When a small business owner is turned down for a commercial mortgage by their local bank, it can seem like there are few financing alternatives, one of which is a short-term hard money loan. However, when a broker knows where to look, non-bankable borrowers will find that they have more options. Yes, for some borrowers, a hard money loan is going to be the only commercial financing available. But for many, a small-balance commercial mortgage lender could be the answer.

Here are some key differences between hard money lenders and lenders like APEX who specialize in commercial mortgages for the average small business owner:

Rate and terms:

Traditional hard money lenders may charge rates as high as 30% for a term that rarely lasts over two years. APEX offers rates as low as 7.5% and our terms are fixed and fully-amortizing for 25 years. So, now only will your borrower be making a lower, more consistent monthly payment, they’ll be doing so without worrying about their ability to quickly pay off the loan.

Loan size:

It can be difficult to secure a hard money loan for a lower amount, which makes things difficult for small business owners looking to secure smaller mortgages to find financing. APEX offers loans ranging from $25,000 to $1,000,000, allowing small business owners to take out a true small-balance commercial mortgage that fits their needs.

Closing costs:

Most hard money lenders will generally charge at least 5% in closing costs when financing a commercial property, and many will charge even more in upfront fees throughout the process. APEX only charges one lender point at closing, and your borrower won’t have to pay any upfront fees to get the deal done. The only cost your borrower will be responsible for before closing is a commercial appraisal fee paid directly to an APEX-approved appraiser.

When your commercial borrower gets turned down for a bank loan, it’s crucial to explore the financing options available to them. Just because a borrower isn’t able to obtain bank financing doesn’t necessarily mean that a hard money loan is their only alternative. Nonconforming commercial mortgage lenders like APEX can offer your borrowers the financing they need with better rates and terms and lower closing costs. These types of mortgages will be easier for you to sell, making it simpler to earn your commission.

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