For some small business owners, obtaining a bank loan is a struggle. For these borrowers, whether they have income verification issues, past credit problems or delinquent taxes, a traditional funding source will likely not be an option. This is where brokers who work with small-balance commercial mortgage lenders come into play. You can get your clients the financing they need; you just need to understand how to sell non-conforming mortgages, and the best way to do that is to sell them as a means to an end.
Here are some examples of how to sell small-balance commercial mortgages:
Pay off debt:
Many small business owners have accrued debt over the course of the years in operation, which can lead to credit problems. Late payments on a credit report will make it difficult for these borrowers to obtain a bank loan, but small-balance commercial lenders are generally more flexible when it comes to past credit issues. A non-conforming lender’s rates will be higher, but you need to explain to your borrower that a small-balance commercial mortgage could be the best solution to help them pay off their debt. Read how APEX can help solve borrower tax debt problems with a loan
Inject capital into the business:
Sometimes, small business owners need working capital in order to take advantage of great inventory deals or to cover their bills while they wait for receivables. In this scenario, waiting for a bank loan to fund is not likely to be a feasible option. Small-balance commercial mortgage lenders aren’t subject to the same guidelines as banks, and can get your borrower the funding they need fast.
Upgrade or purchase a building:
Many small business owners would like to be able to expand their business through the purchase of a new property or to make improvements to a property they already own. However, certain commercial property types will be ineligible for bank loans, and borrowers looking for smaller loans will likely be out of luck when trying to obtain traditional financing. A small-balance commercial mortgage lender that specializes in smaller and unique commercial property types is a great solution.
While small-balance commercial lenders cannot offer the same kinds of rates and terms that borrowers would find at their local bank, these lenders do provide funding for those who need an alternative option. Whether your borrower needs to pay off debt, requires cash out to purchase inventory or is looking to purchase or improve a property, a small-balance commercial mortgage can be a great solution. Brokers need to explain the benefits of these loans and keep borrowers focused on their goals in order to close more deals and earn more income.