For borrowers who own or are looking to purchase a smaller office building, obtaining a commercial mortgage can sometimes be a challenge. However, there are lenders who specialize in small-balance commercial mortgages who have the expertise to finance these properties. If you’re a broker working with a borrower seeking a small-balance product, these lenders are a great option. In order to submit a deal, though, there’s some basic information you’ll need to gather.
Here’s what you’ll need for a small-balance commercial mortgage lender to evaluate your borrower’s request:
Learn about the collateral.
One of the first things you need to do is have a conversation with your borrower about the office building they’re planning to pledge as collateral. Where is it located and how large is it? Do they already own it and need to refinance or are they looking to purchase it? Is it owner-occupied or an investment? What type of business operates out of the property? These are all questions you should be asking so that you have this information ready for your commercial mortgage lender.
Understand your borrower’s credit history.
There are many factors a lender uses to evaluate a commercial mortgage request, and one of the most important is your borrower’s credit history. Provide your lender with a recent credit report that includes scores and tradelines, and be ready to review it with them and answer any questions they might have. Talk to your borrower ahead of time about any past credit issues they’ve had so that you can properly explain them and how they were resolved to the lender.
Know their plans for the money.
Your commercial mortgage lender is going to be interested in how your borrower is planning on using the funds they provide, so make sure you take the time to discuss this with the borrower. Whether they’re planning on purchasing the office building, refinancing to pay off debts or obtaining cash out for property improvements, your lender will need to know. Include this information in your summary of the deal and be prepared to have a conversation about it with your lender.
Get a sense of your borrower’s ability to pay.
Of course, any commercial mortgage lender will need to know that your borrower can make consistent monthly payments in order to feel comfortable providing them with funds. Make sure you collect any relevant financial documentation, such as income and expense reports, profit and loss statements, or a rent roll if applicable, about your borrower’s office building to show your lender that your borrower has the means to make their payments.
Securing a commercial mortgage for your borrower’s property doesn’t have to be a major challenge; you just need to find the right lender and collect the necessary information. Be sure to learn about the property, your borrower’s credit history, how they plan on using the funds, and confirm their ability to repay the mortgage. Providing this information upfront will allow your small-balance commercial mortgage lender to properly evaluate the scenario and get your borrower the money they need more quickly.