guarantee just let us know, we’re happy to reach out and help.
We recommend the company seeking the guarantee has at least one (1) year of operations and at least the amount of the sought guarantee in cash at the time of application. An active DUNS number is also required, which is free and can be obtained directly from Dun and Bradstreet. You can learn more here.
We recommend you have the following as well:
At least the amount of cash in the bank you are applying for and preferably that amount (or close to it) on a consistent basis.
No active bankruptcy or lawsuits against your business.
Contact Us If you have questions.
Otso uses your financial transaction history as part of our decisioning process. At no time do we seek to control or access your account beyond the one-time we pull information, with your approval.
We use military-grade encryption and security for this via Plaid. You can learn more about Plaid here.
We can review any decision manually, just contact us and we will take another look.
Our guarantees serve both parties in a lease (Tenant and Landlord) more effectively than cash or letters of credit. With our program, businesses get to retain and invest valuable capital for their business instead of locking it up for years in a deposit or letter of credit. Landlords enjoy increased coverages against defaults along with the strength and comfort of AA-rated credit that covers everything in their lease. Otso is truly a better way to lease commercial properties.
While Otso is the provider of the policy, every guarantee we write is backed by our financial partner, Euler Hermes. Euler Hermes has over 135 years of operations and billions of dollars in paid claims for their trade insurance program. You can read more about Euler Hermes here.
We cover every instance of default a Landlord’s commercial lease does. Monetary, non-monetary, damage considerations and more are all covered.
Our guarantee, an agreement between Tenant, Landlord and Otso, becomes an exhibit to the new lease. Language in the lease itself is outlined in the exhibit being used in lieu of whatever the standard deposit provisions normally used. In an existing lease, a short amendment is used to revise the language appropriately in situations where a deposit is being returned to a Tenant.
The number one benefit is not having to put up valuable cash or lock up that same capital in a letter of credit for the life of a lease. With Otso, we underwrite the performance of the Tenant so the Landlord is comfortable (and has strong protection against default scenarios) but without needing the Tenant to inject capital in a deposit.
Tenants are guaranteeing good lease performance. The lease governs many provisions of default and our guarantees point to that as supporting documentation. If a Landlord believes a default has occurred in line with the lease, a claim can be made for up to the full amount of the guarantee.
Claims are simple, fast to upload in our secure portal and all documentation provided is in line with what would be sent to the Tenant in any default scenario.
We reimburse Landlords within thirty (30) days or less. If we pay out in a default scenario, we will seek restitution from the Tenant directly. You can read or download a sample guarantee here.
For same-day approvals, we can cover up to $50,000 per business/lease. Guarantee amounts larger than $50,000 are available with our manual underwriting process which usually takes 48-72 hours.
No. If the Tenant otherwise performed in their lease without default there is no obligation to pay back the amount guaranteed. This also means there is no liability on the books. At the end of a lease, the guarantee simply ends. During a lease, we can assign or modify the guarantees as required if material changes are needed/requested by the Tenant and Landlord and mutually agreed upon.
Otso helps you get your deals done faster. Whether you are representing a Landlord or a Tenant, the current security deposit system is slow, poor at assessing creditworthiness, and really fails to work for anyone.
Just have your client apply using the link here and we will notify them of our decision quickly. From there, you can negotiate and present the financials for your client to any landlord you and your client choose.