There are many strong commercial borrowers in the market for a mortgage who still find it challenging to obtain a bank loan. Even borrowers with good credit and steady cash flow might find it difficult to obtain financing from a traditional source. This is why you, as a commercial broker, need to develop relationships with various small-balance commercial lenders. These niche lenders will be able to help your borrowers navigate the lending process and to secure the loans they need. First, though, it’s important to understand why these borrowers are having such a tough time:
Banks are still adjusting to the new normal
Regional banks that might have jumped at the opportunity to help small business owners are now far more cautious about lending. They’re still trying to find the middle ground between an improving economy and regulatory restrictions.
Small business owners are still recovering
Commercial borrowers are caught in the middle of this tug-of-war between the improving economy and new lending regulations. These business owners need capital to grow their businesses, but they might still be working to recover fully from the “Great Recession.”
Banks are less inclined to lend on small properties
While traditional lenders have always preferred lending on larger commercial properties, small business owners housed in small buildings are now finding it even more difficult to obtain bank loans.
So, how does developing a relationship with a non-conforming commercial lender help? These are lenders who are willing to listen to your borrowers’ stories and work with them to find a solution despite less-than-stellar credit and other problems that resulted from the economic downturn. They don’t face the same kind of regulations as banks do, and they are willing to lend smaller amounts on smaller properties. This type of commercial lender is a great resource for your non-bankable clients and can help you to expand your commercial offerings.