In the small-balance commercial mortgage industry, it’s not uncommon for brokers to be contacted by investment property owners looking to secure financing for their buildings. Whether their collateral is a traditional investment property like a multifamily or apartment building or a more commercial building such as a small shopping center, it’s important for brokers to understand how to present the financing requests of these borrowers to commercial lenders.

Here’s what you’ll need to get started:

A summary and completed 1003 or application:

The first documents you should focus on are your borrower’s application and a summary of the deal. Be sure to fill out the 1003 or commercial mortgage application completely; the more information your lender has upfront, the smoother the rest of the process will go. It’s also important to provide a detailed summary discussing why your borrower needs funds for their commercial investment property and how they plan to use the money.

A credit report and explanation:

A tri-merge credit report is always preferred, but most lenders will accept less detailed reports with the initial application as long as there are trade lines and at least one score. If your borrower has had credit issues in the past, a credit explanation should be drafted and you both should be prepared to discuss the obstacles in detail with the lender.

Information about the collateral:

Make sure to provide your lender with details about your borrower’s investment property. This should include the property type, its location, its size and its occupancy. Because it’s an investment property, information about the rents paid by tenants should also be included.

If it’s a purchase, an agreement of sale and proof of funds:

Like any property purchase, a small-balance commercial lender will need a copy of the agreement of sale and the proof of funds for your borrower’s down payment early on in the process. The sooner you provide this information, the better.

Your initial submission of your borrower’s request for financing is a very important part of securing them a small-balance commercial mortgage. Submitting the above documents as early in the lending process as you can not only makes a great impression, it also makes it simpler for the lender to review your borrower’s scenario.

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