Many borrowers looking to obtain small-balance commercial mortgages are turned down by their local banks; it happens every day. As a broker, it’s your job to know what to do next if your borrower is facing this situation. While many traditional lenders don’t believe small-balance commercial mortgages are profitable, there are lenders who will fund these deals. More documents will be needed throughout the process, but the following are the basic documents a lender needs to determine whether to issue a conditional approval or a quick no so that a broker can get back to shopping the deal:
Loan submission summary:
Generally, non-conforming commercial mortgage lenders will want to know your borrower’s story, as well as their plans for the proceeds of the loan. Be sure that the loan submission summary fully explains your borrower’s situation and plans and that it is as clear and concise as possible.
Like any lender, a non-conforming commercial lender will need an application to begin evaluating your borrower’s financing request. Usually a 1003, commercial mortgage application or personal financial statement will suffice – just be sure to fill out the form completely so that your lender can properly assess the loan scenario.
Your borrower’s credit report is a very important tool for a small-balance commercial lender, so submitting a credit report is a must. Be sure that the report is as recent as possible. A tri-merge credit report is ideal, but if you cannot pull credit, you can have your borrower pull their own report, and make sure that it includes both scores and trade lines.
If possible, provide pictures:
The property your borrower plans to pledge as collateral is another crucial part of any lender’s decision-making process. Providing photos of the building saves your lender time searching for photos of the property, and allows them to fully evaluate your borrower’s scenario more quickly.
While more documents are required to fund a commercial loan, the above are the basic documents you need to submit to get started with a commercial mortgage lender. Without this information, a non-conforming lender cannot begin to consider a loan. These documents will allow your lender to make a quick, informed decision about whether or not they can fund your borrower’s mortgage request. Submitting these documents lets your lender know that you understand the commercial lending process and that you’re serious about closing commercial mortgages.