Working with non-bankable borrowers presents its own unique set of challenges, not least of which is selling your customers on the rates and terms for which they qualify. Many borrowers go into the commercial mortgage process expecting bank rates and terms, but some simply don’t fit the bank’s parameters. For these borrowers, brokers should keep their borrowers focused on their goals and on the fact that alternative financing is the best means to their ends.
The first step to keeping your borrower’s eyes on the prize is to understand some quintessential goals of small-business owners.
Refinancing to pay off debt:
One of the most common reasons borrowers need to obtain a small-balance commercial mortgage is to pay off outstanding debts. Whether it’s a ballooning bank note, credit card debt or delinquent taxes, non-conforming commercial lenders offer many borrowers the opportunity solve these financial problems by giving them the ability to consolidate and pay off this debt.
Upgrading or purchasing a building:
Many small-business owners seek commercial financing to make routine improvements to their existing property, or to purchase a new property. If your borrower owns or is looking to buy a smaller property, obtaining traditional financing can be difficult because of the small loan size required. In these cases, a small-balance commercial mortgage lender can be a great solution.
Buying equipment or inventory:
Another common goal for many small business owners is to purchase equipment or to take advantage of great inventory deals. For these borrowers, a non-conforming mortgage is an opportunity to get the necessities for their business quickly without having to jump through traditional lenders’ hoops.
As a commercial mortgage broker, it’s crucial for you to understand what it is your borrower wants to achieve and to keep them focused on these goals. By keeping their eyes on the prize, you’ll do a better job of selling the loan you can secure for them and will be able to close more deals.