As a broker, your job is to work with borrowers to help them obtain the best possible commercial mortgage for their situation. In order to do this, you need to be able to quickly assess whether your borrower will qualify for a bank loan or whether they’ll need alternative financing. That way, you can start working with the right lender as soon as possible.
Here are a few ways to tell if your borrower is non-bankable and needs a non-conforming commercial mortgage:
Less-than-stellar credit history:
Banks and other traditional lenders tend to stick to working with borrowers who have good or great credit, so small business owners who have dealt with credit issues in the past are often out of luck. In this case, you need a lender who looks at your borrower as more than a number and listens to their story. A non-conforming commercial mortgage lender with a common-sense approach to underwriting is your best bet.
Income verification or tax issues:
If your borrower is unable to verify their income through their taxes or is looking to pay off back taxes, they’re not going to be able to obtain a bank loan. However, there are lenders who don’t use tax returns to underwrite their deals and who will provide funds for borrowers to pay off tax liens. Steer borrowers facing these issues in the direction of these non-conforming lenders.
Smaller property or loan size:
Borrowers with small or unusual properties or those looking for a smaller commercial mortgage are often hard pressed to secure a bank loan. In this case, brokers should seek out a lender who specializes in small-balance commercial mortgages.
Quick closing needed:
Because of stricter regulations, it can take months for a bank loan to close. If your borrower needs money quickly, this is going to be a problem. However, non-conforming lenders can generally close loans for borrowers in need of fast cash within a matter of weeks if necessary.
In order to succeed as a commercial mortgage broker, you need to be able to quickly determine the kind of commercial mortgage for which your borrower will qualify. If you push a non-bankable borrower toward traditional financing, you’ll end up wasting not only your borrower’s time, but yours as well. However, if you can identify these borrowers quickly and have a financing outlet for them, you’ll be able to close more loans and earn more income.