Obtaining a small-balance commercial mortgage for a non-bankable borrower can be difficult enough without worrying about how long a lender will take to approve and close the deal. It’s important for broker to work with small-balance commercial lenders who will focus on moving the deal forward, particularly when time is of the essence for your borrower.
Here’s how to find out if a commercial mortgage lender will be able to close your borrower’s loan in the necessary time frame:
Find out what they need to review the deal.
The first thing you’ll want to ask a commercial lender is what documents they’ll require in order to review your borrower’s financing request. If you’re working with a bank or other traditional lending sources, you’ll need to collect a lot of information before they can take a look at the deal. This takes time, and since these funding sources must abide by strict regulations, the risk of hearing “no” and wasting your borrower’s time is higher. Conversely, non-conforming lenders usually require much less documentation to review a deal.
Ask about their approval turnaround time.
Unfortunately, it’s not unusual for brokers to submit a commercial mortgage request only to end up waiting quite a while to hear whether or not the lender will move forward with the deal. However, as a broker, you should be wary of lenders who say “yes” too quickly, as these deals might not turn into closed loans. Waiting a few days for a commercial loan approval might benefit your borrower in the long run because the lender will have taken the time to underwrite the deal and your borrower will be less likely to waste their time and money. It will also give you and the lender to nip any potential problems in the bud early in the lending process.
Discuss how long it takes on average for a deal to close.
If you’re working with a traditional commercial lending source, your borrower’s deal could take months to close. If your borrower needs the money fast, it’s best to seek out a lender that can close the deal within the necessary time frame.
The above is all important information for brokers working with borrower who need funds quickly. Be sure that you understand a lender’s process and how long it takes them to close the average commercial deal before submitting a time-sensitive deal.