Whether you’re a commercial mortgage broker, a banker, an accountant or a financial advisor, you’re working with small business owners in your community. Many of these individuals are going to need mortgages, but won’t qualify for bank loans, so it’s important that you know where to direct them in order to help them achieve their financial goals.
A non-conforming commercial mortgage is a great tool for many small business owners. These mortgages allow your non-bankable clients to overcome various obstacles and obtain financial stability.
One of the most common goals a small business owner needs a mortgage is that they need to inject capital into their business for a variety of reasons. Some borrowers need the money in order to take advantage of a great deal on inventory or to purchase equipment for their business. Others may simply need funds to cover the bills while they wait for receivables.
Generally, the loan amounts borrowers in this situation require are too small for banks, and it’s likely they’ll need the money faster than a bank could provide it. A non-conforming commercial lender, however, will likely specialize in small-balance mortgages and will be able to underwrite, process, and close the deal quickly for your non-bankable clients.
Property Upgrades or Purchases
Improving an existing property or purchasing a new building to expand a growing business is a common goal for many small business owners. However, if the borrower requires a relatively small amount of money, needs the cash fast, or has faced credit or other financial obstacles in the past, getting a loan from their local bank will likely be a struggle.
In these instances, it’s important for brokers and other financial professionals whom borrowers trust to have other outlets for financing. Non-conforming lenders are able to evaluate each borrower’s financial situation on a case-by-case basis, and they understand your clients are more than just a credit score.
Most of these lenders are also able to close loans within a matter of weeks from commitment, so if you borrower is looking to pay a contractor or purchase a property quickly, this could be the best solution.
Paying Back Taxes
It’s not unusual for some small business owners to owe back taxes, but your clients won’t be able to obtain a bank loan if they’re not up-to-date as banks have strict guidelines concerning IRS debt. This is where a non-conforming lender can be an asset.
Because these lenders aren’t subject to the same regulations as banks and other traditional lenders, they’re able to provide the funds small business borrowers need in order to pay off IRS debt. If you’re a broker working with borrowers who need to pay back taxes, an accountant looking to help your client clean up their finances, or a banker unable to provide a loan because a potential borrower has IRS debt, seeking out a non-conforming lender is a great solution.
Small business owners often accumulate a fair amount of debt in the course of running their businesses. Your clients may have a mortgage, credit card debt, and various other business expenses that they’re working to pay down each month.
Non-conforming commercial mortgages can also be used as a way to consolidate your client’s business debt. Rather than paying multiple bills per month, a great solution for many small business owners is to refinance their property and pay off any outstanding debt with the proceeds. Then, they only need to worry about one consistent monthly payment and can focus on running and growing their businesses.
One of the most common reasons small business owners need financing is to pay off a ballooning mortgage. Whether that mortgage is a bank loan, a hard money loan, or a merchant cash advance, your clients will likely need to acquire funds quickly in order to pay off this debt.
In this case, a non-conforming lender willing to offer fixed and fully-amortizing terms could be a great solution for your clients. Merchant cash advances and hard money loans in particular require borrowers to pay off their debt in a very short amount of time and the rates are generally very high. A non-conforming commercial loan with a better rate and more stable terms will provide your clients with more financial security.
For non-bankable borrowers looking to leverage their commercial property to pay off debt, purchase or upgrade a property, or inject some capital into their small business, a non-conforming commercial mortgage is often a great solution. Lenders who provide this type of financing will listen to your clients’ stories, take the time to understand their financial situation and what they’re looking to accomplish, and can close deals smoothly and quickly. If you’re looking to help your clients achieve their business goals and offer them more financial stability, get to know non-conforming commercial mortgage lenders.